Business taxpayers operate in an enhanced employment tax enforcement climate both civil and criminal and in certain situations face potentially devastating liability from worker misclassification. The need for analysis and strategizing by business taxpayers for proactively managing the worker-misclassification risk issue (rather than it being managed by the tax authorities) has never been greater. The stakes in many cases have become too high to do nothing if potential exposures exist. Notably, in such a hostile climate for business taxpayers, the IRS has relaxed the eligibility requirements for its previously announced Voluntary Classification Settlement Program (VCSP). That program, which was launched in September 2011, has been utilized to help defuse situations where businesses faced lurking issues regarding the misclassification of employees as independent contractors and allowed their reclassification, thus minimizing or eliminating tax exposure.
In IRS Announcements 2012-45 and 2012-46, the IRS revised, relaxed and expanded eligibility for its VCSP.
