The IRS recently introduced the Voluntary Classification Settlement Program (VCSP), a new program for businesses wishing to reclassify workers from contractor to employee status (Ann. 2011-64). Participating businesses will be required to complete an application, pay a small portion of the prior year's tax liability, and agree to treat the affected worker or class of workers as employees prospectively. According to the IRS, the program is intended to increase compliance and provide certainty for businesses.
The IRS also has published a series of Frequently Asked Questions related to VCSP on the IRS web site, www.IRS