Quote Quoting budwad
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The IRS deals with their regulations and what taxes have to be paid to them. They don't deal with UE and workman's comp issues. That is up to the states.

Now you have heard it.
I have never heard of a state not cooperating with a federal decision on classification. In fact, once the employer is required by the IRS to issue proper payroll, with withholding and a W2 at the end of the year, the employer has no choice but to treat the employee as an employee for state purposes as well.

The same would apply if the state was the one who determined that someone was misclassified. The feds would certainly have no reason to not cooperate with that as well.