Vision Payroll

September 23, 2011

Question of the Week: How Do I Apply for the VCSP?

How Do I Apply for the VCSP?
How Do I Apply for the VCSP?
This week’s question comes from Allan, a small-business owner.

Allan asks…

I read about the Voluntary Classification Settlement Program (VCSP). I have some workers who might need to be classified as employees. How do I apply for the VCSP?

Answer: Employers may use Form 8952, Application for Voluntary Classification Settlement Program (VCSP), to apply for participation in the VCSP.

Eligibility Requirements

The instructions to Form 8952 list the following eligibility requirements to participate in the VCSP:

  1. Want to voluntarily reclassify certain workers as employees for federal income tax withholding, Federal Insurance Contributions Act (FICA), and Federal Unemployment Tax Act taxes (collectively, federal employment taxes) for future tax periods.
  2. Be presently treating the workers as non-employees.
  3. Have satisfied any Form 1099 requirements for each of the workers for the 3 preceding calendar years ending before the date Form 8952 is filed. A taxpayer will have satisfied its Form 1099 filing requirements if it provided Forms 1099 to the workers being reclassified for the period of time that the workers worked for the taxpayer. For example, a taxpayer who has only been in business for two years will have satisfied its Form 1099 filing requirements if it provided the workers being reclassified with Forms 1099 for those two years.
  4. Have consistently treated the workers as non-employees.
  5. Have no dispute with the Internal Revenue Service (IRS) as to whether the workers are non-employees or employees for federal employment tax purposes.
  6. Not be under examination by the IRS.
  7. Not be under examination by the Department of Labor (DOL) or any state agency for the proper classification of the workers.
  8. Not have been examined previously by the IRS or the DOL for the classification of workers; or,
  9. If the taxpayer has been examined previously by the IRS or the DOL for the classification of workers, taxpayer must have complied with the results of the prior examination.

In addition, as part of the VCSP, a taxpayer must agree to extend the period of limitations on assessment of employment taxes for 3 years for the first, second, and third calendar years beginning after the date the taxpayer elects to begin treating the workers as employees under the VCSP closing agreement. The taxpayer has the right to refuse to extend the period of limitations on assessment or to limit the extension to particular issues or to a particular period of time. However, if the taxpayer refuses to extend the period of limitations on assessment or provides only a limited extension, the IRS will not execute the VCSP closing agreement.

Filing Deadline for Form 8952

Although there is no absolute filing deadline for Form 8952, it should be filed at least 60 days before the date you want to begin treating the class or classes of workers as employees.

No Payment Due with Form 8952

Although you will be required to calculate the amount of the payment to be paid, the amount should not be sent with Form 8952. It must be sent with the signed closing agreement.

Contact Vision Payroll Today for Information on Form 8952

Contact Vision Payroll for further information on Form 8952.

September 21, 2011

Tip of the Week: IRS Announces Voluntary Worker Classification Settlement Program

IRS Commissioner Douglas H. Shulman
IRS Commissioner Douglas H. Shulman
The Internal Revenue Service (IRS) today launched a new program that will enable many employers to resolve past worker classification issues and achieve certainty under the tax law at a low cost by voluntarily reclassifying their workers.

Minimal Payment Will Clear Up Prior Liabilities

This new program will allow employers the opportunity to get into compliance by making a minimal payment covering past payroll tax obligations rather than waiting for an IRS audit.

Part of the “Fresh Start” Initiative

This is part of a larger “Fresh Start” initiative at the IRS to help taxpayers and businesses address their tax responsibilities.

Settlement Program Provides relief and Certainty

“This settlement program provides certainty and relief to employers in an important area,” said IRS Commissioner Doug Shulman. “This is part of a wider effort to help taxpayers and businesses to help give them a fresh start with their tax obligations.”

VCSP Designed to Increase Tax Compliance

The new Voluntary Classification Settlement Program (VCSP) is designed to increase tax compliance and reduce burden for employers by providing greater certainty for employers, workers and the government. Under the program, eligible employers can obtain substantial relief from federal payroll taxes they may have owed for the past, if they prospectively treat workers as employees. The VCSP is available to many businesses, tax-exempt organizations and government entities that currently erroneously treat their workers or a class or group of workers as nonemployees or independent contractors, and now want to correctly treat these workers as employees.

Eligibility Criteria for the Program

To be eligible, an applicant must:

  • Consistently have treated the workers in the past as nonemployees,
  • Have filed all required Forms 1099 for the workers for the previous three years,
  • Not currently be under audit by the IRS, the Department of Labor or a state agency concerning the classification of these workers.

File Form 8952 to Apply for the Program

Interested employers can apply for the program by filing Form 8952, Application for Voluntary Classification Settlement Program, at least 60 days before they want to begin treating the workers as employees.

Payment Due upon Acceptance

Employers accepted into the program will pay an amount effectively equaling just over one percent of the wages paid to the reclassified workers for the past year. No interest or penalties will be due, and the employers will not be audited on payroll taxes related to these workers for prior years. Participating employers will, for the first three years under the program, be subject to a special six-year statute of limitations, rather than the usual three years that generally applies to payroll taxes.

Contact Vision Payroll Today

Contact Vision Payroll for further information on the VCSP.

April 15, 2011

Question of the Week: Have the Expanded Form 1099 Reporting Requirements Been Repealed?

