Thursday, January 12, 2012

Voluntary Classification Settlement Program (VCSP)

This program enables employers to voluntarily reclassify as employees workers misclassified as subcontractors for federal employment tax purposes and take advantage of audit production and a reduced penalty framework. The VCSP is open to taxpayers currently treating their workers as independent contractors or other nonemployees and that want to prospectively treat the workers as employees. Other requirements also must be satisfied such as 1099 forms must have been sent. The reduced penalty framework absolves the employer from the employee’s portion of the tax and assesses a 10% penalty on the unremitted employer’s portion. In round numbers, $8500 may be due on $100,000 of wages misclassified as contractor payments. It is a great deal! Apply with form 8952.,,id=246203,00.html

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