The independent contractor files a claim for workers' compensation. The independent contractor files a claim for disability benefits. The IRS finds out the independent contractor hasn't been paying taxes.
Auditors can go back three years.
Additional fines can be imposed by the IRS depending on the situation. Failure to file quarterly return 25 percent of the unpaid tax liability. Failure to pay taxes 0.5 percent of the unpaid tax liability for each month up to 25 percent. There are also significant fines if the IRS believes you committed fraud or were negligent, plus fines for many other situations. Contact the IRS if you want further information.