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Can I hire employees as independent contractors to save money on taxes in Oklahoma? What are the requirements?

Based on the documents provided, it is not recommended to hire employees as independent contractors to save money on taxes in Oklahoma. The state has strict regulations and penalties for misclassifying employees as independent contractors.

Requirements for Contractors

According to [1.3], all contractors in Oklahoma must have current employer identification numbers issued by the Oklahoma Tax Commission, the Oklahoma Employment Security Commission, the Internal Revenue Service, and the Social Security Administration. Additionally, they must have a workers’ compensation policy in compliance with the provisions of Title 85 of the Oklahoma Statutes.

Penalties for Misclassification

Misclassifying employees as independent contractors can result in fines and penalties. According to [1.2], any contractor who intentionally misclassifies individuals as independent contractors rather than employees for the purpose of affecting procedures and payments relating to withholding and social security, unemployment tax or workers’ compensation premiums shall be fined by the Oklahoma Tax Commission an amount not to exceed ten percent (10%) of the contractor’s total bid, which shall be in addition to any other penalties allowed by law.

Furthermore, [2.1] states that a contractor who intentionally misclassifies employees as independent contractors with intent to affect procedures and payments related to withholding and social security, unemployment tax or worker’s compensation shall be fined in an amount not to exceed 10% of the contractor’s total bid.

Conclusion

In summary, it is not recommended to hire employees as independent contractors to save money on taxes in Oklahoma. The state has strict regulations and penalties for misclassifying employees as independent contractors. All contractors must have current employer identification numbers issued by the Oklahoma Tax Commission, the Oklahoma Employment Security Commission, the Internal Revenue Service, and the Social Security Administration. Misclassifying employees can result in fines and penalties.

Source(s):
Jurisdiction

Oklahoma