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IRS Voluntary Worker Classification Settlement Program

IRS detailed new program for employers to receive relief from payroll taxes otherwise owed for agreeing to prospectively treat workers as employees. To be eligible, employer must have filed Form 1099s for each worker for past 3 years, and not be currently under audit. In exchange for agreement to treat workers as employees, employer will be liable for 10% of liability due for most recent tax years, as determined under reduced rates of?Code Sec. 3509Ā , but won’t be liable for penalties and interest and won’t be subject to audit for employment tax issues. Employer participating in program will agree to extend period of limitations on assessment of employment taxes for three years for first, second and third calendar years beginning after date on which employer has agreed under program to begin treating workers as employees. Those who are accepted into program will execute closing agreement with IRS and pay full amount due at same time.

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