Austin, TX (PRWEB) May 16, 2014
The IRS has announced an expanded program to allow eligible employers to reclassify workers as employees — rather than independent contractors — for future tax periods without being penalized for previous misclassification.
The program was originally created in 2011 to encourage tax compliance among businesses while reducing existing tax burdens on employees that have misclassified workers. As part of the latest push to encourage tax compliance, the IRS is hosted a webinar entitled “Payments to Independent Contractors” on Tuesday, which is available for streaming on IRS.gov.
“VCSP is a great option for eligible businesses to properly classify workers,” said Mishkin Santa, Director of Tax Resolution at Five Stone Tax Advisers. “This particular Voluntary Disclosure Program is one of the better settlement options the IRS has produced. It addresses the key components of liability in a manner that is truly equitable for the business while simultaneously eliminating audit risk for the past discretions of the particular issue. The alternative route of not properly classifying workers carries substantial audit risk which in turn may result in a heavy tax burden, draconian penalties and piercing of the corporate veil to the individual business owner.”
Santa’s firm, Five Stone Tax Advisers, specializes in IRS tax representation. The firm works with individuals and small/medium business owners to resolve various and complex cases, such as this Voluntary Reclassification Program and other programs offered by the IRS.
For businesses that qualify and reclassify before June 30, the IRS will forgive any back taxes owed for retroactive misclassification of workers.
To be eligible for the program, according to IRS.gov, 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
To find out more about reclassifying your business to avoid back tax accrual, contact Five Stone Tax Advisers for a free consultation.