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What Are the New IRS Tax Settlement Rules?

One of the major new changes to tax settlement rules is the addition of a new program that is designed to help employers make a minimal payment that will cover past payroll taxes instead of waiting to be audited. This new tax settlement program is known as the New Voluntary Worker Classification Settlement Program. The program will give relief to companies who owe back taxes and begin to treat workers for the company as employees rather than subcontractors.

This tax settlement program is open for any company who has in the past treated its workers as independent contractors when in reality they meet the qualifications of full employees. In order to be eligible, the company must have consistently treated their workers as contractors, filed all the required 1099 forms for all of their workers for at least the past three years, and must not be currently be undergoing an audit by the IRS, the Department of Labor, or any other government agency.

Companies that are accepted into this particular tax settlement program will pay a little over 1% of the wages that are being paid to the newly reclassified employees. One of the benefits of being part of this type of program is that companies will not have to pay interest or any penalties for the IRS tax debt that they owe. Accepted companies will be able to breathe a sigh of relief as they will not have to undergo any payroll tax audits on their employees for the previous years of their employment. A company that is part of this program will be subjected to a six year statute of limitations rather than the three year statute of limitations that most companies are under on their payroll taxes.

Any company that is desiring to be a part of this type of program needs to fill out a Form 8952. The form must be correctly filled out and filed 60 days before the company plans on making the change to treating their workers as official employees of the company.

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