Re: [taxchat]Unfiled 940 & 941 help

I believe the percentage IRS defaults to is 1.5% federal withholding on these cases.    BUT if you acquiesce to this, look for the State to come after you for the full amount of State withholding, UC taxes and disability, if applicable.  The dollars due will add up quickly.

 

You may need to fight tooth & nails the reclassification of any self-employed businesses - to supervised employees.

 

How much was paid to the owner and his family themselves?  Perhaps these payments were not for services at all?   Maybe loans, or distributions, director fees?

Did the recipients report the income on Sch C?  If so, what better proof is there that they are unsupervised self-employed businesses?

 

 

You may need to do a lot of research, starting for IRS form SS-8;  Sec 530 safe harbor; Pub 1976  and  QETP program

 

 

Colin Cody, CPA

 

----- Original Message -----

From: Marc Enzi

To: taxchat@yahoogroups.com

Sent: Saturday, September 20, 2008 11:57 AM

Subject: RE: [taxchat]Unfiled 940 & 941 help

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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