Uh-oh! The IRS audited your business and concluded that you misclassified some workers as independent contractors. The IRS says they are employees.

You are worried—rightfully worried.

If you got this wrong, the IRS will assess years of back employment taxes, plus penalties and interest. The dollar amounts can be huge.

This is the second in a three-part series on various remedies available to small-business owners who misclassified their workers as independent contractors rather than employees. In the upcoming June issue, we will discuss the IRS Voluntary Classification Program, another relief program—but available only before your mistake gets discovered in an audit.

In the first article in this series, Owe Taxes for Misclassified Workers? Section 530 to the Rescue!, we discussed the Section 530 safe harbor that can apply in some cases where workers have been misclassified. But let’s say you don’t meet all the requirements for Section 530 relief.

Okay, no Section 530 relief? Here’s a second shot: the IRS’s Classification Settlement Program (CSP). It can provide relief for your employment tax woes.

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