Started in 2011 and ending on July 30 of this year, the worker misclassification forgiveness program run by the Internal Revenue Service (IRS) just relaxed its entry rules.
The program is designed to allow employers to fess up to misclassifying employees as independent contractors and also failing to issue 1099s for them. Accepted employers can then settle everything by paying just 10 percent of all employment taxes that would have been due had it not been for the misclassification.
So far, nearly 1,000 employers have applied for the Voluntary Classification Settlement Program (VCSP), but the relaxed rules may lure others. Under the new rules, there will no longer be a six-year statute of limitations for employers, and employers undergoing an IRS audit may apply.
To be eligible for VCSP, employers must:
- Currently be considering the workers as non-employees
- Have consistently treated the workers as non-employees in the past
- Not be under audit regarding payroll tax issues
- Not be under a Department of Labor or state agency audit regarding the classification of the workers, or challenging the worker classification in court.
Employers can find more information on the IRS website.