Last chance - Voluntary Worker Classification Settlement
Employee misclassification is a major problem in the United States nowadays. A Government Accountability Office report in 2009 stated that employee misclassification in 2006 cost the US over $2.72 billion dollars in tax revenue. In all fairness, many businesses are not misclassifying their workers on purpose. The 20 question test put out by the IRS to determine the classification is very vague and open to interpretation. Many businesses may classify their workers as independent consultants because of their line of work or because the workers themselves want to be classified that way. In order to rectify this situation with the least amount of financial difficulty the IRS is giving businesses one last chance to correctly classify their workers by allowing them to participate in the Voluntary Worker Classification Settlement Program. This program allows businesses to pay only 1% of wages paid instead of the whole liability which could add up to 25%-30%.
In order to participate in this voluntary worker classification settlement the businesses needed to have filed the correct 1099 forms for the past three years and the workers cannot currently be under an investigation audit.
The IRS wanted to make it very clear that they will be auditing companies very strictly from now on once this program ends. They believe that most large corporations won't have this issue because their structure enables them to properly engage their contractors. They believe that most of the companies which will take part in this voluntary program will be small companies such as IT firms and home contractors.
The easiest and most cost effective way to avoid employee misclassification is to use iamindependent.com's services. We eliminate all classification risk because the contractors are classified as W-2 employees.
If you would like to know more about this topic or how you can get more involved in the program, feel free to contact iamindependent.com.