Form 8952 - Application for Voluntary Classification Settlement Program

Instructions for Form 8952
(Rev. November 2014)

Department of the Treasury
Internal Revenue Service

For use with Form 8952 (Rev. November 2013)
Application for Voluntary Classification Settlement Program (VCSP)
Section references are to the Internal Revenue Code unless
otherwise noted.

Future Developments

For the latest information about developments related to
Form 8952 and its instructions, such as legislation enacted
after they were published, go to www.irs.gov/form8952.

What's New

For applications filed after May 1, 2014, attach a statement
listing the names and corresponding social security numbers
of the workers for all classes to be reclassified, as indicated
on line 15.

Reminders

Employer's effective rate. The effective rate for a
volunteering employer's social security tax on wages paid
after 2012 is revised to 7.44% (.0744) to reflect the expiration
of the payroll tax holiday.
Modified VCSP. The modified VCSP has expired. The
program ended on June 30, 2013.

General Instructions
Purpose of Form

Eligibility Requirements

To participate in the VCSP, taxpayers must meet certain
eligibility requirements and certify on Form 8952 that they
meet these requirements.
Specifically, to be eligible for the VCSP, a taxpayer must:
1. Want to voluntarily reclassify certain workers as
employees for federal income tax withholding, Federal
Insurance Contributions Act (FICA), and Federal
Unemployment Tax Act (FUTA) taxes (collectively,
federal employment taxes) for future tax periods;
2. Be presently treating the workers as nonemployees;
3. Have filed all required Forms 1099 for each of the
workers to be reclassified for the 3 preceding calendar
years ending before the date Form 8952 is filed (a
taxpayer will meet this requirement if it filed all required
Forms 1099 for the workers being reclassified for the
period of time that the workers worked for the taxpayer;
for example, a taxpayer who has only been in business
for 2 years meets this requirement if the taxpayer filed all
required Forms 1099 for the workers being reclassified
for those 2 years);
4. Have consistently treated the workers as nonemployees;

Use Form 8952 to apply for the Voluntary Classification
Settlement Program.

5. Have no current dispute with the IRS as to whether the
workers are nonemployees or employees for federal
employment tax purposes;

DO NOT send payment with Form 8952. You will
submit payment later with a signed closing
CAUTION
agreement. If you submit payment with Form 8952, it
may cause a processing delay.

6. Not be under employment tax examination by the IRS (if
the taxpayer is a member of an affiliated group, this
requirement is met only if no member of the affiliated
group is under employment tax examination by the IRS);

Voluntary Classification Settlement
Program (VCSP)

7. Not be under examination by the Department of Labor or
any state agency concerning the proper classification of
the class or classes of workers; and

!

The VCSP provides an opportunity for taxpayers to
voluntarily reclassify workers as employees for federal
employment tax purposes. The VCSP allows eligible
taxpayers to obtain relief similar to that available through the
Classification Settlement Program (CSP) for taxpayers under
examination.
The VCSP is an optional program that provides taxpayers
not under an employment tax examination with an
opportunity to voluntarily reclassify their workers as
employees for future tax periods with limited federal
employment tax liability for past nonemployee treatment. To
participate in the program, the taxpayer must meet certain
eligibility requirements, apply to participate in the VCSP, and
enter into a closing agreement with the IRS.
For more information on the VCSP, see Announcement
2012-45 in Internal Revenue Bulletin 2012-51 available at
www.irs.gov/irb.

Oct 24, 2014

8. a. Not have been examined previously by the IRS or the
Department of Labor concerning the proper
classification of the class or classes of workers; or
b. If the taxpayer has been examined previously by the
IRS or the Department of Labor concerning the proper
classification of the class or classes of workers, the
taxpayer must have complied with the results of the prior
examination and not be currently contesting the
classification in court.

When To File

File Form 8952 at any time. However, Form 8952 should be
filed at least 60 days before the date you want to begin
treating the class or classes of workers as employees.

Where To File

Send Form 8952 to the following address.

Cat. No. 58045V

2. Form 2848, Power of Attorney and Declaration of
Representative, if applicable. See Part II. Contact
Person, later.

Internal Revenue Service
Government Entities Compliance Unit
P.O. Box 409107
Ogden, UT 84409

Complete every applicable entry space on Form 8952. Do
not enter “See Attached” instead of completing the entry
spaces. If more space is needed, attach separate sheets
using the same size and format as the printed forms. If there
are supporting statements and attachments, arrange them in
the same order as the lines they support and attach them
last. Show the total dollar figure on Form 8952, Part IV. Enter
the taxpayer’s name and EIN at the top of each supporting
statement or attachment.

