Tax Consulting & Compliance; Specialties. Sansiveri provides a tailor made service approach that satisfies the unique and individual needs of your industry. Program to reclassify independent. Independent Contractor Compliance and Misclassification News Update (December 2012) IRS Announces New Voluntary Worker Classification Settlement Program. Voluntary Classification Settlement Program. An independent contractor. Delinquent Filer Voluntary Compliance Program; FAQs; Retirement. In determining whether the person providing service is an employee or an independent contractor. New IRS Classification Settlement Program Provides Tax Relief for Independent Contractor. IRS) has announced a new voluntary compliance program. IRS Launches Voluntary Compliance Settlement Program for. IRS VCP Voluntary Compliance Program Independent Contractors IRSSeptember 2. Updated October 3, 2. On September 2. 1, 2. Internal Revenue Service (IRS) unveiled a Voluntary Compliance Program (VCP) that offers relief for businesses that may have misclassified workers as independent contractors, rather than employees, and so are potentially liable for significant additional taxes, penalties, and interest. Background. Prior to announcement of the VCP, the IRS and the Department of Labor (DOL) stepped up joint enforcement efforts by signing a new memorandum of understanding to strengthen information sharing on enforcement actions aimed at misclassified workers. The IRS retains discretion over whether to accept an employer into the VCP. VCP Consequences. Under the VCP, eligible taxpayers will generally be entitled to settle their employment tax liability under a single- year assessment of employment taxes of 1. Internal Revenue Code Section 3. Do you have any “independent contractors”? The IRS is looking for revenue. Independent Contractor Calamities. In order to implement the EBSA policy of promoting voluntary compliance with ERISA, the following program. IRS’s Voluntary Classification Settlement Program: Correcting Worker. Observation: The IRS has indicated that an employer that wants to begin treating a class or classes of workers as employees for the fourth quarter of 2. Form 8. 95. 2 as soon as possible. Additional VCP Consequences & Limitations. In addition to filing Form 8. IRS extending the statute of limitations from three years to six years for the first three calendar years beginning after the agreement is signed. At this time, there does not appear to be any special relief for retirement and other benefit plans, so employers need to review the impact of any filing under the program on the benefit plans they offer. Specifically for retirement plans, corrective contributions on behalf of misclassified workers and retesting of the plan's coverage (required by regulation) for the years that workers were misclassified may be required. Insured benefits also should be discussed with an insurance agent. Observation for Foreign Investors: For a foreign business which has classified U. S. It does not constitute accounting, tax, or legal advice; nor is it intended to convey a thorough treatment of the subject matter. IRS's Voluntary Classification Settlement Program: Correcting Worker Misclassification. October 1. 1, 2. 01. Dana Ingols, Manager – Tax Services. It can be difficult to determine whether a worker is performing services as an employee or independent contractor, but that distinction has a significant affect on a company’s employment tax liability. On September 2. 1, 2. Internal Revenue Service (IRS) announced a new program that will allow businesses to voluntarily reclassify certain workers. This Voluntary Classification Settlement Program (VCSP) offers relief for businesses that may have misclassified workers in the past and may therefore be liable for significant additional taxes, penalties, and interest. Background. Recently, the IRS has focused on employment taxes with a particular emphasis on worker classification issues. The IRS and the Department of Labor (DOL) entered into a joint initiative to improve compliance with both IRS and DOL laws and regulations. The two entities will share information and collaborate to help reduce the incidence of misclassification of employees as independent contractors, and to improve compliance with labor and tax laws. The Voluntary Classification Settlement Program (VCSP)Under the VCSP, eligible employers can obtain relief from federal payroll taxes, penalties, and interest they may owe for the past, if they prospectively treat workers as employees. The VCSP is available to businesses (including exempt organizations) that have been uncertain whether to treat their workers or a class or group of workers as employees or independent contractors, and now want to correctly treat these workers as employees. To be eligible for the VCSP, an employer must have: consistently treated the subject workers as non- employees in the pastfiled all required Forms 1. IRS, the Department of Labor, or a state agency concerning the classification of these workers. If an eligible employer agrees to prospectively treat a class of workers as employees, its employment tax liability will be only 1. Section 3. 50. 9 of the Internal Revenue Code (these rates include federal income tax withholding and employer/employee social security and Medicare tax). Therefore, the VCSP generally allows an employer to settle employment tax liabilities for misclassified workers for slightly more than one percent of the total compensation paid to the workers. No interest or penalties will be due, and the employers will not be audited on payroll taxes related to these workers for prior years. Applying for the Program. To apply for the VCSP, an employer must submit an application using IRS Form 8. Application for Voluntary Classification Settlement Program, at least 6. Additional Program Requirements. Under the program, an employer does not have to reclassify all of its workers who are currently treated as non- employees. However, once an employer chooses to reclassify certain of its workers as employees, all workers in the same class (those who perform the same or similar services) must be reclassified as employees and must continue to be treated as employees in the future. In addition to filing Form 8. IRS extending the usual three year statute of limitations to six years for the first three calendar years after the agreement is signed. If you have concerns about the current classification of your workers or if you are interested in participating in the Voluntary Classification Settlement Program, please contact Dana Ingols at Frank, Rimerman + Co.
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