IRS payroll tax problem With Nick Nemeth
  • December 8, 2017
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Payroll taxes can not just cost a company a lot of money, but it can also be detrimental to its reputation. Every year several companies get penalized for making payroll tax payment mistakes, some intentional some unintentional. To avoid getting to that point where the IRS comes knocking at your company door for a payroll default, it is advisable to avoid the common mistakes that most companies. Come, let us take a look at some payroll mistakes employers make and ways to avoid them.

1 . Improper Worker Classification

Employers are supposed to classify their workers as employees or independent contractors, but many employers do not get this classification right the first time. As a result they get penalized by the IRS for doing the wrong classification. If you made the wrong classification too, you can reclassify them under the Voluntary Classification Settlement Program (VCSP).

2. Issuing Payment without Obtaining Form W-9

Companies are supposed to withhold taxes from a vendor’s payment, unless they obtain a W-9 Form that clarifies the vendor should be exempt from mandatory withholding. In case a company fails to do so, they can be subject to a 28 percent penalty. Note – The IRS may still pursue a case against a company and force a company to pay a failure-to-deposit penalty, if it believes that the company made the payment without being aware of the vendor’s status of exemption from backup withholding.

3. Excluding Taxable Fringe Benefits in Employees’ Income

Fringe benefits such as gift cards, awards or prizes are liable to federal income tax. Employers who fail to include the fair market value of these fringe benefits in their employees’ compensation are subject to penalty. The only exception are the items that are de minimis in nature. Gift cards or any other form of cash equivalents are never de minimis.

4. Excluding Reimbursements from Reportable Income

Companies can exclude the time, travel and commuting expenses from their employees’ taxable income if they are out on a short-time assignment. However, if the employee moves goes on a long term assignment (more than a year) or moves to a permanent work site, the travel and commuting benefits received by the employee may need to be reported in their income.

Need Help with an IRS Payroll Tax Problem?

If you are facing an payroll tax debt problem and need help to get out of it,  call the Law Offices of Nick Nemeth at (972) 426-2553 or click here for a FREE TAX ANALYSIS and we will get back to you shortly. In your first initial free consultation, you will be advised as to what the best step moving forward will be.

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What Our Clients Have to Say

Susan WilsonSusan Wilson
03:27 25 Jan 23
I have been very pleased with the solid counsel and guidance that Nick Nemeth has provided me regarding my tax issue. I found him to be honest and straightforward which I appreciated. I was impressed with his relevant experience and knowledge . He has definitely brought me peace of mind during a difficult and stressful time.
Sarah HowardSarah Howard
03:44 14 Nov 22
I would like to thank Mr. Nick and his staff for the superb help that I received from them. My IRS problem was resolved quickly and efficiently. It took 2 visits to convince me that I was over my head. I thought that I could call the IRS, appeal my tax notices and settle on a payment plan on my own. After many phone calls to the IRS, waiting sometimes more than 4 hours with no resolution to speak of, it proved to be extremely difficult and stressful. Revisiting Mr. Nick was a huge wake up call. My account was reviewed, and a payment plan was established with the IRS within a week. I will be forever grateful to the staff who worked on my case and especially to Lorna who listened to me vent while going through this painful process.
00:33 07 Aug 22
I cannot say enough good things about Nick and his team. When I first met with Nick he was up front, honest, friendly and efficient. When I worked with one of his attorneys, Eric B, I was just as pleased. All of the staff there are nice and very helpful. I wish I hadn't waited so long to get help with my issue. Over 6yrs I tried getting through and getting anywhere with the IRS and hardly made any progress. I know this may not be the case for all, and even I thought it would take longer than it did, but 3mos and they had my situation straightened out. I still can't believe it. Thank you thank you THANK YOU for all that you did for me. This is a huge burden gone out of my life now thanks to you. If anyone needs help out there, I know you may not want to shell out more money to get their help but it may just save you in the long run.
Spoilly GirlSpoilly Girl
23:49 03 Aug 22
The Nemeth Law team is exceptional. They treat their clients like a family member who is in crisis. They want you to get the best possible outcome. I really appreciate everything that they did for me. Jake and Ashley had the greatest role in my case and it all turned out for the best for me. Thank you Nick and team for easing my fears and getting me through the long process. I'm truly grateful.
Eddie WaltEddie Walt
19:44 12 Jul 22
During a time in which competent, professional service at a fair price seems to have disappeared, Mr. Nemeth and his team are a refreshing breath of fresh air.From my first phone call to the final settlement of our case with a non-responsive IRS, they under-promised, over-delivered and were in constant courteous contact to make sure we knew exactly what was happening and where we stood.I hope to never need their services again, but, should I receive another friendly letter from the IRS...I know who to call!
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