Kentucky Department of Revenue's Tax Issues for Misclassified Workers in the Construction Industry
The Kentucky Department of Revenue discusses tax issues related to misclassified workers in the construction industry. Construction contractors in Kentucky must withhold individual income tax from employees and submit related forms. Determining employee versus independent contractor status can be challenging, and disputes are resolved following IRS guidelines. The department investigates tips related to misclassified workers and issues assessments when contractors are found to have employees.
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Presentation Transcript
Classification of Workers in the Construction Industry Task Force KY Department of Revenue Presentation Date: September 10, 2020 Kentucky Department of Revenue 501 High Street Frankfort, KY 40601
Kentucky Tax Issues for Misclassified Workers in the Construction Industry Construction contractors doing business in KY are required to withhold KY individual income tax from their employees performing work in KY. The tax and related forms are required to be submitted by the Contractor to the Department. Employees are required to file a Kentucky Individual Income Tax return.
Kentucky Tax Issues for Misclassified Workers in the Construction Industry The Department has long recognized that some construction contractors claim they hire independent contractors to perform work in Kentucky and not employees. Determining whether an independent contractor or employee performed work at a Kentucky construction job site is very challenging.
Kentucky Tax Issues for Misclassified Workers in the Construction Industry When we receive information that indicates an independent contractor vs. an employee situation exists, we attempt to contact the contractor. If a dispute with the contractor arises, we rely upon IRS guidelines for determining when a worker is an employee or independent contractor. In some cases we have requested the contractor to obtain an IRS SS 8 Determination, a process that takes several months. If we determine a contractor has employees, we issue an estimated assessment for tax, interest, and penalties.
Kentucky Tax Issues for Misclassified Workers in the Construction Industry We do not currently have a dedicated group of workers to work on issues related to misclassified workers. We do investigate tips from the public or other government agencies that relate to this issue to the extent that present departmental resource levels allow.
Contacts Gary Morris, Executive Director Office of Tax Policy & Regulation Gary.Morris@ky.gov (502) 564-0424 Kentucky Department of Revenue 501 High Street Frankfort, KY 40601
Legal Disclaimer The information in this presentation is for educational and informational purposes only and does not constitute legal advice. Information is presented as an overall review that is subject to law changes and may not apply to all states. For accurate information on issues related to the Kentucky Department of Revenue, please reference KRS Chapter 141 and KAR Chapter 103. Information in this presentation is believed to be accurate as of the date of publication. In the event that any information in this presentation is later determined to be in error, this presentation cannot be used by taxpayers in supporting a specific position or issue before the Department of Revenue, as it does not have the statutory or regulatory authority. Kentucky Department of Revenue 501 High Street Frankfort, KY 40601
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