Subadhra Sriram's Blog

IRS Fails Own Audit

Everyone knows how tough it is to be compliant with the maze of independent contractor law now in place.  And if the IRS didn’t already appreciate this complexity, maybe they will now—a recent internal IRS audit found massive non-compliance in the IRS' own offices

Think about your precious tax returns being examined by felons — or worse, your sensitive financial information sold or abused. It’s not a pretty picture. Okay, I admit it may not be as bad as it sounds.

However, the IRS has admitted that its Employment Operations offices did not complete all of the required pre-screening steps before their employees reported for work. In 2010, taxpayers filed more than 230 million tax returns that contained sensitive financial information. When inspecting its pre-employment screening processes, the IRS found that four of nine Employment Operations branch offices did not have sufficient documentation to prove all of the required pre-screening steps were taken for 77 percent of the cases reviewed (507 of 662 cases).

So what is the penalty that the IRS pays? Will the responsible IRS officials’ pay be garnisheed? Or maybe their property will be seized. Not quite. What really happened was that the agency’s Office of Inspections and Evaluations examined the agency’s employee pre-screening process and made recommendations. And the agency’s top brass accepted the recommendations and said it would go electronic with its background checks. No disciplinary action was indicated.

For those in contingent workforce management, keeping up with developments in background checks can be a challenge. But unlike the IRS, not conducting the appropriate screenings can land both staffing firms and their clients in legal hell.

The cost of background checks has often been an obstacle for staffing firms, particularly those that fill positions with high turnover. So learn from the IRS’s predicament. Get those pre-screening tests in place and share the costs with your supplier. The expense will buy you supplier goodwill and save you from bringing wrong contingent workers on board. Vendors could profit, too, even if they pay for the tests. They save their clients from embarrassment, which in turn could generate new business.

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