What is the Voluntary Classification Settlement Program?

The Voluntary Classification Settlement Program is a new optional program that provides employers with an opportunity to reclassify their workers as employees whom they have previously treated as independent contractors. The employer will be required to pay only a fraction of the federal employment taxes that it would have owed for the workers if they had been classified as employees with interest or penalties and will not be subject to audit by the IRS for prior years with respect to employment taxes for those workers. The employer must identify a class of workers that it wishes to reclassify, and it must have been consistently treating all workers in this class as non-employees (1099) for the past 3 years. Also remember that employees lose government-mandated benefits when they are misclassified as contractors. Please consult your attorney before applying for this program. is a new optional program that provides employers with an opportunity to reclassify their workers as employees whom they have previously treated as independent contractors.

The employer will be required to pay only a fraction of the federal employment taxes that it would have owed for the workers if they had been classified as employees with interest or penalties and will not be subject to audit by the IRS for prior years with respect to employment taxes for those workers.

The employer must identify a class of workers that it wishes to reclassify, and it must have been consistently treating all workers in this class as non-employees (1099) for the past 3 (three) years. Also remember that employees lose government-mandated benefits when they are misclassified as contractors. Please consult your attorney before applying for this program!

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