IRS Tightens Scrutiny of Worker Misclassification | Paperless Cockpit

IRS Tightens Scrutiny of Worker Misclassification

The Internal Revenue Service (IRS) plans to step up audits of companies for improperly classifying employees as independent contractors, and the agency is promoting its Voluntary Classification Settlement Program (VCSP) for taxpayers to voluntarily change the classification of their workers. "Participation in the VCSP is essentially an admission to the IRS that you've misclassified workers in exchange for paying a reduced amount in back taxes," said Gregory Ripple, a labor and aviation attorney at Michigan-based law firm Miller Johnson. According to the IRS, if a taxpayer agrees to prospectively treat any misclassified workers as employees, "in exchange the taxpayer will pay 10 percent of the employment tax liability that would have been due on compensation paid to the workers for the most recent tax year."

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