Expanded Reporting Requirements for Form 1099 Have Been Repealed
Expanded Reporting Requirements for Form 1099 Have Been Repealed
This week’s question comes from Lindsay, an office manager. I read before that businesses were going to have expanded Form 1099-MISC reporting requirements starting in 2012. Now I’ve heard that these requirements may have been repealed. Have the expanded Form 1099 reporting requirements been repealed? Answer: The expanded reporting requirements for Form 1099 that were added as part of the Patient Protection and Affordable Care Act have been repealed.

Business Reporting Reverts To Previous Rules

Business reporting now reverts to the previous rules, requiring reporting of payments of $600 or more for services performed by non-employees. Most payments to corporations are exempt.

Reporting by Landlords Also Repealed

Expanded reporting requirements for landlords have also been repealed. Landlords not in the trade or business of renting property will have no Form 1099-MISC reporting requirements.

Contact Vision Payroll Today

Contact Vision Payroll for further information regarding the repeal of the Form 1099-MISC expanded reporting requirements.

February 8, 2011

Vermont Mandates Electronic Filing of Form W-2, Form 1099, and Form WH-434

Filed under: News — Tags: , , , , , — Vision @ 1:30 pm
Vermont Mandates Electronic Filing of Form W-2, Form 1099, and Form WH-434
Vermont Mandates Electronic Filing of Form W-2, Form 1099, and Form WH-434
The Vermont Commissioner of Taxes has mandated the electronic filing of Forms W-2 and 1099 and the accompanying Employers Annual Withholding Reconciliation (Form WH 434) beginning with the calendar year 2010 submissions.

This mandate is effective for:

  • Employers who will remit 25 or more W-2 and/or 1099 forms for 2010.
  • Payroll Filing Services and accountants who prepare W-2 forms and annual reconciliations for multiple taxpayers.

The Vermont Department of Taxes’ new online Electronic Filing Service for Form W-2, Form 1099, and Form WH-434 can be accessed here.

Electronic Filing Available Soon

This service will be available for use beginning in February 2011.

Contact Vision Payroll for Assistance

Contact Vision Payroll immediately for assistance in complying with the new Vermont electronic filing mandate.

May 29, 2010

Health Care Law Expands Form 1099 Reporting Requirements

The recently enacted Patient Protection and Affordable Care Act (the Act) will expand information reporting requirements starting in 2012. §9005 of the Act amends §6041 of the Internal Revenue Code of 1986 (IRC) so that payments to corporations that were previously exempted from reporting will now be subject to reporting on Form 1099. Additionally, information reporting will now be required for purchases of property. Therefore, businesses that pay a single entity $600 or more in a calendar year for purchases of goods and services will be required to report those payments on Form 1099.

Under the law, the IRS was granted the authority to issue so-called legislative regulations to “prevent duplicative reporting of transactions.” Since under a different provision also effective in 2012 payment processors will be required to report gross amounts paid to companies using debit and credit cards, IRS Commissioner Douglas H Shulman indicated in a recent speech that transactions that use credit or debit cards might be exempted from these reporting requirements.

Vision Payroll strongly recommends that businesses begin their implementation plan now to be ready to report under the new requirements and to be ready to reconcile the forms received from their customers. Vision Payroll is ready now to work with businesses on their implementation plan and will assist them in filing the necessary forms.

February 24, 2010

Tip of the Week: File Form 1096 by March 1, 2010 for Most Returns

The filing deadline for 2009 Form 1096 is March 1, 2010 for most returns. The returns due on that day include Forms 1099, Form 1098, Form 3921, Form 3922, and Form W-2G. The deadline for filing Form 5498, Form 5498-ESA, and Form 5498-SA is June 1, 2010. Filers transmitting more than 250 of any type information return must file electronically. Not filing electronically when required and without a waiver could subject the filer to a penalty. Additionally, filers who submit returns that are unable to be scanned may be subject to a penalty of $50 per return. Contact Vision Payroll if you have any questions on the Form 1096 filing deadlines.

November 23, 2009

IRS Announces Pilot Program to Truncate Social Security Numbers on 1098 and 1099 Forms in Notice 2009-93

In Notice 2009-93, the Internal Revenue Service (IRS) has announced the creation of a pilot program to allow certain filers of Form 1098, Forms 1099, and Form 5498 to truncate an individual’s nine-digit identifying number on paper copies of the payee statements. The three types of numbers are the social security number, the IRS individual taxpayer identification number, and the IRS adoption taxpayer identification number. The purpose is to reduce the risk of misuse of a person’s identifying number through misappropriation from the payee statement.

There are three requirements that must be met for a filer to qualify for the pilot program. They are:

  1. The identifying number is a social security number, IRS individual taxpayer identification number, or IRS adoption taxpayer identification number;
  2. The identifying number is truncated by replacing the first five digits of the nine-digit number with asterisks or Xs (for example, a social security number 123-45-6789 would appear on the paper payee statement as ***-**-6789 or XXX-XX-6789); and
  3. The truncated identifying number appears on a paper payee statement (including substitute and composite substitute statements) in the Form 1098 series, Form 1099 series, or Form 5498 series for calendar year 2009 or 2010.

The notice also invites public comments on specific areas. Contact Vision Payroll if you have any questions on Notice 2009-93.

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