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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

• rprasad 16y ago
  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...