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In Massachusetts, the rules about who can be classified as an independent contractor are part of the Wage Act. Any violation of the Wage Act, including an improper classification, will result in triple damages and payment of the plaintiff's attorneys' fees.

Answer: Independent contractors report their income on Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship). Also file Schedule SE (Form 1040), Self-Employment Tax if net earnings from self-employment are $400 or more.

Federal law violation fines This department hires auditors to identify and penalize independent contractor misclassification. At a minimum, consequences include paying back wages, but you could also face criminal penalties, including: Payment penalties of up $1,000 per misclassified employee. Jail time of up to a year.

How is Form 1099-NEC completed? Obtain a copy of Form 1099-NEC from the IRS or a payroll service provider. Provide the name and address of both the payer and the recipient. Calculate the total compensation paid. Note the amount of taxes withheld if backup withholding applied.

Under Massachusetts General Law Chapter 149, Section 27C, employers who willfully misclassify workers are guilty of a criminal offense. A first-time offense carries up to $25,000 in fines and a year in jail. Subsequent offenses carry up to $50,000 in fines and two years in prison.

Suppose an employer misclassifies an individual as an independent contractor. In that case, they will not have the required Form I-9 on file and could be subject to penalties that include civil fines, criminal penalties, debarment from government contracts, and court orders.