The IRS is getting the message and doing something about it. As part of a National Research Project, the IRS will conduct 6,000 planned audits over the next three years. The audits will focus on backup withholding for 1099s, fringe benefits and employee independent status. You should know that the distinction between employee and independent contractor is not established by the employer and the individual, it is determined by the IRS. W&C readers, be careful out there.