The Internal Revenue Service (IRS) has released details regarding its new Voluntary Classification Settlement Program (VCSP) in Announcement 2011-64.The VCSP provides taxpayers a new opportunity to reclassify as employees workers that have been incorrectly treated as independent contractors for employment tax purposes, with partial relief from back federal employment taxes. Unlike the current Classification Settlement Program (CSP), the VCSP does not require that a company currently be under audit by the IRS.
Overview
The VCSP supplements the IRS's existing CSP, expanding eligibility to voluntarily correct misclassified workers. The current CSP is available to resolve federal employment tax issues related to worker misclassification if certain criteria are met. The CSP permits the prospective reclassification of workers as employees, with reduced federal employment tax liabilities for past nonemployee treatment. The CSP allows business and tax examiners to resolve the worker classification issues as early in the administrative process as possible, thereby reducing taxpayer burden and providing efficiencies for both the taxpayer and the government.
Please see full publication below for more information.