When the IRS introduced its Voluntary Classification Settlement Program (VCSP), many employers questioned its true motives. So the agency has set out to reassure skeptical companies.
The VCSP is an IRS initiative that was created to help organizations who are dealing with tax problems stemming from misclassification issues.
Under the program, employers can reclassify full-time employees they mistakenly classified as independent contractors – and potentially save a significant amount on back taxes.
However, many employers are afraid that signing up for the program would set them up for other problems down the road.
Example: What’s to stop the IRS from sharing info about a company’s misclassification issues with agencies like the DOL? And what’s to stop those agencies from imposing harsh penalties on the company?
To reassure firms this wasn’t the case, the IRS stated on its FAQ page that:
- It will not share info about VCSP applicants with the DOL or state agencies
- Signing the VCSP closing agreement is not an admission of any liability or wrongdoing for prior years, and
- A rejection of a VCSP application will not automatically trigger a federal audit.
To view the complete FAQ, click.