Is the Voluntary Worker Classification Settlement Program a solution to my non-profit payroll tax problem?

While non-profit organizations enjoy many tax benefits, they are not exempt from facing IRS tax problems. Non-profit organizations are required to abide by payroll tax obligations in the same manner as for-profit organizations. One way that non-profits can find themselves in trouble with regard to this obligation is if they improperly classify workers as independent contractors rather than employees. Payroll taxes are owed with regard to employees but not independent contractors. If a worker or group of workers are misclassified, penalties can accrue due to unpaid payroll taxes.

An Overview of the Voluntary Worker Classification Settlement Program

Non-profit organizations facing payroll tax problems may benefit from the IRS’s Voluntary Worker Classification Settlement Program. The following is an overview of this alternative solution:

  • If your non-profit has past worker classification issues, this program may potentially allow you to come into compliance.
  • The program may allow your non-profit to come into compliance at a low cost in exchange for voluntarily reclassifying workers.
  • While the program is not without penalties, the penalty is minimal and covers past payroll tax obligations.
  • The program allows non-profits to come into compliance rather than simply waiting for an IRS audit.
  • The program offers non-profit employers greater certainty with regard to the employee classification rules.
  • The program allows non-profits to obtain a significant reduction in past federal payroll taxes that are owed, provided that the non-profit treats the workers as employees going forward.

For assistance determining how best to resolve your non-profit’s IRS tax problems, we encourage you to contact us today for assistance at (800) 721-7054.