Private delivery services. You can use certain private
delivery services designated by the IRS. These private
delivery services include only the following.
DHL Express (DHL): DHL Same Day Service.
Federal Express (FedEx): FedEx Priority Overnight,
FedEx Standard Overnight, FedEx 2Day, FedEx
International Priority, and FedEx International First.
United Parcel Service (UPS): UPS Next Day Air, UPS
Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air
A.M., UPS Worldwide Express Plus, and UPS Worldwide
Express.

Specific Instructions
Line 2. Employer Identification
Number (EIN)

The private delivery service can tell you how to get written
proof of the mailing date.
Private delivery services cannot deliver items to P.O.
boxes. When using a private delivery service, send Form
8952 to the following address.

Enter the taxpayer’s EIN. If the taxpayer does not have an
EIN, the taxpayer must apply for one. An EIN can be applied
for in one of the following ways.
Clicking the EIN link at www.irs.gov/businesses/small.
The EIN is issued immediately once the application
information is validated.
Faxing or mailing Form SS-4, Application for Employer
Identification Number.

Internal Revenue Service
Government Entities Compliance Unit
1973 N. Rulon White Blvd.
Mail Stop 7700
Ogden, UT 84404

The taxpayer must have received an EIN by the time Form
8952 is filed for the form to be processed. For more
information about EINs, see Publication 1635, Understanding
Your EIN.

Who Must Sign

Form 8952 must be signed by the taxpayer under penalties
of perjury. The taxpayer’s representative may not sign for the
taxpayer. By signing Form 8952, including all representations
in Part V, you are representing that the taxpayer is eligible for
this program and that all information presented is correct to
the best of your knowledge.

Line 10

Check the box that applies. If you are not a member of an
affiliated group, you can skip lines 11-14.
An affiliated group is one or more chains of includible
corporations (section 1504(a)) connected through stock
ownership with a common parent corporation. The common
parent must be an includible corporation and the following
requirements must be met.
The common parent must own directly stock that
represents at least 80% of the total voting power and at
least 80% of the total value of the stock of at least one of
the other includible corporations.
Stock that represents at least 80% of the total voting
power and at least 80% of the total value of the stock of
each of the other corporations (except for the common
parent) must be owned directly by one or more of the
other includible corporations.

For a sole proprietorship, the form must be signed and
dated by the individual who owns the business.
For a corporation (including a limited liability company
(LLC) treated as a corporation), the form must be signed and
dated by:
The president, vice president, treasurer, assistant
treasurer, chief accounting officer; or
Any other corporate officer (such as tax officer)
authorized to sign.
For a partnership, the form must be signed and dated by a
general partner. For an LLC classified as a partnership, the
form must be signed by a member or manager who would be
authorized to sign the partnership’s Form 1065, U.S. Return
of Partnership Income. For more information on who can sign
for a partnership, see the Instructions for Form 1065.

For this purpose, the term “stock” generally does not
include any stock that (a) is nonvoting, (b) is nonconvertible,
(c) is limited and preferred as to dividends and does not
participate significantly in corporate growth, and (d) has
redemption and liquidation rights that do not exceed the
issue price of the stock (except for a reasonable redemption
or liquidation premium). See section 1504(a)(4).

For an estate or trust, the form must be signed and dated
by the fiduciary or an authorized representative. If there are
joint fiduciaries or representatives, only one is required to
sign the form.

Part II. Contact Person

If the form is filed on behalf of the taxpayer by a receiver,
trustee, or assignee, the fiduciary must sign the form.

The contact person is the person the IRS may contact if there
is an issue with the application. If the contact person does not
have legal authority to bind the taxpayer, the taxpayer must
attach to Form 8952 a properly executed Form 2848.

Assembling the Application

To ensure the application is both timely and correctly
processed, attach all documents in the following order.
1. Form 8952 and attached statement (see Line 15
instructions).

Special instructions for Form 2848. On Form 2848, line 3,
enter “Voluntary Classification Settlement Program” as the
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Instructions for Form 8952

Paid Preparer Use Only

type of tax. Leave the entry spaces for Tax Form Number
and for Year(s) or Period(s) blank. Check the box on Form
2848, line 4.

A paid preparer must sign Form 8952 and provide the
information in the Paid Preparer Use Only section at the end
of the form if the preparer was paid to prepare the form and is
not an employee of the filing entity. The preparer must give
you a copy of the form in addition to the copy to be filed with
the IRS.

Line 15

For the workers from all classes to be reclassified (shown on
line 15), attach a statement listing their names and
corresponding social security numbers.

If you are a paid preparer, enter your Preparer Tax
Identification Number (PTIN) in the space provided. If you
work for a tax preparation firm, you must also enter the firm’s
name, address, and EIN. However, you cannot use the PTIN
of the tax preparation firm in place of your PTIN.

