IRS Voluntary Worker Classification Settlement Program: Apply using IRS Form 8952 - John R. Dundon II, Enrolled Agent
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IRS Voluntary Worker Classification Settlement Program: Apply using IRS Form 8952

IRS Voluntary Worker Classification Settlement Program: Apply using IRS Form 8952

The Internal Revenue Service launched a new program that will enable many employers to voluntarily reclassifying their workers in an effort to resolve past worker classification issues. It is called the Voluntary Classification Settlement Program (VCSP).

This new program will allow employers the opportunity to make a minimal payment covering past payroll tax obligations rather than waiting for an IRS audit and was designed to increase tax compliance and reduce burden for employers by in theory providing greater certainty. Eligible employers can obtain relief from federal payroll taxes they may have owed for the past if they prospectively treat workers as employees. The VCSP is available to many businesses, tax-exempt organizations and government entities that currently erroneously treat their workers or a class or group of workers as non-employees or independent contractors, and now want to correctly treat these workers as employees.

Employers can apply for the program by filing Form 8952, at least 60 days before they want to begin treating the workers as employees. To be eligible applicants must:

1. Consistently have treated the workers in the past as non-employees,

2. Have filed all required Forms 1099 for the workers for the previous three years

3. Not currently be under audit by the IRS, the Department of Labor or a state agency concerning the classification of these workers

Employers accepted into the program will:

1. pay an amount effectively equaling just over one percent of the wages paid to the reclassified workers for the past year.

2. be relieved of interest or penalties,

3. will not be audited on payroll taxes related to these workers for prior years.

Participating employers will, for the first three years under the program, be subject to a special six-year statute of limitations, rather than the usual three years that generally applies to payroll taxes. For more information check out the Employment Tax pages of IRS.gov, and in Announcement 2011-64



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