Small business owners might want to spend a little more time checking over their tax returns before submitting this year, because Uncle Sam is breaking out the magnifying glass on all worker classification status entries.

FBN’s Liz MacDonald reports that the IRS is cracking down on businesses that it says are misclassifying on-the-job employees as independent contractors. According to the IRS, it’s looking to stop businesses from classifying workers as contractors rather than on-the-job employees to skirt minimum wage laws and avoid paying payroll taxes, Social Security, Medicare and unemployment insurance.

MacDonald reports that the IRS has audited or is in the process of auditing 6,000 companies in the crackdown mission already; the Department of Labor and IRS are receiving information from 14 states that have committed to helping find businesses guilty of misclassifying workers.

The IRS estimates that 30% of workers are misclassified, MacDonald reports, and President Obama has said that the crackdown will lead to an additional $7 billion in revenue coming in to the government. Penalties for misclassification may be as high as 100% on the payroll taxes owed to the IRS.

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