Contractors have heard and read much lately about the current Internal Revenue Service (IRS) crackdown on relationships between independent contractors and their subcontractors. The IRS is examining these relationships closely to make sure that contractors' subs really are independent subcontractors, rather than employees who look primarily to the contractor for their livelihoods, and for whom the contractors should be paying income and social security taxes. Often such questions are clearcut. But sometimes the distinction between sub and employee is fuzzy. As a result, the IRS might declare someone you honestly consider a sub to be an employee. Suddenly you owe the IRS a lot of money for back taxes and penalties. The IRS rulings in this area so far don't provide much comfort. Revenue
