Good News For Cleaning Business Owners That Might Have Mis-Classified Employees As Independent Contractors

Do you think you might have misclassified employees as independent contractors?

This is a serious topic for cleaning business owners because if caught, the IRS can go after you for back employment taxes plus penalties and interest. This would put most companies right out of business. The good news is, the IRS has launched a new program that allows many employers to resolve their misclassification issues at a low cost by voluntarily reclassifying their workers.

Most employers don't know what to do if they realize they've made a mistake because they know there is a stiff penalty to pay depending on how long it's been going on. But under the new program, they have the opportunity to get into compliance by making a minimal payment covering past payroll tax obligations rather than waiting for an IRS audit.

The program is called Voluntary Classification Settlement Program (VCSP), and is part of the “Fresh Start” initiative at the IRS to help taxpayers and businesses address their tax responsibilities.

To be eligible the applicant must:

• Consistently have treated the workers in the past as nonemployees,
• Have filed all required Forms 1099 for the workers for the previous three years
• Not currently be under audit by the IRS
• Not currently be under audit by the Department of Labor or a state agency concerning the classification of these workers

To read the announcement and find out how to apply, visit the IRS.

Comments

[Karen Swett]

New Yorker's should be aware that NYS is instituting their own initiative to uncover mis-classified workers. They will insist that contractors have their own: 1. website that markets to the general public, and 2. their own business card. See my blog post of earlier this week at www.northshorejanitorial.com and discuss with your accountant if you may have this problem.