Tuesday December
- 2011
- 13
New Settlement Offer For Misclassified Workers
by Lee Reams in Small Business
The IRS has launched a new Voluntary Classification Settlement Program (VCSP) for employees who have been misclassified as independent contractors (or as other nonemployees). The VCSP is available to taxpayers who are currently treating their workers (or a class or group of workers) as independent contractors or other nonemployees and want to prospectively treat the workers as employees. To be eligible, a taxpayer: (a) must have consistently treated the workers as nonemployees; (b) must have filed all required Forms 1099 for the workers for the previous three years; and (c) cannot currently be under audit by the IRS, or currently under audit concerning the classification of the workers by the Department of Labor or by a state government agency. A taxpayer who applies for and is accepted into the VCSP will agree to prospectively treat the class of workers as employees for future tax periods and in exchange:
If you have questions about this program or need assistance in applying for it, please give one of our professionals a call.
1) Will pay 10% of the employment tax liability that may have been due on compensation paid to the workers for the most recent tax year, determined under reduced rates;
2) Will not be liable for any interest and penalties on the liability;
3) Will not be subject to an employment tax audit for the worker classification of the workers for prior years; and
4) Will agree to extend the period of limitations on assessment of employment taxes for three years for the first, second, and third calendar years beginning after the date on which the taxpayer has agreed under the VCSP closing agreement to begin treating the workers as employees.
2) Will not be liable for any interest and penalties on the liability;
3) Will not be subject to an employment tax audit for the worker classification of the workers for prior years; and
4) Will agree to extend the period of limitations on assessment of employment taxes for three years for the first, second, and third calendar years beginning after the date on which the taxpayer has agreed under the VCSP closing agreement to begin treating the workers as employees.
If you have questions about this program or need assistance in applying for it, please give one of our professionals a call.
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