Made an error classifying independent contractors as employees?
Voluntary Classification Settlement Program (VCSP) Update!
Think you may have made an error classifying your workers as an independent contractor
when they should have been an employee? Be sure to understand the rules when classifying your workers as the penalties for misclassifying them can be large. One penalty plus interest can wipe out two to three years the small business thinks they are saving by misclassifying its workers.
Earlier this year, the IRS launched the VCSP which allows employers to reclassify their workers who were previously labeled “independent contractors” in error as employees for future tax periods.
IRS Update:
1) The VCSP application (or rejection of) will not automatically trigger initiation of a Federal audit.
2) The VCSP concerns future years only. A taxpayer that signs a VCSP closing agreement is not admitting liability or wrongdoing for past periods.
3) The VCSP filing of Forms 1099 Requirement states “a taxpayer will be eligible for the VCSP if it files the required Forms 1099 within 6 months of their due date (including extensions).”
4) The VCSP permits taxpayers to reclassify some or all of their workers; However, once a taxpayer chooses to reclassify its workers as employees, all workers in the same class must be treated as employees for tax purposes.
5) The IRS will not share information about VCSP applicants with the Department of Labor or with States.
For a free review of your employee classification contact us today!
