New IRS ruling gives businesses a break. Need to re classify a worker? Read this straight from the IRS guidelines.
New IRS rule on worker classification If you had employees classified as contract workers here is an easy way to get them back on your payroll and avoid an audit. The above link gives you the whole code, but the meat of the article says:
“The new Voluntary Classification Settlement Program (VCSP) is designed to increase tax compliance and lower the burden for employers by providing greater certainty for employers, workers and the government. Under the program, eligible employers can obtain substantial 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 nonemployees or independent contractors, and now want to correctly treat these workers as employees.
To be eligible, an applicant must:
- Consistently have treated the workers in the past as nonemployees,
- Have filed all required Forms 1099 for the workers for the previous three years
- Not currently be under audit by the IRS
- Not currently be under audit by the Department of Labor or a state agency concerning the classification of these workers
Interested employers can apply for the program by filing Form 8952, Application for Voluntary Classification Settlement Program, at least 60 days before they want to begin treating the workers as employees.”
There are some penalties, but not interest or fines. Cost is approx 1% of total wages for 1 year. As always, I recommend consulting your CPA tax professional on this mattVSCPer before taking any action.