According to NBAA, IRS officials recently indicated the agency plans to intensify audits of companies for improperly classifying employees as independent contractors, which could include contract pilots frequently used by corporate flight departments. The independent contractor issue is so concerning and complicated that NBAA issued a Best Practices for Utilizing Independent Contractors guide for business aircraft operators in 2011.
Since business aviation operators are increasingly turning to independent contractors to contain costs and do more while conserving resources, NBAA has published a guide aimed at helping flight operators to properly classify these workers as either employees or independent contractors. “If a worker is classified incorrectly, there are significant tax, liability and legal risks for the employer,” NBAA said.
Some flight departments employ independent contractors as a way to keep their costs in check. However, with the IRS taking a new interest in the “independent contractor classification,” companies might want to take a closer look at this plan and its tax and liability implications.