Consider the Classification Settlement Program (CSP), under which the Internal Revenue Service must offer your company a settlement that includes a significantly reduced liability if your company meets the established criteria, including the consistent issuance of Forms 1099 each year to the class or
classes of workers at issue. If there was a reasonable basis for treating the workers at issue as independent contractors, such as an administrative ruling, a determination in a prior audit, or
long-standing industry practice, your company will only pay 25% of the potential employment tax assessment for the year under audit. If there is no reasonable basis, then your company will pay 100% of the assessed amount for the year. In either situation, the assessment is limited to the year under audit (not past years with potential improper treatment) and the company must agree to treat the workers as employees going forward.