IRS Offers Employers a Worker Classification Do-Over

October 11, 2011 – In The News
Compliance Week

The misclassification of employees has been a hot topic among the IRS and the Department of Labor and has prompted both organizations to increase related programs and enforcement efforts.

The Department of Labor says they have collected more than $9 million in back wages since January of 2009 in related investigations. As an incentive to fix such problems, the IRS has created the Voluntary Classification Settlement Program that lets companies pay back taxes on misclassified workers without fines or interest.

"Misclassification is like sitting on a ticking time bomb. The faster employers resolve the issue, the better it will be for them,” said Keith Reinfeld.

“Essentially, the IRS is giving companies a 90 percent discount off their employment tax liability for the previous year and wiping out penalties and interest.”

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