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The New California Willful Misclassification Of Independent Contractors Law, Payroll Taxes And Your Business

January 9, 2012 By

As a resource to our past, present and potential future clients, the Tax Resolution Institute provides an in-depth analysis of the new California independent contractor law. When Governor Brown signed the new law at the end of 2011, the stakes rose to the next level. and your business could be in serious financial jeopardy, both with payroll tax violations and numerous other penalties. Here is the first part of our two part analysis.

California Enforcement Spotlight In Your Business

California Enforcement Spotlight On Your Business

Part 1 — If you are a business owner in California and you employ independent contractors, whether you are based in Orange County or San Diego, Los Angeles or Irvine, it is time to pay attention because the EDD could be coming after you. Let’s face the simple truth – California is struggling to collect more revenue and has begun implementing some of the most aggressive tax collection actions in the nation. In October 2011, Governor Brown signed Senate Bill 459 into law that makes the “Willful Misclassification” of employees as independent contractors illegal.

Working with the California Employment Development Department, the law gives California’s Labor Workforce Development Agency authority to assess very high civil penalties and take severe actions against a person or employer violating this new law, including extensive payroll tax violations.

The 3 key points of the law are outlined as follows:

Point 1 – This law allows California’s Labor Commissioner, or a court, to levy a civil penalty of $5,000 to $15,000 for each violation found to be “willful” (a single misclassified individual is one violation).

Point 2 -If the agency, or a court, determines there is a pattern and practice of these “willful misclassifications,” a civil penalty of $10,000 to $25,000 for each violation may be imposed.

Point 3 – These fines are in addition to any other assessments, penalties and fines that may be imposed under other laws.

A New Day For Independent Contractors In California

New Day For Independent Contractors And Employers In California

Do not think that your company will be exempt or you will pass under the radar of this new law. These fines will be levied against any business that continues to “willfully misclassify” workers. “Willful misclassification” is defined in the new law as “avoiding employee status for an individual by voluntarily and knowingly misclassifying that individual as an independent contractor.” What is truly challenging about the new law is that the courts have generally defined “knowing” in this context as including constructive knowledge, which can mean what an employer purportedly should have known.

What is frightening is that the law not only includes financial penalties and payroll tax violations, but has a public disclosure aspect as well. Any violator will be required to post a letter on its Internet website for one year that explains the violation in detail. The letter must contain the following according to the letter of the law:

(1) That the Labor and Workforce Development Agency or a court, as applicable, has found that the person or employer has committed a serious violation of the law by engaging in the willful misclassification of employees.

Yes, you have to admit in public that you violated the law.


(2) That the person or employer has changed its business practices in order to avoid committing further violations of this section.

Yes, like a child, you must admit on your business premises that not only did wrong, but will do better in the future.

(3) That any employee who believes that he or she is being misclassified as an independent contractor may contact the Labor and Workforce Development Agency. (The notice must include the mailing address, e-mail address, and telephone number of the Agency.)

Yes, the purpose of the posting is to help your employees prosecute you for the willful misclassification.

(4) That the notice is being posted pursuant to a state order.

As you can see, the consequences are extreme and the state of California, represented by the California Employment Development Department and the California’s Labor Workforce Development Agency new and extensive powers of both investigation and  retribution. In order to protect your business, you need a tax professional on your side like the Tax Resolution Institute, a respected company with both experienced Tax Resolution Specialists and Tax Attorneys on staff. This ends Part 1 of the account of the new law and regulations in regards to California independent contractors and the new Worker Misclassification Law. If you have a serious payroll tax problem with California Employment Development Department, the time to take action is now. Contact the Tax Resolution Institute for real help!

Filed Under: California Tax Relief, Payroll Tax Problems, Tax Relief, Tax Resolution Services Tagged With: , , , , ,

From CNN: President Obama & House Speaker Boehner Square Off In Payroll Tax Fight With Zero Progress

December 21, 2011 By

By Tom Cohen and Alan Silverleib at CNN, the National Payroll Tax Cut that was supposed to be extended to businesses and the American people with a temporary compromise by Congress for an additional two months made zero progress before shutting down for the holiday break. As the Senators and Representatives take off for a season of good cheer, American business owners still do not know whether they will continue to have a break in payroll tax cuts to help them out next year.

