The VCSP program is available to businesses that currently erroneously treat their workers as non-employees or independent contractors, and now want to correctly treat these workers as employees.
To be eligible, an applicant must:
- Consistently have treated the workers in the past as nonemployees,
- Have filed all required Forms 1099 for the workers for the previous three years
- Not currently be under audit by the IRS, the Department of Labor or a state agency concerning the classification of these workers
Interested employers can apply for the program by filing Form 8952, Application for Voluntary Classification Settlement Program, at least 60 days before they want to begin treating the workers as employees.
Employers accepted into the program will:
- Pay an amount effectively equaling just over one percent of the wages paid to the reclassified workers for the past year.
- No interest or penalties will be due, and
- The employers will not be audited on payroll taxes related to these workers for prior years.
- Participating employers will, for the first three years under the program, be subject to a special six-year statute of limitations, rather than the usual three years that generally applies to payroll taxes.
For full detail please visit the IRS website.