The IRS has expanded the Voluntary Classification Settlement Program to allow more employers to properly reclassify workers as employees and pay a reduced penalty.
Even if an employer has never issued a Form 1099 to the misclassified worker, the employer can participate in the program until June 30, 2013. The program initially only involved workers who had received a 1099 but should have received a W-2 and been treated as employees.
Other restrictions still apply: An employer who participates in the voluntary program will pay a penalty of just more than 1 percent of the wages paid to the worker over the most recent tax year, and the employer agrees to treat the worker as an employee for future tax periods. In exchange, the employer will not be liable for employment taxes, penalties or interest from previous years.
For more information, contact your Barnes Dennig tax representative at (513) 241-8313.