John McCain explained the conflict being caused by the Tea Party radicals the best: The lingering dispute is hurting us, veteran Republican Sen. John McCain of Arizona told CNN, adding that the reality of the issue is that the payroll tax cut must be extended to help out Americans still struggling in the economic recovery.

Payroll Tax Cut Helps Everyone

Payroll Tax Cut Helps Employers And Employees

Let’s face the truth! The Tax Resolution Institute recognizes that the first priority of the Federal government, even as an election year rapidly approaches around the bend, is not to take care of and make sure the American business owner is secure and comfortable as the economy continues to be a roller-coaster ride. If you company has serious tax issues and you are confronting a payroll tax debt, contact the Tax Resolution Institute today for help.

Here is the article, cut down to size, as it basically appeared on CNN.com…

Washington (CNN) – The congressional impasse over extending the payroll tax cut became a showdown Tuesday between President Barack Obama and House Speaker John Boehner. After the Republican-controlled House passed a measure calling for more negotiations, Boehner made public a letter to Obama that urged him to order the Senate back from its holiday break to take part in further talks.

Boehner: ‘I need the president to help’

 

Leaders in the Democratic-controlled Senate reject that idea, and Obama agreed with them, telling reporters in a previously unscheduled appearance that the House must approve a two-month extension passed by an 89-10 vote in the Senate. ”The bipartisan compromise that was reached on Saturday is the only viable way to prevent a tax hike on January 1,” Obama said. “It’s the only one.”

The House motion, passed Tuesday with no Democratic support on a 229-193 vote, expressed the chamber’s disagreement with the Senate plan and called for the dispute to be immediately taken up by a House-Senate conference committee — something already ruled out by Senate Majority Leader Harry Reid, D-Nevada. However, Boehner and the Republican leadership prevented a direct vote on the Senate’s two-month extension, signaling they may lack enough GOP support to defeat it in the face of unrelenting pressure from the White House, Democrats and some Senate Republicans.

Obama calls House to vote on extension

 

Instead, the House approved a separate resolution supporting a yearlong extension of both the payroll tax cut and emergency federal unemployment benefits. House Republicans are also pushing for a new, two-year “doc fix,” or delay in significant scheduled pay cuts to Medicare physicians. All three measures are set to expire December 31.

Meanwhile, House members headed out of town for their holiday break after legislative business ended Tuesday. The Senate measure approved Saturday called for a two-month extension of the payroll tax cut, unemployment benefits and the “doc fix” spending. It was a fallback plan designed to give both sides more time to negotiate.

Now that short-term compromise has slammed into a conservative roadblock in the House, where rank-and-file Republicans are fuming over the two-month time period of the plan, among other things. The lingering dispute is hurting his party, veteran Republican Sen. John McCain of Arizona told CNN, adding that the reality of the issue is that the payroll tax cut must be extended to help out Americans still struggling in the economic recovery. ”It is harming the Republican Party,” McCain said. “It is harming the view, if it’s possible any more, of the American people about Congress.”

Boehner called for Obama to order the Senate to return from its holiday recess and appoint negotiators. The House already has come back from its holiday break to respond to the Senate’s two-month proposal. In a letter to Obama made public by Boehner’s office, the speaker said, “I ask you to call on the Senate to return to appoint negotiators so that we can provide the American people the economic certainty they need.”

White House spokesman Jay Carney told reporters Tuesday that the House needs to pass the Senate two-month extension so that a full one-year extension can be worked out. ”In order for it to get done, it has to pass the House,” Carney said, adding that Obama “cannot order the extension of the payroll tax cut. Congress has to take action.”

Obama then made his surprise appearance in the White House briefing room and called for Boehner to allow an up-or-down vote on the Senate proposal. ”House Republicans refuse to allow a vote,” Obama said, noting that Senate leaders from both parties had agreed to the short-term extension in order to guarantee that taxes don’t increase for working Americans while negotiations continue early next year on the one-year extension that House Republicans say they support. ”What they’re really holding out for is to wring concessions from Democrats on issues that have nothing to do with the payroll tax cut,” Obama said of House Republicans.

