Video instructions and help with filling out and completing Can Form 843 Withheld

Instructions and Help about Can Form 843 Withheld

Oh and welcome my name is Janice and I'm the managing journey of the low income taxpayer clinic here at Maryland volunteer lawyer service we are delighted to welcome Stephen Kaufmann who's going to be talking to us about the federal payroll tax case I hope you can all hear me there is a section there for questions so if you do and Stephen is welcoming questions throughout this talk so please feel free to write in your question and we'll read it aloud and seasonal answer at them so okay here we go thanks Jen oh hi I understand that the attendees include attorneys and CPAs and enrolled agents and I feel kindred spirit with you guys I've been practicing law for 30 years plus or minus was dumb before I practice law I went to Loyola on college and I majored in accounting and when I graduated in Royal I went to work for the Internal Revenue Service as a revenue agent with the law school University of Maryland in the evenings and I became a CPA and I became an attorney so it's kind of a cross-section doing doing packs and packs related law as a cross-section of those two it's been a very interesting it's been a lot of fun and federal payroll tax cases is that's that's an area of the law where I develop an expertise very early on and the reason is because there are so many federal payroll tax cases out there they're ubiquitous it's really incredible so before before we even get to the first slide I'd like to recommend that all of you when you have a client give a lot of consideration about whether you want to hire employees or treat someone the worker as an employee or take some other approach because there are so many ramifications legal and otherwise that decision of course you have the tax ramifications but Department of Labor our intellectual property liability family League on and off and on and on so what we're proposing here is that you've made the decision to treat a one or more workers as an employee so we get into the federal payroll tax case kind of go to the next slide um so when you have workers who are employees there's federal payroll tax compliance state level as well but we're going to be focused on the federal one of the first things of course that you have to be aware of is there's a requirement to make federal tax deposits there's a way of determining whether you are a monthly depositor semi-weekly depositor or so-called look back period it's a one year look-back period for that which runs from July through June and that makes the determination for you but once that's determined then you've got to make those tax deposits electronically in a timely fashion so that's one of the compliance issues that you're going to confront if you have workers that you treat as employees next again at the federal level there are going to be filing requirements so as an employer you'll have to file quarterly form forms 941 and they're due one month after the end of each payroll period the payroll periods would be apart June September and December you'd also have to file an annual unemployment tax return form 940 and then finally if there's still tax remaining at the end of the period it hasn't been positive there are payment requirements you would have to pay any tax remaining with them with your return Janna's can go to the next slide now what was common out there is that there are so many people starting their own businesses these days and they're under capitalized or they're under educated in terms of what with the compliance requirements are there's a lot of non-compliance people don't make deposits they don't follow returns they don't pay the tax maybe they don't issue w-2s etc etc so what are the consequences for non-compliance well the first that you'll see it at the top of the list is you're going to incur interest expense on the tax bin saud do and unpaid and then there are on the civil penalty the civil penalties are pretty heavy let's let's talk about them the first civil penalty is the failure to deposit penalty FTD and that's going to range from 2 to 15 percent depending on how when how late your deposit is the next penalty and this is huge is the failure to file penalty the failure to file penalty is 5% per month or part of a month for any month that you haven't failed or that you fail to file even if you're one day late it's 5% so I've got a little mitigation tip there if nothing else whether you can they are not file and of course if you don't file as you know that could be considered a crime setting in a file so in terms of advising clients clients a lot of times because they can't pay they're afraid the IRS is going to come in and shut them down they hope file and these problems tend to compound so if nothing else does take away anything else from this file and there is one other thing I want you to take away that's called designation we'll talk about that a little later next you have the of pay penalty and the failure to pay penalty is one half percent per month and that runs from the due date of the return and it's it's imposed on any tax expectedness do want to return until you receive what's called a notice and demand notice and demand is really just a bill from the IRS fancy term for it there's a provision in the code that mandates the notice and demand but once you receive a notice and demand then that 50% goes to 1% per month up