From the TahoeDailyTribune.com — “An age-old issue which seems to never go away. In an effort to bring “employers” out of the shadows, however, IRS has a deal for you.
It’s called the Voluntary Classification Settlement Program (VCSP) and may be just what the doctor ordered for your business despite the fact that the Treasury Inspector General for Tax Administration (TIGTA) isn’t thrilled about how IRS is managing the deals.
The VCSP allows businesses and tax exempt organizations which presently treat their workers as nonemployees or independent contractors to prospectively reclassify workers as employees in return for promising not to audit prior years’ treatment which, in the egregious cases, could subject employers to prior years’ payroll taxes on these workers (not to mention penalties and interest).
Taxpayers must meet a few requirements to enable their participation in the program:
They must have consistently treated the workers in the past as nonemployees.
They must have filed all required 1099 forms for the workers for the previous three years.
They must not be currently under audit for employment taxes by IRS.
They must not be currently under audit by the Department of Labor or any state agency regarding the classification of these workers.
Employers accepted into the program are required to pay an amount which equals just over 1 percent of the wages paid to the reclassified workers for the past year….”
Read the full story at Revenooer Rants: The employee vs. independent contractor game