Mercer Law PLLC is pleased to share some of its success stories representing clients before state and federal agencies — i.e. Internal Revenue Service (IRS), Department of Labor & Industries (L&I) and Employment Security Department (ESD) — over the past few months. These cases have been selected to show the variety and types of cases the firm handles for our clients. Names and specific business information have been withheld for client confidentiality.
- Successful IRS audit representation. Mercer Law represented a Washington State language services company in an employment/independent contractor tax audit conducted by the IRS. Mercer law argued that the language company’s independent contractors were properly classified as independent contractors, and that they were also protected under federal safe harbor (an argument the auditor did not think could succeed). Mercer law submitted briefing on the client’s behalf and the auditor found that the company’s independent contractors were properly classified as such, and were entitled to lifetime federal safe harbor protection.
- 59 percent reduction in ESD tax assessment. A Tacoma company volunteered for an audit of its independent contractor practices, and ended up receiving a substantial tax assessment for misclassifying workers as independent contractors. The client’s accountant brought in Mercer Law to assist with the appeal, and we helped the business obtain a 58 percent reduction in its assessment amount.
- 56 percent reduction in L&I tax assessment. A Seattle general contractor was assessed back taxes, penalties, and interest after an auditor determined that subcontractors (carpenters, installers, plumbers, etc.) for the firm failed to qualify as independent contractors. Mercer Law represented the general contractor on appeal and obtained reversal of portions of the auditor’s decision, and a 56 percent reduction in the assessed amount.
- 48 percent reduction in L&I tax assessment. A Renton business was assessed back taxes, penalties, and interest after an auditor determined that the business’s 1099 workers should have been classified as employees. Mercer Law represented the contractor on appeal and obtained reversal of portions of the auditor’s decision, and a 48 percent reduction in the assessed amount.
- 40 percent reduction in L&I tax assessment. A Bellevue business was assessed back taxes, penalties, and interest after an auditor determined that the business’s independent contractors should have been classified as employees. Mercer Law represented the business on appeal and obtained a 40 percent reduction in the assessed amount.
- Successful ESD audit representation. A “no change audit” is where a business is audited and the auditor determines that the business was operating properly and that there is no need to assess back taxes, penalties or interest. Mercer Law represented a flooring contractor and established to the auditor’s satisfaction that the company’s subcontractor flooring installers were properly classified as independent contractors. The auditor issued a no-change audit.
- Successful ESD audit representation. The client was a Seattle company with national operations that hired instructors as independent contractors. Mercer Law represented the company in an audit, and obtained a determination by the auditor that the instructors were properly classified as independent contractors. The company ended up paying minimal amounts in back taxes, and paid no penalties or interest.
- 44 percent reduction in L&I tax assessment. A Seattle general contractor was assessed back taxes, penalties, and interest after an auditor determined that subcontractors and casual laborers failed to qualify as independent contractors. Mercer Law represented the contractor on appeal and obtained reversal of portions of the auditor’s decision, and a 44 percent reduction in the assessed amount.
Please note that Mercer Law PLLC cannot guarantee a given result or outcome for any case. The results for each case cited above should not be relied upon as a guarantee or promise of similar results. Each case, therefore, must be evaluated by the relevant facts, circumstances, and law with its own individual outcome.
For more information on how to comply with independent contractor obligations, consult with an experienced independent contractor law attorney, and check out 1099 Review™, a Mercer Law PLLC product, and Washington’s State’s first online independent contractor risk assessment tool and resource center.
