Why do you need a got1099 report?
A) Avoid a CSLB Stop Order and Potential Criminal Exposure.
CSLB routinely conducts random inspections of construction sites looking for unlicensed workers. In 2019/2020, CSLB’s Statewide Investigative Fraud Team (SWIFT) responded to 855 leads, conducted 52 sting operations and 216 sweep days, which led to the issuance of 260 Notices to Appear in criminal court. SWIFT issued 239 stop orders to employers without workers’ compensation insurance and issued 1,494 advisory notices. In total, 368 cases resulted in administrative action and 634 cases were referred for criminal prosecution.
California Department of Consumer Affairs had 34,154 Convictions and Arrests Cases and a total of 116,234 new Enforcement Cases against
B) Verify your subcontractor has a legitimate business.
We will verify your subcontractor’s business information, which includes and EIN verification, tax license review, business location, and other credentials.
C) Minimize the risk California EDD will reclassify your independent contractor worker as an employee.
California law changed in 2020 with AB5. California has strict requirements when you can classify a worker as an independent contractor versus an employee. First, any unlicensed workers performing any work in connection with construction work will be required to have a license or may be reclassified as your employee. EDD may audit your company and assess payroll taxes, penalties, and interest for all payments you made to your workers for the prior 3 years. Although the typical audit period is 3 years, EDD may extend the audit period to 8 years under certain circumstances.
The audit rate for misclassified independent contractors is up. Various government agencies are investigating companies that hire workers who may not be legitimate independent contractors.