Discussion Archives:Anybody looked into VCSP (Voluntary Worker Classification Settlement Program)?

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Discussion Forum Index --> Advanced Tax Questions --> Anybody looked into VCSP (Voluntary Worker Classification Settlement Program)?


Discussion Forum Index --> Tax Questions --> Anybody looked into VCSP (Voluntary Worker Classification Settlement Program)?

Marcilio (talk|edits) said:

26 September 2011
from www.IRS.gov

What is the Voluntary Classification Settlement Program (VCSP)?

A1. The VCSP is a new program developed by the IRS that allows taxpayers to voluntarily reclassify their workers as employees for future tax periods for employment tax purposes. Under the VCSP, a taxpayer will pay 10 percent of the amount of employment taxes calculated under the reduced rates of section 3509 of the Internal Revenue Code for the compensation paid for the most recent tax year to the workers being reclassified under the VCSP. In addition, the taxpayer will not be liable for any interest and penalties on the payment under the VCSP, and will not be audited for employment tax purposes for prior years with respect to the worker classification of the workers. Taxpayers may apply for the VCSP using Form 8952, Application for Voluntary Classification Settlement Program. For more information on the VCSP, see Announcement 2011-64 (PDF)

Mscash (talk|edits) said:

28 September 2011
I think most employers would rather continute to cheat their employees who are happy to have any job and take the chance that they won't be caught up in an audit that may kill them. I have several clients who would not want to file a Form SS-8 for fear that they would be fired if they did. I'm exploring ways to rat out the employer for them without making them a party or a tracable source. If anyone has suggestions for me, I'm all ears.

Wiles (talk|edits) said:

2 December 2011
One of the eligibility requirements for this program is that an employer cannot be under audit by the IRS or under a DOL or state worker classification audit.

Here in CA, I have a client that had a worker report them to the EDD in order to gain UI benefits. The EDD sided with the employee based on a unilateral review of the employee's claim. My client appealed their decision, but lost that appeal. He is continuing his fight with the EDD, but is interested in limiting his potential losses with the IRS via this VCSP program.

Is the EDD process that he is under considered "under audit" thus making him ineligible for the VCSP program?

Szptax (talk|edits) said:

4 December 2011
I would look to CA law for the classification. I do know that here in PA someone could be a subcontractor for Federal & withholding purposes but fall under the UC law for UC taxes. I don't think that if the fell in that category and there were questions about their UC filing, I would consider them "under audit". Changing the classification, however could have other implications.

Jpell81 (talk|edits) said:

10 May 2012
Can someone tell me what it means to "extend the 3-year period of limitations on assessment of employment taxes for 3 additional years" (quoted from the instructions for Form 8952)?

Ckenefick (talk|edits) said:

10 May 2012
3 + 3 = 6

Jake (talk|edits) said:

11 May 2012
In re: "I think most employers would rather continute to cheat their employees who are happy to have any job and take the chance that they won't be caught up in an audit that may kill them. I have several clients who would not want to file a Form SS-8 for fear that they would be fired if they did. I'm exploring ways to rat out the employer for them without making them a party or a tracable source. If anyone has suggestions for me, I'm all ears."

FYI - I have found that there are some "independent contractors" that do not want to be treated as "employees" because their unreimbursed expenses, e.g. mileage, does them no good as a W-2 employee vs. a Sch C 1099-Misc. independent contractor. I do returns for a couple of W-2 outside salesmen where the employer does not reimburse them for mileage, the charges they pay for brochures, etc. I think this is a serious issue that works against the 95%.

CathysTaxes (talk|edits) said:

11 May 2012
Jake, have you looked at publication 1778? Yesterday, there was an IRS/iBank webinar "Worker Classification - Independent Contractor or Employee (if cheapo me pays the $25 fee, I can get CPE credit).

Jpell81 (talk|edits) said:

23 May 2012
Thanks for nothing, Ckenefick. Glad I found the answer I needed elsewhere.
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