Form 8952 - Application for Voluntary Classification Settlement Program

Instructions for Form 8952

Department of the Treasury
Internal Revenue Service

(Rev. November 2011)

Application for Voluntary Classification Settlement Program (VCSP)
Section references are to the Internal
Revenue Code unless otherwise noted.

General Instructions
Purpose of Form
Use Form 8952 to apply for the Voluntary
Classification Settlement Program
(VCSP).
DO NOT send payment with Form
8952. You will submit payment
CAUTION later with a signed closing
agreement. If you submit payment with
Form 8952, it may cause processing
delay.

!

Voluntary Classification
Settlement Program
The Internal Revenue Service (IRS) has
developed a new program to provide an
opportunity for taxpayers to voluntarily
reclassify workers as employees for
federal employment tax purposes. The
Voluntary Classification Settlement
Program (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 examination with an opportunity to
voluntarily reclassify their workers as
employees for future tax periods, with
limited federal employment tax liability for
the past non-employee 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 2011-64. For the
latest information about Form 8952 and
its instructions, go to www.irs.gov/
form8952.

Eligibility Requirements
To participate in the VCSP, taxpayers
must meet certain eligibility requirements
and certify that they meet those
requirements on Form 8952.
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 taxes (collectively,
federal employment taxes) for future tax
periods.

3) Have satisfied any Form 1099 requirements
for each of the workers for the 3 preceding
calendar years ending before the date Form
8952 is filed. A taxpayer will have satisfied
its Form 1099 filing requirements if it
provided Forms 1099 to 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 two years will have satisfied its
Form 1099 filing requirements if it provided
the workers being reclassified with Forms
1099 for those two years.
4) Have consistently treated the workers as
non-employees.
5) Have no dispute with the Internal Revenue
Service as to whether the workers are
non-employees or employees for federal
employment tax purposes.
6) Not be under examination by the Internal
Revenue Service.
7) Not be under examination by the
Department of Labor or any state agency
for the proper classification of the workers.
8) a. Not have been examined previously by
the Internal Revenue Service or the
Department of Labor for the
classification of workers; or,
b. If the taxpayer has been examined
previously by the Internal Revenue
Service or the Department of Labor for
the classification of workers, taxpayer
must have complied with the results of
the prior examination.
In addition, as part of the VCSP, a taxpayer
must agree to extend the period of limitations
on assessment of employment taxes for 3
years for the first, second, and third calendar
years beginning after the date the taxpayer
elects to begin treating the workers as
employees under the VCSP closing
agreement. The taxpayer has the right to
refuse to extend the period of limitations on
assessment or to limit the extension to
particular issues or to a particular period of
time. However, if the taxpayer refuses to
extend the period of limitations on assessment
or provides only a limited extension, the IRS
will not execute the VCSP closing agreement.

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.

2) Be presently treating the workers as
non-employees.
Oct 27, 2011

Cat. No. 58045V

Private Delivery Services
Applicants can use certain private
delivery services designated by the IRS.
These private delivery services include
the following:
• DHL Express (DHL): DHL Same Day
Service.
• Federal Express (FedEx): FedEx
International 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 A.M., UPS Worldwide Express Plus, and
UPS Worldwide Express.
The private delivery service can tell the
taxpayer how to get written proof of mailing.

Where to File
File Form 8952 by United States Postal
Service or private delivery service.
For United States Postal Service, mail
Form 8952 to:
Internal Revenue Service
Government Entities Compliance Unit
P.O. Box 12220
Ogden, UT 84412
For private delivery service, mail Form
8952 to:
Internal Revenue Service
Government Entities Compliance Unit
1973 N. Rulon White Blvd.
Mail Stop 7700
Ogden, UT 84404

Who Must Sign
Form 8952 must be signed by the
taxpayer under penalties of perjury. The
taxpayer’s representative may not sign
Form 8952. By signing Form 8952,
including all representations in Part V, the
taxpayer is representing that it is eligible
for this program and that all information
presented is correct to the best of its
knowledge. In addition, the taxpayer
understands that by participating in the
VCSP the taxpayer agrees to extend the
3-year period of limitations on
assessment of employment taxes for 3
additional years, for periods beginning in
the first, second, and third calendar years
beginning after the date on which the
taxpayer has agreed under the VCSP

closing agreement to begin treating the
workers as employees. For calculating
the period of limitations on assessment,
employment tax returns reporting FICA
tax or income tax withholding are
generally deemed filed on April 15 of the
following calendar year.
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

Specific Line
Instructions
Line 1. Employer
Identification Number
Enter the taxpayer’s employer
identification number (EIN). If the
taxpayer does not have an EIN, the
taxpayer must apply for one using Form
SS-4, Application for Employer
Identification Number. An EIN can be
applied for:
• Online- Click on the EIN link at www.irs.gov/
businesses/small. The EIN is issued
immediately once the application information
is validated.
• By telephone at 1-800-829-4933.

• 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. For more
information on who can sign for a
partnership, see the Instructions for Form
1065.
For an estate or trust, the form must
be signed by the fiduciary or an
authorized representative. If there are
joint fiduciaries, only one is required to
sign the form.
If the form is filed on behalf of the
taxpayer by a receiver, trustee, or
assignee, the fiduciary must sign the
form.

Assembling the Application
To ensure the application is both timely
and correctly processed, attach all
documents in the following order:
1. Form 8952.
2. Form 2848, Power of Attorney and
Declaration of Representative, if applicable.
See the instructions to Part II.

