Re: [taxchat]Unfiled 940 & 941 help

Until the recent creation of the 944 everyone had to file a quarterly 941. You say that he treated all persons as contractors but didn't issue any 1099s. That being said then there were no taxes of any sort taken out and the employees either reported their income in full on a Schedule C or didn't report any income because they didn't receive a 1099 and dismissed the income. It is my understanding that the employer can't gross up wages for the SS & Med taxes that weren't properly taken out as they have to now pay both out of their own pocket. Unless the employees have not filed their returns they are only going to be subject to taxes on the last three tax years and the employer will most likely not be allowed to take the deduction for amounts paid to them for earlier years. The IRS has no recourse on tax payers that filed timely when a 1099 wasn't filed and the recipient doesn't report the income so the IRS will most likely deny the deduction to the payer since the payer has not closed their books totally.  

On 9/20/08, Marc Enzi <menzi@earthlink.net> wrote:

I have a new client who came to me with 8 years of unfiled 940 & 941 returns.  He's got IRS notices and they are after him to get his stuff filed.

Do I need to compile 32 941s, or is there a way to simply do one for each year?

He kept records of total annual payments to employees for some years, but quarterly for only a few years.

He treated all of his employees as contractors but didn't issue 1099s either. He had some unemployment, workers comp and a social security disability claim...so he is on the hook and needs to get these things filed.

My question is - can I do a summary 941 for the entire year, or does it need to be done quarterly?  If it is quarterly, I suppose I will just divide the years employee payments by 4 and gross up the FITW? and FICA withholding.

He wants me to say he did not withhold anything from the pay for FITW, but if he does that, I think the employees may get under reporter notices... THis is a mess.

Any advice on the best way to tackle this?

 

Thanks,

Marc

 

 

 

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