That is completely untrue. What they don't like are employers trying to avoid employment taxes by classifying employees as IC's. IC's are a VERY valid form of association in MANY industries, even dentistry with the right set of circumstances.
But have they ever done anything about it?
Sure they have, and they continue to look for those abuses where employers try to evade employment taxes.
I work part time in multiple offices and enjoy being an independent contractor. Am I in the wrong?
The easy answer is it depends. You can arrange your set of circumstances. I mention above to create a defensible case IF challenged and generally speaking, you won't be challenged. Your general contractors (or employers if they lose) will be challenged as they're the ones NOT paying the employment taxes when maybe they should.
Can you name a case where the IRS did anything about it and what were the consequences?
I can't name names due to confidentiality issues; however, I recall back in the late 80's when I had a stock broker tax client where all the brokers of this small brokerage firm were being treated as IC's. The IRS audited the brokerage for several years for this very issue and the brokers had to submit returns to prove that they were reporting their income correctly and paying the SE tax while the brokerage got SLAMMED for hundreds of thousands of back payroll taxes, penalties, and interest. Ultimately, they went belly up.
We've had similar stories on a much smaller scale where IRS re-classed IC's as EE's and made the client pay back payroll taxes, interest, and penalties. I have yet to see a case where the IC themselves got "harmed".
The bottom line is in just about EVERY audit of a business. One issue the agent MUST take a look at is the EE vs. IC issue to ensure employers aren't trying to evade employment taxes.
This first appeared on Dentaltown.