Posted by defensebaseactcomp on February 24, 2011
Some Contract Companies avoid paying Medicare and Social Security Taxes on their employees by classifying them as independent contractors or consultants. The IRS considers this to be Fraud.
These same companies claim these same independent contractors/consultants to be employee’s for the purposes of acquiring mandated Defense Base Act Worker’s Compensation Insurance. Even going so far as to have workers sign and back date employee contracts after they have been injured so they will be covered.
See more on Misclassification of Employee’s as Contractors at Overseas Contractors Tax Information where you will also find a link to the IRS Form SS-8
Following is a recent SS-8 Determination which confirms the Misclassification and opens up the company to an investigation of Tax and Insurance Fraud and US Labor Law Violations.