FAQ's
- Why do companies need a compliance process?
- What critical role does the HR, Tax and Procurement department play in protecting your company from misclassifying workers?
- If a contractor is incorporated or has worked as an independent contractor in the past is there a risk for misclassification?
- What are the benefits of using ICon's Professional Payroll Service for high-risk workers?
- Why is it such an issue to bring back former employees or returning retirees?
- What is the value of a MSP (Managed Service Provider) Program?
- How is ICon’s ICverify program different from other similar programs?
- Why would staffing agencies want to participate in ICon's MSP program?
- How does the ICon suite of products benefit your business?
- Can your services be tailored to my company's needs (i.e. transition time, reports, business rules, etc.)?
- Is ICon's suite of services affordable?
- What is iConnect?
Why do companies need a compliance process?
The State and Federal government are desperate to recover billions of dollars each year in unpaid taxes. The two largest sources of lost revenue for the IRS are from small businesses and self-employed people who do not accurately report their income and/or exaggerate deductions. It is the company who engages the services of these workers and who is ultimately responsible for the appropriate classification, as well as the treatment of these entities as either an employee or an independent contractor. The company must ensure taxes are withheld from payments and paid to the appropriate government entities if a worker does not qualify as an independent contractor based on the government's complex criteria. IRS Guidelines
Those companies are therefore subject to random audits by government taxing authorities and are subject to stiff fines, penalties and back pay liabilities if found at fault of misclassifying their workforce. With 3 years of documents subject to the government's scrutiny, it is imperative that company departments, specifically Tax, HR and Procurement, closely coordinate their processes to ensure accurate classification is determined and critical evidence of compliance is maintained for a minimum of 3 years on each contractor and companies with less than 5 employees providing services. It is also imperative that changes in legislature or legal guidelines are monitored and implemented as they occur.
What critical role does the HR, Tax and Procurement department play in protecting your company from misclassifying workers?
Typically, each of the departments has a specific responsibility and role in the process of contractor acquisition and classification.
- HR is accountable for the process of acquiring talent, which includes independent contractors and temporaries. They are tasked with ensuring that a reliable and consistent screening process is in place to properly classify workers.
- TAX will likely be called upon to produce documents as far back as 3 years, proving the status of your independent contractors in the event of a state or IRS audit. Tax should therefore have appropriate evidence on hand for contractors that may have only worked a few months or years before.
- As the gate keeper of purchasing, PROCUREMENT is predominately the entity that issues the purchase orders for Independent Contractors. The responsibility of ensuring the contractor has been accurately classified is a weighty factor in the Purchase Order process. Procurement is often assumed to have the documented evidence for each contractor on file to provide in the event of an audit.
Understanding government guidelines as well as the consequences of misclassification, is the first step in creating a compliance defense. The effectiveness of a compliance program is fully dependent upon the collaborative efforts of each department to participate and support the compliance process.
If a contractor is incorporated or has worked as an independent contractor in the past is there a risk for misclassification?
Yes. There is a threat of misclassification even if a contractor is or has been incorporated.
Although issuance of a "1099" is not a requirement if one is "incorporated," appropriate and prompt tax payment is still required and closely monitored by the government. For example: If an "incorporated" contractor is audited and found to have failed to accurately or promptly pay quarterly estimated taxes in full, it opens the door for the government to audit the company receiving benefits from their services for inaccurate classification of all independent contractors.
The Taxing Authorities are aware that small corporations can be setup to shelter tax obligations. Internal IRS audit documents show that in California, Alaska, Ohio, Minnesota, New York and New Jersey, IRS auditors, have aggressively audited corporations created by computer programmers and other technology professionals.
What are the benefits of using ICon's Professional Payroll Service for high-risk workers?
Most importantly, ICon provides a W-2 structure by employing the worker directly. As an ICon employee the worker is completely removed from the client's responsibility for tax purposes. To reinforce the company's protection for co-employment liabilities, ICon takes unprecedented steps to not only provide a premium benefit plan, but ICon also makes substantial contributions to the cost.
For the company, the benefits include:
- Eliminate the risk of fines and penalties for misclassification
- Mitigate potential co-employment lawsuits
- Nationwide coverage - All 50 states
- Cost efficient
- Various levels of online reporting, including headcount, spend, location and tenure
- Online submission, approval/denial of timecards/invoices (24/7)
For the contractor, the benefits include:
- Eliminates quarterly estimated tax payment requirement
- Taxes are filed with a W-2 form
- A significant portion of taxes are paid by the employer
- Health and dental coverage with ICon contribution
- ICon paid life insurance policy
- Pre-tax dependent care plans
- 401(k) plan
- Direct deposit
- Unemployment insurance
- Worker's compensation
- Various payment methods, including weekly, monthly, milestone, etc.
