Companies that improperly treat workers as independent contractors may draw scrutiny from the IRS.

If the IRS reclassifies workers as employees, the company may be charged penalties. One key factor is the level of control over the work. In one case, the IRS found that a company that arranged for workers to clean apartments had misclassified workers as independent contractors.

But in U.S. Tax Court, a review showed that the control exercised over the workers was minimal. The court found that the owner was similar to a dispatcher and an intermediary between the workers and apartment complexes.

Therefore, the court ruled she properly treated the workers as contractors. (TC Memo 2020-88)