Line 16

If more space is needed, attach separate sheets. Enter the
taxpayer's name and EIN at the top of each sheet.

Line 17

You can apply for a PTIN online or by filing Form W-12,
IRS Paid Preparer Tax Identification Number (PTIN)
Application and Renewal. For more information about
applying for a PTIN online, visit www.irs.gov/ptin.

Enter the beginning date of the employment tax period
(calendar year or quarter) for which you want to begin
treating the class or classes of workers as employees. To
allow the IRS time to process your application, this date
should be at least 60 days after the date you file Form 8952.

TIP

Generally, do not complete this section if you are filing the
form as a reporting agent and have a valid Form 8655,
Reporting Agent Authorization, on file with the IRS. However,
a reporting agent must complete this section if the reporting
agent offered legal advice, for example, advising the client on
determining whether its workers are employees or
independent contractors for federal tax purposes.

The IRS will make every effort to process Form 8952
with sufficient time to allow for the voluntary
reclassification on the requested date.

Example. If you want to begin treating a class or classes
of workers as employees for the first quarter of 2015, you will
enter January 1, 2015. In this case, you should file Form
8952 as soon as possible.
If you want to begin treating a class or classes of workers
as employees for the fourth quarter of 2015, you will enter
October 1, 2015. In this case you should file Form 8952 at
least 60 days before October 1, 2015, or by August 2, 2015.

Privacy Act and Paperwork Reduction Act Notice. We
ask for the information on this form to carry out the Internal
Revenue laws of the United States. We need this information
to determine your eligibility to participate in this program and
to calculate the appropriate payment under the VCSP. Our
authority to ask for the information on this form is Subtitle C,
Employment Taxes, of the Internal Revenue Code. Section
6109 requires you to provide your identifying number. You
are not required to apply for the VCSP; however, if you apply,
you must provide the information requested.

Part IV. Payment Calculation Using
Section 3509(a) Rates
Line 18

Line 20

Failure to provide all the requested information may
prevent the processing of your application; providing false or
fraudulent information may subject you to penalties. We may
disclose this information to the Department of Justice for civil
or criminal litigation, and to cities, states, the District of
Columbia, and U.S. commonwealths and possessions for
use in administering their tax laws. We may also disclose this
information to other countries under a tax treaty, to federal
and state agencies to enforce federal non-tax criminal laws,
and to intelligence agencies to combat terrorism.

Example. A taxpayer filing Form 8952 in December of
2014 with one worker would look to compensation paid to the
worker in 2013 because 2013 is the most recently completed
calendar year. If the worker received $125,000 in
compensation in 2013, the taxpayer would subtract $113,700
from $125,000 and enter $11,300 on line 20.

The time needed to complete and file this form will vary
depending on individual circumstances. The estimated
burden for taxpayers who file this form is shown below.

Enter total compensation paid in the most recently completed
calendar year to all workers to be reclassified.
Nonemployee compensation of $600 or more can
generally be found reported in box 7 of the Form
1099-MISC, Miscellaneous Income, filed for the
worker for the most recently completed calendar year. See
the instructions for box 7 of Form 1099-MISC for details.

TIP

You are not required to provide the information requested
on a form that is subject to the Paperwork Reduction Act
unless the form displays a valid OMB control number. Books
or records relating to a form or its instructions must be
retained as long as their contents may become material in
the administration of any Internal Revenue law. Generally,
tax returns and return information are confidential, as
required by section 6103.

The social security wage base is applied on an employee by
employee basis. The social security wage base for calendar
year 2013 was $113,700. The social security wage base for
calendar year 2014 is $117,000. The social security wage
base for calendar year 2015 will be $118,500.

Line 24

Multiply the amount on line 23 by 10% (.10). This is the
amount required to be paid upon IRS acceptance of your
application and execution of your VCSP closing agreement.
DO NOT send payment with Form 8952. You will submit
payment later with a signed closing agreement. If you submit
payment with Form 8952, it may cause a processing delay.

Instructions for Form 8952

Recordkeeping . . . . . . . . . . . . . . . . . . . . . . . .

6 hr., 56 min.

Learning about the law or the form . . . . . . . . . .

18 min.

Preparing and sending the form to the IRS . . . . .

25 min.

If you have comments concerning the accuracy of these time
estimates or suggestions for making this form simpler, we
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would be happy to hear from you. You can send us
comments from www.irs.gov/formspubs. Click on “More
Information” and then on “Give us feedback.” Or you can
send your comments to:

Do not send this form to this office. Instead, see Where To
File, earlier.

Internal Revenue Service
Tax Forms and Publications
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224

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Instructions for Form 8952