- Immediate enrollment (less than an hour)
- 24/7 online access to submit timecards
Why is it such an issue to bring back former employees or returning retirees?
It is a significant red flag and a likely audit trigger when an individual is issued a W-2 and a 1099 from the same company within the same calendar year. This practice incurs the greatest risk for misclassification. When minimal changes result in the relationship or job description, it can appear that the company's intent is to save money by avoiding tax payments and healthcare benefits.
What is the value of a MSP (Managed Service Provider) Program?
Our MSP services take the burden of managing your temporary staffing suppliers by consolidating information and standardizing processes across the board. Therefore, ICon delivers you the best talent available at the most favorable prices.
ICon will assist you with interfacing with all staffing agencies, negotiate bill rates, staffing company selection, enforce contractual obligations, audit mark-ups for accuracy, and provide only the best qualified candidates. We provide consolidated, real time reporting to track the entire hiring process of a temporary worker and we customize it for your specialized needs. We also offer unparalleled customer service to support technical excellence; whether you use multiple staffing agencies or not, our program is structured in such a way that any company will benefit from these services.
How is ICon’s ICverify program different from other similar programs?
ICon's unique difference is in its ability to close the gap on the often overlooked area of managing the independent contractor. They are not only the most costly and highest risk segment of worker, but also the most difficult to track and control. Even the largest temporary staffing companies in the world do not adequately address this formidable risk in their management practices because compliance is a complex process requiring a unique expertise.
Our award winning compliance management application has been rigorously tested against government audits and consistently passed scrutiny by never losing an audit. ICon has saved clients millions of dollars in potential back taxes, fines and penalties by creating and maintaining bullet proof documentation to meet the government's rigid criteria.
Why would staffing agencies want to participate in ICon's MSP program?
There are numerous reasons why staffing agencies would choose to work with ICon. ICon is a third-party neutral vendor that is an advocate rather than a competitor. ICon enables collaboration by providing an easy to use web-based interface that understands an agency's processes and billing procedures. All staffing agencies will have an unbiased opportunity to increase business through quality performance because of the objective design of our system. It offers standardized monitored rates to ensure that you obtain the most talented people at the best prices. The software applications are easy to install and we guarantee that you will not waste time on firewall issues or needing additional software.
How does the ICon suite of products benefit your business?
By having a single provider manage three of the most complex HR functions (independent contract compliance, payroll and benefits, and vendor neutral management), ICon will help increase productivity, reduce the risks associated with contractors and consolidate your workforce under one roof. You will save time and money through the automated features online, and also minimize your risk of misclassifying independent contractors that could result in unwanted audits and penalties. Advantages include:
- Compliance with government taxing authorities
- Locating the best talent at the best prices
- Vendor management and advocacy
- Superior web-based management tools
- Available personalized intranet site
- Independent contractor and vendor consolidated billing
- Organizational training
- Comprehensive online, real-time reporting
- Available on site management
- One invoice/One vendor for your entire contingent workforce
Can your services be tailored to my company's needs (i.e. transition time, reports, business rules, etc.)?
Yes. ICon works with clients to select the best fitting options for your entire contingent workforce. To accomplish this, ICon has assembled an elite group of financial, legal, HR and procurement experts to design the services that will best suit your company's need. ICon leverages its best-of-breed web-based technology providing a multitude of customized reporting options, as well as divisional and consolidated company wide reporting at the contractor, manager and executive levels. Our world-class systems are scalable and flexible to seamlessly integrate with your current program.
Is ICon's suite of services affordable?
Yes. Our pricing model is uniquely structured to create a low-cost, high-value opportunity for you. We offer various discount opportunities as your business grows with us. In addition, we have a pricing structure to ultimately provide a "no-cost" compliance program. iConnect can be implemented as a holistic, enterprise solution, or as individual service components, depending on your needs. Provide us with the opportunity to help protect your company's workforce investment by ensuring that you are meeting all federal and state guidelines, along with securing the best talent available in your industry. Please contact us today to determine which of our solutions are best for your organization.
What is iConnect?
iConnect is a comprehensive suite of contingent workforce management services that combines independent contractor compliance, payroll and benefits, and vendor neutral management to get the right people for the right job, at the right price, right away.
Our program enables a HR, Tax and Procurement perspective of contingent workforce management, empowering and unifying the entire contingent workforce operation. iConnect automates the qualifying of independent contractors and expedites the temporary contractor engagement process, improving the quality of talent and reducing employer costs.
iConnect leverages best-of-breed web-based technology that is intuitive, clean and easy to use. Our user interface is built on the concept of "prompt and process," with a notification intensive design that prompts managers with specific "next steps" and intuitive processes that ensure you don't miss a deadline or an assignment date.