If you feel like you’re between a rock and a hard place when it comes to misclassification of your contractors, now is the time to correct your wrongs and get into compliance. Many employers have been apprehensive to call attention to known misclassifications and risk penalties or legal action. Instead, they’ve been ignoring the problem and praying they aren’t audited. The IRS Voluntary Classification Settlement Program allows companies to voluntarily re-classify employees and get into compliance with protection and decreased cost. The program is intended to “provide 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.”
The implementation of this program brings up an interesting point – should penalties be more lenient on employers who step forward and admit their wrongdoings? Or, should penalties be the same for those who are caught by an audit? For many employers, their non-compliance is simply a result of them not knowing the correct guidelines. There is a case to be made that the risk it too great for an employer to raise the red flag on themselves. But, does that mean the system is set up to promote this idea of looking the other way until your audited? It’s a little bit of the “don’t ask, don’t tell” mentality. Employment laws and regulations are designed to protect and ensure the equal and fair treatment of all workers. Perhaps the flaw is in the penalty piece and how the laws are implemented and policed. Doing it right from the start, which may mean hiring a trained HR professional, will help eliminate this dilema.
Whatever your stance, now is the time to act and get into compliance!