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Aspen Office
400 East Main Street
Aspen, CO 81611

Carbondale Office
0326 Hwy 133, Suite 200
Carbondale, CO 81623

Voluntary Worker Classification Settlement Program

The IRS has announced a new program that attempts to resolve the age old question of whether someone is an employee or an independent contractor. Unfortunately, this new program only creates a mechanism for employers to correct what they deem to be mistakes in classification; it does not provide any additional information as to who is an employee and who is an independent contractor.

The new program, just announced by the IRS, allows employers to voluntarily “correct” the classification of workers that have been incorrectly classified in the past. Essentially, it allows a company to “come clean” with the IRS and admit that they have previously classified certain individuals as independent contractors when those individuals really were employees. This misclassification, according to the IRS, allowed employers to avoid payroll taxes on payments made.

To qualify for the new program, you must meet certain requirements dealing with consistency of treatment, consistency of reporting, and whether there was a reasonable basis for the original determination that the individual was an independent contractor. If you meet the tests, you can essentially settle with the IRS at 10 cents on the dollar with no penalties or interest. You do, however, have to agree to classify the affected individuals as employees going forward, as well as abide by numerous other requirements.

If you would like assistance in determining if this program is beneficial to you, or if you have any questions regarding worker classification, please contact us. We would love to help!

Reese Henry & Company, Inc.
400 East Main Street Aspen, CO 81611
970.925 3771

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