a tax accountant or lawyer for the USA will tell you that the IRS is cracking down on consultants in the programming area who do consulting work under corporations as they want to attempt to get full taxes..main reason why recruiting firms are so prevalent in the USA.
Check with your local accountant/lawyer as you may be in a state that has not been targeted by the IRS. IL is one that is targeted whereas IN currently is not targeted for example..
I don't understand this at all. Are you saying that consultancies cannot form an LLC or that consultancies that do are being scrutinised more by the IRS at this time?
He's saying that any consultancy, however structured, will be disregarded if its consultants perform too much of their work for a single client over the course of its tax year.
The IRS' reasoning is that the consultancy is just a way for the client to avoid paying payroll taxes and other taxes incident to the employee relationship.
The result to the client: a deficiency for not paying those taxes. The result to the consultancy: a deficiency for taking now-inapplicable deductions or for paying the wrong type of taxes. Yes, its silly, but that's the way the tax code works...
Check with your local accountant/lawyer as you may be in a state that has not been targeted by the IRS. IL is one that is targeted whereas IN currently is not targeted for example..