Vote on payroll tax bill delayed

The mistrust between the parties was palpable. When asked if Democrats were to blame for the impasse by refusing to name conference committee negotiators, Pelosi said the issue was the refusal by House Republicans to go along with the bipartisan support for the Senate plan. ”Whatever they say is irrelevant,” Pelosi declared about Republican claims of wanting a one-year payroll tax cut extension. “What they do is what’s important, and what they’re doing is not giving a payroll tax cut to 160 million Americans.”

A failure to act could have major economic and political fallout. The payroll tax break alone is worth roughly $1,000 a year for an average family and affects about 160 million Americans.

How The Payroll Tax Cut Affects America

State By State Across The Country — How The Payroll Tax Cut Affects America

Meanwhile, five mostly moderate Republican senators have called for the House to support the Senate’s two-month extension. Sen. Scott Brown of Massachusetts issued a statement after Tuesday’s House vote that said House Republicans “would rather continue playing politics than find solutions.” ”Their actions will hurt American families and be detrimental to our fragile economy,” said Brown. “We are Americans first; now is not the time for drawing lines in the sand.”

The Tax Resolution Institute completely agrees with the last point. Now is not the time to draw lines in the sand and play partisan politices. Now is the time to help ensure the future of the economic recovery by helping American businesses by continuing with the payroll tax cut. If you are in payroll tax trouble, not taking action right away is like putting a lock on your front doors and shutting down your business for good. Payroll tax problems are extreme, but the Tax Resolution Institute knows how to keep your doors open and save you business.

Contact Peter Stephan and the Tax Resolution Institute for a free consultation  and the professional help you need to avert a crisis and turn 2012 into a year of profitable progress for you and your business.

 

Filed Under: Delinquent Tax Debts, Payroll Tax Problems, Tax Relief, Tax Resolution Services Tagged With: , , , , , , ,

Small To Mid-Sized Companies With Delinquent Payroll Tax Debts Need A Tax Professional In Their Corner

December 6, 2011 By

The Tax Resolution Institute has seen payroll tax problems close a business overnight and lead to criminal sanctions against the owners, including prison time. Due to the economic downturn, the IRS has been increasingly aggressive in their collection attempts for past due payroll taxes. For example, if you are a struggling business owner in Orange County with delinquent payroll taxes, you need to know right away how to protect your company and livelihood. Why stick your head in the sand and let the IRS levy your funds and take control of your cash flow and your incoming finances Peter Stephan and the Tax Resolution Institute can help you resolve payroll tax penalties with the best in tax resolution services and avoid any long-term devastation to your company and your reputation.

Payroll Tax Borrowing Is Criminal Theft From The IRS

Payroll Tax Borrowing Is Criminal Theft From The IRS

In these difficult days in a questionable California economy, TRI has seen a couple of past clients in Orange County and Irvine go under. Luckily, they went under on their own terms and not in the clutches of the IRS. We warn every business client that delinquent payroll taxes can be the downfall of an otherwise successful company. Payroll tax problems can cause long-term damage that your business may never recover from while staining your professional reputation. None of your clients who owe you incoming invoices wants to be contacted the IRS and told to pay the money to them directly. But this is what will happen if you are not careful and smart.

It makes sense that in tough times a small business may find themselves in a cash crunch with a lack of financial resources. It is no surprise that you might be tempted to borrow from the money they collect from employment taxes to pay operating expenses. Not stealing the money, just borrowing it for a short period until things improve and invoices are paid and that big deal happens. This is a huge mistake because what many businesses don’t know is that the IRS views non-payment of payroll taxes as a criminal act of theft. The Internal Revenue Service does not care about your cash flow crisis. The payroll taxes you hold are called a trust fund because the federal government trusts you to make your payments. If you don’t, the penalties and consequences are quick and severe.

Collecting Payroll Tax Debts Is The Top IRS Priority

Collecting Payroll Tax Debts Is Now A Top IRS Priority

With highly effective collection methods, the IRS is ruthless and the biggest risk that business owners with payroll tax problems can take is incurring their focus. They will levy your customers and clients, and they will use every tool in the book to collect that delinquent payroll tax debt. In addition to having your cash flow cut off, you will also risk permanently losing valued customers because your payroll tax problems can damage your reputation. After being contacted by the IRS, your clients may no longer want to do business with you. Can your company afford in these times to lose any ongoing source of revenue. Even worse, if they can’t be paid, the IRS will close your doors, shut you down and start criminal proceedings against the responsible party, the signer on the payroll tax bank statements.

