December 23, 2011: Is the IRS Misclassification Amnesty Program Right For Your Business?

Misclassification. It's a subject we've discussed before, and it's still one of the biggest hotspots for litigation and regulatory investigation. The Department of Labor has launched a Misclassification Initiative and is currently working on signing a Memorandum of Understanding with the IRS. Under this agreement, the agencies would work together and share information to reduce misclassification of employees, reduce the tax gap, and  to improve compliance with federal labor laws.

But the two agencies seem to be taking different approaches to remedying misclassification. The IRS is offering a new Voluntary Classification Settlement Program. The program would allow those employers who are concerned that they have misclassified employees in the past to voluntarily come forward, rather than waiting for an IRS examination. The Department of Labor, however, is not offering a similar program. Many employers may be interested in taking advantage of the IRS amnesty program, but worry about what will happen on the Department of Labor's end if they do.

In this installment, we'll be talking about the IRS misclassification settlement program with Jennifer Neumann and Tamar Dolcourt. Ms. Neumann and Ms. Dolcourt are members of Foley and Lardner's Labor and Employment Practices Group.