Posts Tagged ‘Payroll’

Have You Failed to Report or Pay Any Taxes?

Saturday, February 26th, 2011

The articles from this website are provided solely for the purpose of disseminating and sharing of important information related to a variety of topics.  In the United States the timely filing of required tax returns and the payment of the associated taxes are not an option.

Although every American may have a different opinion, my own experience has lead me to conclude that our nation has been in a downward recessionary spiral since the year 2000.  There have been a myriad of outcomes and associated adverse economic impacts which have already occurred or are still occurring throughout our nation, including (but not limited to):  a)  job losses, b) unacceptably high unemployment, c) unprecedented losses in the housing market, d) the transfer of jobs overseas which were previously filled in America, e) an erosion of the customer base for most businesses, f) personal and business failures (bankruptcy), and g) a significant loss of available working capital (businesses) or available cash after monthly living expenses have been paid (individuals).  

One of the related outcomes from one of more of the above situations is a failure to file all of the required tax returns in a timely manner (on or before the required due date), and failing to make the required tax deposits and/or pay the required taxes when due.  This article is intended to provide important information for you when either or both of these events has occurred.

Before proceeeding, there is a special major category of taxes that requires a separate discussion.  This category is “Payroll Taxes.”  Anyone who withholds payroll taxes for another person (i.e. your employee) is considered to be a “fiduciary” and one who holds assets for another person is a “trustee.”   Therefore, a fiduciary is a person who holds assets in trust for a beneficiary. It is illegal for a fiduciary to misappropriate money held in trust for someone else for personal gain.  From page 3-47 of the Thomson-Reuters “Write Up Services” manual “The IRS can also assess a penalty equal to 100% of the taxes due if the employer does not withhold or remit employment taxes.  The penalty can be assessed on any person that the IRS determines is (a) responsible for collecting, accounting for, and paying the taxes, and (b) acted willfully in not doing so.  Thus the penalty can be lievied against the company (or organization), or an officer or employee of the company (or organization)” (   ) additional entity added.

If you are in a situation which is described above, there may be courses of action which you can follow to successfully resolve the matter and move yourself back to a position of “compliance with all of the Federal and state laws.”  Generally speaking, the following events either have already occurred, are in the process of occurring, or will occur:

  • You failed to file your tax returns and/or pay the associated taxes when required by law.
  • You have received a notification letter in the mail from the “taxing authority” (Federal or state).  In the upper right hand corner of the notice is a  Notice Number.  This code provides specific information on the cause for the notification. 
  • The body of the letter provides you with a specific period of time in which to respond (i.e. usually 30-60 days).  Even if you can not presently pay the taxes, don’t fail to respond to this notice.  It will only make matters worse for you.
  • Depending on the decisions that you make and the events that occur after you receive the notification letter, you may:  a) file the delinquent report(s) and pay the taxes which are due, plus interest and penalties, b) execute an installment agreement with the taxing authority, c) mutually resolve the matter via an “Offer In Compromise” with the taxing authority, d) the taxing authority will place a “lien” against any and all of the property that you own to satisfy the delinquent taxes, interest and penalties, or e) liquidate all of the seized assets to satisfy the lien

You should certainly consult with and engage the services of a CPA, but preferably a tax attorney,who will act as your representative, IF your situation can not be successfully resolved via options a) through c) above.  This representative should have an extensive background and experience in the successful resolution of tax matters exactly as yours. (more…)

Did Your Net Pay Change in January???

Friday, February 11th, 2011

I had several inquiries during January on this subject.  The questions were received from those who are still employed and from retirees.  In a nutshell, the provisions of the “Making Work Pay” tax credit were not extended past tax year 2010, and were allowed to expire on schedule.  The tax credit was only available for tax years 2009-2010.   Another contributing factor was the late December enactment of the “Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010” on December 17th.

Due to the late enactment of these tax law changes, the IRS asked employers and plan administrators to adjust their systems as soon as possible but not later than January 31, 2011.   This meant that employees and pension recipients may not have seen the full impact of these changes until their first paycheck in February, 2011.

Once employers implement the changes, there will be a net increase in take-home pay for most employees (excluding the impact of any other withholding amounts, such as withholding for health insurance, state income taxes, etc.).

Contact your pension plan administrators, human relations, or payroll department to be absolutely sure that your 2011 gross earnings, deductions, and net pay are all correct.  (more…)

Employee or Independent Contractor?

Friday, August 21st, 2009

Employee vs. Independent Contractor – Ten Tips for Business Owners 

If you are a small business owner, whether you hire people as independent contractors or as employees will impact how much taxes you pay and the amount of taxes you withhold from their paychecks. Additionally, it will affect how much additional cost your business must bear, what documents and information they must provide to you, and what tax documents you must give to them.

Here are the top ten things every business owner should know about hiring people as independent contractors versus hiring them as employees.