Do you want to find the doors to your company padlocked overnight while you face such charges and a possible prison sentence. And the Federal Government needs money. They need to fund deficit-reduction strategies as well as close the growing tax gap. As a direct result, the IRS is making the collection of delinquent payroll taxes their top priority. The IRS Revenue Officers are taking a closer look at employment tax returns and other possible reveals of a delinquent payroll tax problem.

If you have a payroll tax debt, the time to take action is today. You do not have the luxury to wait. Contact the Tax Resolution Institute and we will give you a free consultation that lays out possible methods of paying off the tax and avoiding the penalties. To protect the future of your business, you need a respected tax professional like Peter Stephan in your corner!

 

Filed Under: California Tax Relief, Delinquent Tax Debts, Payroll Tax Problems, Tax Relief, Tax Resolution Services Tagged With: , , , , , , , ,

How Could This Happen To Me? Peter Stephan On Why The Wealthy Have Serious Tax Problems Today (Part 1)

October 25, 2011 By

Peter Stephan of the Tax Resolution Institute gave an in-depth interview at the beginning of October about the wealthy and their sudden increase in income tax difficulties. In Part 1, Mr. Stephan describes how he is seeing so many wealthy families and individuals come to him with serious delinquent income tax problems with the Internal Revenue Service and their local state taxing agencies. In Part II, Peter Stephan explains how those tax problems continue to spiral out of control and offers potential solutions.

How Could This Happen To Me?

How Could This Happen To Me?

In well-to-do communities throughout Southern California, particularly in Orange County and the San Fernando Valley, Mr. Stephan has found a bevy of new clients in desperate need of help and wondering to themselves: “How could this possibly happen to me?” Peter Stephan explains how people with a history of a good income always believe that the next big job is just around the corner. For years, they have made tons of money, spending it almost as fast as it came in. They expanded their businesses, bought expensive homes, sent their children to private schools, and enjoyed the expensive toys of the affluent.

Independent Contractors and entrepreneurs who run their own businesses, particularly real estate brokers and high-end sales people, were slammed by the downturn in the economy. Suddenly their income was cut in half or more, and it does not appear to be coming back any time soon. The truth is that the recession and the contraction in the overall American economy hit everyone hard. When your family is used to having two big paychecks coming in every month, it is hard enough when one of those income sources is reduced.

Where Has All The Money Gone?

Where Has All The Money Gone?

Peter Stephan described how he has seen a multitude of couples where both parties were decimated when the economy in California went sour. The husband lost his job at the same time that the wife’s business went south, resulting in a sudden lack of cash for the first time in many years. How does a well-off couple maintain their lifestyle without the cash flow? Mr. Stephan calls such an attempt to not face reality a “Snowball Compound Effect” that just gets bigger and bigger.

First, the couple starts borrowing on their credit cards to pay their bills and support their family, leading to more and more debt. Second, as the recession hit the real estate market, their home value drops at the same time that their mortgage increases due to the variable rates. As the bills keep piling up and they can’t borrow any more money from friends and family, paying their taxes get lower and lower on the list of priorities.

The Weight of the Growing Debt can be Overwhelming!

The Weight of the Debt is Overwhelming!

If the family has their own business, they often stop paying payroll taxes as well, “borrowing” money from the Trust Fund. The IRS considers playing with payroll taxes and borrowing from the trust fund to be nothing less than theft from the Federal government. There is a reason why the trust fund recovery penalty is called the 100% Penalty. As the piling debt speeds up and bad decisions increase, Mr. Stephan described how you almost hear the Sonic Boom as the crisis gets wildly out of control.

In Part 2 of this article, Peter Stephan will show how and why the financial problems spiral out of control for a wealthy family in tough economic times, leading to a serious delinquent IRS income tax crisis. But there also is an answer. Mr. Stephan demonstrates how the Tax Resolution Institute can provide workable solutions that can provide real tax relief and lead to a new start before the crisis reaches the point of no return.

