IRS Offers New Program For Business Owners Who Incorrectly Classify Employees As Freelancers

PHILADELPHIA (CBS) -- The IRS is offering a break for business owners who incorrectly classify workers as freelancers.

Some workers, such as independent contractors, are legally freelance workers in a small business, but many others should be labeled employees, given benefits and have to pay payroll taxes. Now the IRS is giving employers a way to come into compliance and pay the government a lot less money.

"It works out to a little over one percent of the wages you paid to those folks during the past year. In exchange for that, we won't audit you for the past three years, we're not gonna charge you interest and penalties," says IRS spokesman Chris Smith

IRS officials will monitor the situation to make sure you keep those workers on as paid employees. You must apply for this program, and more information can be found at www.irs.gov.

Reported by Lynne Adkins, KYW Newsradio