IRS New Voluntary Worker Classification Settlement Program
There has been a lot of buzz about the IRS’s New Voluntary Worker Classification Settlement Program (also known by the acronym VSCP). It’s on IRS.gov, going out in newsletters and major media publications are covering it in stories. What I am not seeing covered yet is how this new settlement program as a disguised as amnesty for small businesses – like a payroll tax “fresh start” settlement program of sorts for misclassified workers.
As an expert in payroll tax problems and resolution, I see the IRS’ recent announcements about their new payroll tax relief program as a settlement vehicle for business owners who are, or may be, classifying their workers as independent contractors vs. W-2 employees.
Business owners have an opportunity to reclassify contractors as employees and make a very small payment to cover past payroll taxes and settle. This is significant because if the IRS audits you, they automatically go back 3 years, and the monetary hit is generally 40% of your 1099 gross amounts. Under this new “amnesty” program, the IRS will not only audit you for just the current year, your tax bill may be reduced from 40% (of 1099s) to anywhere between 33% and to as low as an unimaginable 1%!!!”
The IRS’ new Voluntary Worker Classification Settlement Program is making more business owners make hard decisions about who really is an employee vs. who isn’t. Small businesses need to be honest about employees versus contractors, but also remember that the IRS is the most brutal collection agency on the planet. We need to pay taxes, but small businesses need smart representation too.
Business owners who are confused about the difference between an employee and an independent contractor need to remember that they can forward to the IRS with expert representation or they could end up paying additional payroll taxes unnecessarily. I highly recommend consulting with a Certified Tax Resolution Specialist to answer your questions about worker classification, delinquent payroll taxes, Voluntary Classification Settlement Program and other IRS problems. If you approach this strategically, you may be able to enjoy the same great results compared with the IRS’s offer in compromise program.
We are happy to speak to any business owners about their payroll tax questions at 888-851-5894.
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Tags: IRS Voluntary Classification Settlement Program, Payroll Tax Problems, Payroll Taxes