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 Part IV of
Form 8952. Enter the taxpayer’s name
and EIN on each supporting statement or
attachment.

• By mailing or faxing Form SS-4.

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.

Lines 2 through 8
Enter the name and address of the
location and contact numbers of the
taxpayer’s principal place of business.
Include the suite, room, or other unit
number after the street address. If the
post office does not deliver mail to a
street address and the taxpayer has a
P.O. box, show the box number instead.

Line 9
Check the box for the applicable entity.

Line 10
Check the box that applies. If you are not
a member of an affiliated group filing
consolidated returns for income tax
purposes, 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:
1. 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.
2. 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 this purpose, the term “stock”
generally does not include any stock that
(a) is nonvoting, (b) is nonconvertible, (c)

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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). See
section 1563(d)(1) for the definition of
stock for determining stock ownership.

Lines 11 through 14
Enter the name, address, and EIN of the
common parent of the affiliated group.
See the instructions above for entering
address information.

Part II
Enter the name and address of the
contact person. See the instructions
above for entering address and contact
number information.
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. On Form 2848, line 3, enter
“Voluntary Classification Settlement
Program” as the type of tax. Leave the
entry spaces for Tax Form Number and
for Year(s) or Period(s) blank. Check the
box on line 4 of the Form 2848.

Line 15
Enter the total number of workers from all
classes that you would like to reclassify.

Line 16
Describe the class or classes of workers
to be reclassified. A class of workers
includes all workers who perform the
same or similar services.

Line 17
Enter the beginning date of the tax period
(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 from the date
you file Form 8952.
Examples: If you want to begin
treating a class or classes of workers as
employees for the first quarter of 2012,
you will enter January 1, 2012. In this
case, you should file Form 8952 at least
60 days before January 1, 2012, or by
November 2, 2011.
If you want to begin treating a class or
classes of workers as employees for the
fourth quarter of 2012, you will enter
October 1, 2012. In this case, you should
file Form 8952 at least 60 days before
October 1, 2012, or by August 1, 2012.
If you want to begin treating a
TIP class or classes of workers as
employees for the fourth quarter of
2011, file Form 8952 as soon as possible.
The IRS will make every effort to process
Form 8952 with sufficient time to allow for
Instructions for Form 8952

the voluntary reclassification on the
requested date.

percentage is 3.24% for compensation
paid above the social security wage base.

Line 18

Line 21

Enter the amount of taxable
compensation paid to all classes of
workers to be reclassified for the most
recently closed tax year. In Column A,
enter the compensation paid to all classes
of workers that is at or below the social
security wage base. The social security
wage base for tax years 2010 and 2011 is
$106,800 and is applied on an employee
by employee basis. In Column B, enter
the compensation paid to all classes of
workers that is above the social security
wage base. For example, a taxpayer filing
Form 8952 in October of 2011 with one
worker would look to compensation paid
to the worker in 2010 because 2010 is the
most recently closed tax year. If the
worker received $125,000 in
compensation in 2010, taxpayer would
enter $106,800 in Column A and $18,200
in Column B of line 18. Column C will be
the sum of Column A and Column B. In
the above example, Column C will equal
$125,000.

Add the amounts from Column A line 19
and Column B line 20.

Line 19
Multiply the amount in Column A of line
18 by the applicable percentage. The
applicable percentage is the rate of
employment taxes calculated under
section 3509(a). Generally, the applicable
percentage is 10.68% for compensation
paid at or below the social security wage
base. However, for compensation paid at
or below the social security wage base in
2011 the applicable percentage is 10.28%
because the employee social security tax
rate was reduced to 4.2% for 2011. To
determine which percentage to use, you
will look to the most recently closed tax
year. For example, a taxpayer
reclassifying a class of workers for a tax
period beginning in 2011 would look to
compensation paid in 2010 and would
multiply Column A of line 18 by 10.68%. A
taxpayer reclassifying a class of workers
for a tax period beginning in 2012 would
look to compensation paid in 2011 and
would multiply Column A of line 18 by
10.28%.

Line 20
Multiply the amount in Column B of line
18 by the applicable percentage. The
applicable percentage is the rate of
employment taxes calculated under
section 3509(a). The applicable

Instructions for Form 8952

Line 22
Multiply the amount on line 21 by 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 processing delay.

Paid Preparer Use Only
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. Paid preparers must
sign paper forms with a manual signature.
The preparer must give you a copy of the
form in addition to the copy to be filed
with the IRS.
If you are a paid preparer, enter your
Preparer Tax Identification Number
(PTIN) in the space provided. Include
your complete address. If you work for a
firm, you also must enter the firm’s name
and the EIN of the firm. You cannot use
the EIN of the tax preparation firm,
however, in place of your PTIN.
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 the IRS
website at www.irs.gov/taxpros.
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.
Privacy Act and Paperwork Reduction
Act Notice We ask for the information
on these forms to carry out the Internal
Revenue laws of the United States. We
need this information to determine your

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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. Failure
to provide all the requested information
may prevent processing 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.
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 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:
Recordkeeping . . . . . . . . . . . . . .

6 hrs.,
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 would be happy to hear from you. You
can write to the Internal Revenue Service,
Tax Products Coordinating Committee,
SE:W:CAR:MP:T:M:S, 1111 Constitution
Ave. NW, IR-6526, Washington, DC
20224. Do not send this form to this
office. Instead, see Where to File, above.