TE/GE - Classification Settlement Program

The Classification Settlement Program (CSP) establishes procedures that will enable taxpayers and the IRS to resolve worker classification cases as early in the administrative process as possible, thereby reducing taxpayer burden. The procedures also ensure that the taxpayer relief provisions under section 530 of the Revenue Act of 1978 are properly applied. By using the CSP, examiners can offer an entity under examination a worker classification settlement using a standard closing agreement.

CSP agreements are closing agreements that bind the Service and the taxpayer to prospective tax treatment for future tax periods. Therefore, all CSP agreements must be reviewed and approved. Group managers must review the CSP agreements.

Except as otherwise provided in situations listed in IRM 4.23.6.6, Eligible CSP Employment Tax Cases, and IRM 4.23.6.7, Cases Included in the CSP, you must present a CSP offer to a taxpayer. The taxpayer has the option of either accepting or rejecting the offer. All examinations that involve worker classification issues must follow the CSP Procedures as explained in the following manuals:

IRM 4.23.6, Classification Settlement Program (CSP).

IRM 4.23.10, Report Writing Guide for Employment Tax Examinations.

IRM 4.70.14.2.1.4.4.1, TE/GE – CSP Offer Case Closing Procedures.

For EO Exam Only:

The Group Manager will:

Ensure examiners use the most recent version of the CSP agreement template and the correct CSP agreement form, and ensures that the CSP agreement form is completed correctly.

Review and submit the final CSP package to the Area CSP Reviewer for accuracy and consistency.

Sign the CSP agreement (in triplicate) after the Area CSP Reviewer concurs with, and the taxpayer signs, the agreement.

Send the final CSP package to the CSP Coordinator.

The EO Area CSP Reviewer (one per area):

Reviews proposed CSP agreements within two weeks of receipt of the CSP packages from group managers.

Consults with the CSP Coordinator as necessary.

Returns a signed memo to the group manager concurring with the offer.

Find a list of CSP Reviewers on the EO Employment Tax SharePoint site.

The EO CSP Coordinator:

Acts as a consultant to the group managers and Area CSP Reviewers on all CSP cases.

Responds to managers’ and examiners’ technical and procedure questions over the CSP.

Participates in calls, as needed, with group managers and examiners or Area CSP Reviewers on CSP procedural problems, technical matters, emerging issues, and on the conduct of the overall program.