Tax Law Insights Blog | Burr & Forman LLP

Federal Employment Taxes: Employee-Independent Contractor Issues (Part 5)

Erik P. Doerring — Wed, 20 Dec 2017 09:00:01 -0500

Section 530 Relief

Employers that have workers which the employer classifies as "independent contractors" (Form 1099) risk having these workers reclassified by the IRS as employees. This is a major audit area for the IRS. If the IRS does audit an employer, and reclassifies "contractors" as "employees" this will subject the employer to substantial federal employment tax liabilities, penalties, and interest, and the employer will also be required to treat the "reclassified" contractors as employees going forward.

If an employer is audited by the IRS, the IRS will generally find ...

Federal Employment Taxes: Employee-Independent Contractor Issues (Part 4)

Erik P. Doerring — Thu, 07 Dec 2017 09:00:02 -0500

IRS Voluntary Worker Classification Settlement Program

Employers that have workers which the employer classifies as "independent contractors" (Form 1099) risk having these workers reclassified by the IRS as employees. This classification is a major audit area for the IRS. If the IRS does audit an employer and reclassifies "contractors" as "employees" this will subject the employer to substantial federal employment tax liabilities, penalties, and interest. The employer will also be required to treat the "reclassified" contractors as employees going forward.

If an employer ...

The South Carolina Deed Recording Fee and New South Carolina Department of Revenue Guidance

Erik P. Doerring — Wed, 06 Dec 2017 09:00:03 -0500

South Carolina assesses a recording fee on deeds to real property. The South Carolina deed recording fee is imposed for "the privilege of recording a deed," and is based on the transfer of real property from one person or business entity to another. The fee is generally imposed on the grantor of the real property, although the grantee may be secondarily liable for the fee. There are specific instances where the grantee, and not the grantor, is directly accountable.

This fee is composed of two fees - a state fee of $1.30 for every $500, or fractional part of $500, of the real property's value ...

Federal Employment Taxes: Employee-Independent Contractor Issues (Part 3)

Erik P. Doerring — Wed, 29 Nov 2017 09:00:04 -0500

IRS Form SS-8 Determinations of Employee Status

Employers that have workers which the employer classifies as "independent contractors" (Form 1099) risk having these workers reclassified by the IRS as "employees." This determination is a major audit area for the IRS. If the IRS does audit an employer and reclassifies "contractors" as "employees" this will subject the employer to substantial federal employment tax liabilities, penalties, and interest. The employer will also be required to treat the "reclassified" contractors as employees going forward.

A worker treated by an ...

Federal Employment Taxes: Penalties and Interest (Part 2)

Erik P. Doerring — Wed, 22 Nov 2017 09:00:05 -0500

Employers that pay wages and other forms of compensation to their employees must comply with federal tax return filing and payment/deposit requirement. Employers that receive services from non-employee contractors and which make payments to these contractors must also separately report these payments. The IRS imposes penalties on employers who fail to timely meet their filing requirements, as well as penalties and interest for not making timely tax deposits and/or payments to the IRS.

Penalties

Forms 941 and 940

Subject to limited "reasonable cause" exceptions, the failure to ...

Federal Employment Taxes: Filing and Payment Requirements for Employers (Part 1)

Erik P. Doerring — Thu, 09 Nov 2017 09:00:06 -0500

Federal Employment Tax - Form 941

a. Employers are required to collect federal employee income withholding taxes and the employee's share of Federal Insurance Contributions Act taxes (FICA), from wages paid to employees, match the employee's share of FICA, and deposit these ...

You are Contacted by an IRS Criminal Investigator: What Do You Do? Defending an IRS Criminal Investigation (Part 11)

Erik P. Doerring — Wed, 11 Oct 2017 09:00:07 -0400

The IRS investigates criminal violations of federal tax laws, including tax evasion, tax fraud, and not filing tax returns. Many people do not realize that simply not filing a tax return when it is due is a crime under federal law.

The IRS analyzes criminal violations of federal tax laws through its "Criminal Investigation Division," or "CID." CID agents are referred to as "Special Agents."

The CID examines individuals and businesses for potential criminal tax violations. CID receives information about possible criminal tax violations from a broad range of sources, including ...

You or Your Business Gets an IRS Audit Notice: What Do You Do? Defending an IRS Audit (Part 10)

Erik P. Doerring — Wed, 04 Oct 2017 09:00:08 -0400

The United States has a voluntary tax reporting system. Once a tax return is filed, however, the IRS will seek to verify that filed tax returns comply with the tax laws. To achieve this, an IRS audit ("examination") must take place. There are different types of IRS audits.

The most common type of IRS audit is a "correspondence audit" conducted entirely through the mail. Most correspondence audits are initiated by the IRS computer system, which receives income information for individuals reported to the IRS by third parties (e.g., Form W-2 wages/salaries from employers; Form 1099 ...

The IRS is Garnishing My Wages or Taking My Bank Account: What Do I Do? Collection Due Process Relief (Part 9)

Erik P. Doerring — Wed, 27 Sep 2017 09:00:09 -0400

If an individual or business owes but has not paid federal taxes, the IRS will make efforts to collect these taxes. The IRS will first send a series of notices requesting payment, but if the taxpayer does not respond to the IRS and make arrangements to pay the taxes, the IRS will then begin "enforced collection measures." The most common measures used by the IRS to collect taxes are (1) the "levy" (or garnishment), where the IRS notifies an employer to take taxes out of an employee or a worker's paycheck and send this money to the IRS; and (2) the bank account levy or seizure where the IRS simply ...

I Owe Joint Taxes with My Spouse: What Do I Do? Innocent Spouse Relief (Part 8)

Erik P. Doerring — Wed, 20 Sep 2017 09:00:10 -0400

Married couples may file a joint federal income tax return together, reporting their joint income and expenses. The benefit of a joint return is that the overall tax rate may often be lower. However, if a joint return is filed, each of the spouses is fully and individually liable for all taxes that are required to be paid.

Married couples may also elect, instead, to separately file their own returns. The downside is the tax rate for each separately-filing spouse may be higher, but each spouse is only liable for his or her own taxes - and not the taxes of the other spouse.

If a joint tax return is ...