• Are Your Independent Contractors Misclassified? IRS Offers Employers a “Fresh Start” to Reclassify Workers
  • November 2, 2011 | Authors: Sean H. Cook; Rebecca S. Davies; Terry O. Lang
  • Law Firm: Butzel Long - Detroit Office
  • The Internal Revenue Service (IRS) and the Department of Labor (DOL) have launched a new program to permit employers that have classified workers as independent contractors to switch the classification to employee through a low-cost settlement program. The IRS will allow employers to change past worker classification issues by making a minimal payment and avoid substantial payroll tax obligations for prior years that would be assessed by the IRS under an audit. The IRS hails this as a “Voluntary Classification Settlement Program (VCSP) [that] is designed to increase tax compliance and reduce burden for employers by providing greater certainty for employers, workers and the government.” This program reinforces the belief that the IRS would like all workers to be treated as employees to improve tax collection and reduce deductions claimed by schedule C workers.