As an employer, the IRS may raise the issue of whether or not certain Independent Contractors you use in your business are really employees.
If the IRS concludes that such individuals are really employees, they can assess additional employment taxes and related Penalties and Interest. The amount could be substantial.
The IRS has developed a program that may benefit your business by reducing your potential tax, penalty, and interest exposure relating to independent contractors. The IRS Voluntary Classification Settlement Program (VCSP) allows eligible taxpayers to voluntarily reclassify their workers for federal employment tax purposes. Taxpayers that take advantage of the program can reduce their exposure to federal employment tax liability for past nonemployee treatment.
To participate in the program, a taxpayer must meet certain eligibility requirements, apply to participate in VCSP, and enter into a Closing Agreement with the IRS.
To be eligible under the VCSP, a taxpayer must meet certain requirements, including having consistently treated the workers as nonemployees and having filed all required Forms 1099, consistent with the nonemployee treatment, for the previous three years with respect to the workers to be reclassified.
Please give me a call at your earliest convenience to discuss whether this program would be beneficial for your business.
Please contact the office of Don Fitch Accountancy at (760)567-3110 or Email Don.Fitch@CPA.com if you have any questions or would like additional information.
DON FITCH, CPA
74478 Highway 111 #3
Palm Desert, CA 92260
Toll Free: (877)CPA-Help or (877)272-4357
P.S. My firm is based upon referrals. Please feel free to refer my firm to anyone you know that is looking for a new CPA and/or tax preparer. Thank you in advance.
(Updated 07022021-01 320-560)