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Gary Bode, CPA is a Master's Degreed, nation wide accountant offering tax and business services. Member of AICPA and NCACPA. Our virtual office provides excellent service to long distance and international clients. Call (910) 399-2705 for a free phone consult.

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The recession was hard on me. In 2009 the banks foreclosed a few of my rental properties, than issuing me 1099C's to make the situation even worse. This made my tax liability enormous, as a result I didn't file taxes for a couple of years. I started receiving letters about my unpaid taxes from the government and my job. The accountant I hired in the past really didn't know much about 1099C,,s. That's when I searched the web and found Gary a life saver to say the least, he knew exactly what to do. If I would not have waited three years to file I would not have lost thousands for filing late. I wish I would have found him sooner, the fact that he does taxes in any state is a plus. I truly cant say enough positive things about my experience doing business with Gary. Thanks Again.

Officer D, NYPD

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Even though Gary enjoys helping colleagues, we no longer provide free consults to other tax preparers. He's happy to consult on an hourly billing basis if our schedule allows.

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VCSP CPA discusses possible alternative defenses under Section 530 Safe Harbor

I’m a VCSP CPA with a virtual office to accommodate long distance clients. The idea for this article comes from the Tax practice Corner column of the July 2012 Journal of Accountancy. It’s important to understand all the options for any given tax situation.

VCSP (Voluntary Classification Settlement Program) is a great program for employers who worry about the IRS assessing them back employment taxes for paying employees as subcontractors. Click on VCSP from the drop down category list in the right toolbar for more information on this IRS program. This post discusses possible alternative defenses your VCSP CPA might offer to you.

Note that VCSP has the drawbacks of:

  • Admitting your company was wrong.
  • Paying a penalty.
  • Paying workers as employees in the future.

Section 530 Defenses

These alternative defenses for worker misclassification stem from Section 530 of the Revenue Act of 1978. Here, your company handles worker classification directly, despite the IRS not liking it.

  • Did you treat all workers the same?
  • Did you treat all workers the same in all time periods?
  • Did you file the correct paper work like Form 1099-MISC?
  • Did you have a reasonable basis for classifying workers as subcontractors?

Reasonable Basis For Classifying Workers as Subcontractors

  • Judicial precedent. This is why VCSP CPAs keep up with tax court cases.
  • Published rulings.
  • Private letter ruling. These are specific to the taxpayer.
  • Long standing recognized practice with an industry segment.
  • IRS audits of similar companies approved their worker classification.
  • Worker’s Compensation audit is OK with the classification.

For every IRS engagement your VCSP CPA custom crafts a response. Most times that’s a VCSP application. But, sometimes, being aware of the weaknesses in the IRS assertion means no admission of guilt, no penalty and continued employment tax savings in the future.

I’m a VCSP CPA with a virtual office. For a free consult call (910) 399-2705.

 

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