Florida Gulf Coast University is required to pay back taxes amounting to roughly $86,850 due to their misclassification of more than 50 workers, which they identified as independent contractors.
According to the IRS or Internal Revenue Service, workers who are required to follow certain instructions like following a specific work schedule should be considered as employees and not as independent contractors. The Internal Revenue Service gave examples for such scenarios, which include hired musicians and referees in basketball games.
Susan Evans, spokeswoman for FGCU said that it was an honest mistake on their part because they did not think that a musician or a referee hired for just one occasion should be classified as employee. The university hired a musician before and paid one time to play during a commencement ceremony. They also classified hired referees for a basketball game as independent contractors and not employees.
Because of the misclassification, the Internal Revenue Service audited the school for its 2010 filings and found out that the school owes about $31,725 in Social Security and Medicare tax.
FGCU agreed to correct their own filings for tax years 2011, 2012, and 2013 after the IRS informed them. The self-correction resulted to additional back taxes amounting to more than $50,000. The IRS did not impose additional penalties and waived the interest as long as the university pays the employer share that it should have been paying. The correction will benefit employees since the university will now pay for the taxes, which include Social Security and Medicare on their behalf.