I’m seeing an increased number of businesses being audited for worker misclassifications by both state and federal agencies. In the past several months I’ve encountered a significant increase in the number of businesses who are currently being audited for employment taxes and misclassified workers by the IRS or a state employment tax agency. Oftentimes they [...]
In my seminars I tell participants that, “Over 70% of all employment tax audits find misclassified workers, resulting in a tax assessment.” The reason the number is so high is because tax agencies rarely select a company for an employment tax audit unless they suspect there are misclassification errors. This means the auditor shows up [...]
Because there are a whole bucket of reports and taxes that must be filed and paid this time of year. Think of the next couple months as the Holiday Season for Tax People! What’s happening? Due by January 31, 2010 Forms W-2: You must furnish each employee a completed Form W-2, Wage and Tax Statement. [...]
That’s right! For example, California’s EDD doesn’t publish this fact (government agencies don’t like to publicize these statistics) but at least 70% of all companies audited by them receive a tax assessment for misclassified workers, including back payroll taxes with penalties and interest. There are some reports that the IRS’ finds misclassified workers in 90% [...]
Did you know: Over 70% of all employment tax audits result in finding misclassified workers? The EDD and the IRS win 90% of the cases that go to hearing or trial? During this recession, the EDD and the IRS have been getting increased funding to enforce IC compliance? It is too late to prepare for [...]
Often times, clients want a quick, easy solution to the IC compliance question. Unfortunately, a simple answer won’t work when it comes to who is an employee or independent contractor. There is NO universal formula where “if you do this you have an IC…” Common law is too complex for an easy answer In the previous article [...]
What’s an independent contractor? I just want a simple answer! Common laws and statutory laws that determine who is an employee or independent contractor are not that simple. There is not a magic pill to prescribe to make someone an IC, or a formula where “If you do [this] you have an IC.” Whenever I give [...]
Over the years, I’ve found some employers are unaware of specific conformity laws intended to protect their company, but due to confusion around reporting, these laws caused more harm than help. So I thought I’d take a moment to share an example with you. You can thank me later. Essentially, there are federal “conformity [...]
Short answer: If the LLC is organized as a corporation, and is not an attorney, then a 1099 is not required. LLC’s can be organized in different business structures “LLC” means “Limited Liability Company.” A LLC is not necessarily a “Corporation.” A mistake many people make is to assume that anyone with an LLC is [...]
That’s correct: under the Unemployment Insurance Code 13052.5, if the EDD audits your company and decides you misclassified your consultants you will be assessed for their personal income tax withholding. Also, it is illegal for you to go back and attempt to collect the tax from the consultant after the fact. The personal income tax [...]
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