How to change your independent contractors into employees if they are misclassified?
One thing employers shouldn’t do is wait for the IRS to audit their workers’ classifications. The IRS can levy delinquent payroll taxes, plus penalties and interest, if they find misclassified workers that should have been classified as employees, which can be very costly. If you think you may have some misclassified workers, the IRS has a voluntary classification settlement program that might be helpful in reducing your potential liability.
The IRS voluntary classification settlement program gives taxpayers the ability to reclassify their workers as employees in future tax periods for employment tax purposes. This program relieves a portion of the employment taxes to help mitigate a potentially large payroll tax liability. The company will need to meet certain requirements, but if those requirements are met, this program can assist employers in addressing misclassified workers.
The VCSP is available for taxpayers who want to voluntarily change the prospective classification of their workers. The program applies to taxpayers who are currently treating their workers (or a class or group of workers) as independent contractors or other nonemployees and want to prospectively treat the workers as employees.
Some businesses choose not to utilize the VCSP. Instead they simply collect and file all the necessary paperwork to get their Independent Contractors set up as employees and also report them as new hires to the state. The easiest way to do this is to reach out to a payroll company and have the gather your documents and do you employee set up for you. They will do all of this and also manage your payroll after everything is all set up.
If your Independent Contractors are misclassified we will help. We will assist you in reclassifying your independent contractors to employees before the IRS fines you. You can reach me by phone or email me at firstname.lastname@example.org