Tax Alert: Worker classification settlement program

The IRS has expanded its Voluntary Classification Settlement Program (“VCSP”) established in September 2011 to allow more businesses to qualify for this low-cost option to resolve instances of questionable qualification of workers as independent contractors instead of as employees. (We discussed the VCSP in this prior alert.) The VCSP allows employers that meet certain criteria to voluntarily reclassify workers from independent contractors to employees and pay only a fraction of their federal employment tax liability for past nonemployee treatment while avoiding penalties, interest payments and audits.