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The IRS has announced a new program that allows eligible employers to voluntarily reclassify workers as employees, rather than independent contractors, for future tax periods. In exchange, the employers' liability for past payroll tax obligations will be reduced to only a minimal payment.
The new Voluntary Classification Settlement Program (VCSP) is designed to increase tax compliance and reduce the burden for employers by providing greater certainty for employers, workers and the government. Under the program, eligible employers can obtain substantial relief from federal payroll taxes they may have owed for the past, if they prospectively treat workers as employees. The VCSP is available to many businesses, tax-exempt organizations and government entities that currently erroneously treat their workers or a class or group of workers as nonemployees 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,
� Not currently be under audit by 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.
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October 22 and Sunday, October 23, located at the Merrick train station and along Merrick Avenue. We invite you to come down and enjoy the festivities. There will be rides, games, crafts, and lots of food. Don't forget to stop by our booth and say hello. We hope to see you there!
C&L Tax and Accounting Services LLP is a boutique CPA firm that specializes in meeting the tax and accounting needs of individuals and small businesses. Our experienced tax and accounting professionals offer clients insightful and strategic tax planning and compliance services that maximize savings year after year.