On September 21, 2011, the IRS announced the launching of the Voluntary Classification Settlement Program. This program will provide employers with the ability to resolve past worker classification issues and achieve certainty under the tax law at a significantly reduced employment tax rate by voluntarily reclassifying their workers. Under the program, eligible employers can obtain substantial relief from federal payroll taxes owed for misclassification in the past, if they agree to prospectively treat workers as employees. In exchange, the employer will pay 10 % of the employment liability that may have been due on compensation paid to workers for the most recent year, determined under the reduced rates of IRC section 3509, will not be liable for any interest and penalties on the liability and will not be subject to an employment tax audit with respect to worker classification of the workers for prior years. Certain eligibility requirements must be met including that the employer cannot be currently under audit concerning the classification of workers by the Department of Labor or by a state government agency. This program can be used as a tax planning tool with the advice of your tax counsel.