Voluntary Classification Settlement Program (VCSP)

Do you currently classify some of your workers as independent contractors but in reality they are employees?  Well, the IRS has recently developed a Voluntary Classification Settlement Program (VCSP) that allows taxpayers to voluntarily reclassify workers as employees for federal employment tax purposes.
According to the instructions for the VCSP application, “the VCSP is an optional program that provides taxpayers not under examination with an opportunity to voluntarily reclassify their workers as employees for future tax periods, with limited federal employment tax liability for past non-employee treatment.”
Taxpayers that apply and are accepted into the VCSP will treat the workers as employees in the future, and in exchange will only have to pay ten (10) percent of the employment tax liability for the most recent tax year, will not be liable for any interest and penalties on the amount owed, and will not be subject to an employment tax audit with respect to worker classification under the VCSP for prior years.
Overall, if worker classification is an area that you have been concerned with in your business, the VCSP gives you a chance to fix the situation with limited liability.  Of course, there are numerous eligibility requirements, but if you are interested in participating in the Voluntary Classification Settlement Program, let us know and we can go through the requirements with you and help you file the proper forms.
/posted by Travis Collins, CPA