Voluntary Classification Settlement Program (VCSP)
The Internal Revenue Service has recently started a program enabling employers to reclassify their workers from independent consultants (1099) to employees. The purpose of this program is to provide partial relief to the employers from previous federal tax obligations. It is still unclear if the state or local tax agencies will participate in this program.
In order to take advantage of this program the following stipulations must be met:
- The employees were consistently treated as consultants(1099)
- You filed all of the correct paperwork for the consultants for the past 3 years.
- You are not currently being audited.
If you are interested in participating in this program you can file form 8952.
Any companies who are accepted into the program will classify their 1099 employees as W-2 employees. They will also have to pay a portion of the tax liability owed. They will not be open to any co-employment audit for prior years and will be protected under a special six ear statute of limitations.
However, if you do not want to convert your independent consultants to W-2 employees iamindependent.com offers co-employment risk protection.
Contact us for more information.