 

Filed Under: California Tax Relief, Delinquent Tax Debts, Income Tax Problems, Tax Relief, Tax Resolution Services Tagged With: , , , , , , ,

Orange County Alert: Serious Consequences For Unpaid Payroll Taxes For Business Owners

September 21, 2011 By

Due to a challenging economy,  number of big and small businesses in Orange County, ranging from Newport Beach to Irvine,are in constant struggle with their payroll tax deposits. Most of them have trouble keeping up with their unpaid IRS payroll taxes and they default on the trust fund. This article should serve as an alert to business owners in Newport Beach, Irvine and across Orange County that not covering your trust fund and failing to pay your payroll taxes can be the death knell for your company.

Payroll Tax Mistakes Are Serious!

Payroll Tax Mistakes Are Serious!

You should never treat payroll tax debt carelessly because it can lead to bank account and wage levies that can destroy your business. It is very dangerous to disregard or delay the resolution of such a tax debt because it could mean the end of your company. Unpaid payroll taxes are considered by the Internal Revenue Service as theft and the accompanying  penalties can include imprisonment. Unpaid IRS payroll taxes if not resolved immediately can lead to the padlocking of a business’ doors without a court order. Aside from that, unpaid IRS taxes will result to equipment seizure and contacting of clients to intercept payments owed. If it does not close your doors, such a tax scandal will destroy your reputation.

Fortunately, there are ways to get out of this financial tax mess. To get IRS tax relief for a payroll tax debt, you should contact a tax professional like the Tax Resolution Institute so action can be immediately taken. TRI can properly negotiate an IRS payment plan or an installment agreement. We can turn your IRS nightmare into a successful example of tax relief.

The IRS has special means of knowing who is responsible for failing to file payroll taxes or pay the Trust Fund. Never forget that the Trust Fund recovery Penalty is called the 100% Penalty for a good reason. The IRS can go after everyone in a business, including the owners, shareholders, officers, accountants and bookkeepers. In such cases, it is very risky to negotiate with the IRS on your own because there are legal and technical hurdles that can seriously hurt your case and your finances.

A qualified tax professional like the tax attorneys and CPAs at The Tax Resolution Institute can help protect and safeguard your future. Our tax professionals can negotiate for an IRS payment plan or Installment Agreement that suits your qualifications and financial condition. If you are experiencing a payroll tax crisis in Orange County  or anywhere else in the United States, contact the Tax Resolution Institute today for help.

Filed Under: California Tax Relief, Payroll Tax Problems, Tax Relief Tagged With: , , , , , ,

Payroll Tax Resolution Services

May 23, 2011 By

If you fail to file and pay your payroll taxes you will face numerous problems. Unpaid payroll taxes lead to enormous IRS penalties and interest. Failure to pay payroll taxes can lead to a seizure of your business assets and may require you to shut down. Payroll tax problems can affect your freedom to conduct business.

Payroll Tax Problems Are Deadly

Payroll Tax Problems Can Shut Down A Business

You need to take some steps as early as possible to resolve payroll problems.  The penalties accruing for unpaid payroll taxes can more than double within just a few months. It is crucial to take immediate action when dealing with payroll tax problems.  Many businesses use their payroll tax withholdings to meet other operating expenses. Business forget or do not realize that the money collected from the employees share of federal tax, Medicare and FICA does not belong to them but rather is the employee’s pay that must be paid to the government.

The IRS is most concerned collecting unpaid payroll taxes. The employees withholding portion of payroll taxes is deemed as the Trust Fund portion.  As an employer, it is your duty to collect federal withholding taxes from your employees and pay it to the IRS.  Failure to pay the Trust Fund portion of the tax will result that portion being assessed to the Responsible Person/s (a “Responsible Person” is anyone that is a decision maker for the company that could affect how the payroll was dispersed.  For example business owners, board members, bookkeepers, accountants, attorneys, everyone on the bank signature card, etc.)

Dodging Payroll Taxes Is A No Win Scenario

Dodging Payroll Tax Problems Is A No Win Scenario

Penalties for payroll tax problems are much more severe than they are with other tax problems. It is more difficult to negotiate a payroll tax settlement. Long term Installment Agreements are generally not available for owing payroll taxes, because the IRS wants to ensure that the business can pay off the back taxes and continue to pay current payroll taxes.  Offers in Compromise are virtually always rejected for unpaid payroll taxes when the company remains in business because they feel that if the business cannot afford their current liability let alone their back payroll taxes.

If you find yourself faced with payroll tax issues pick up the phone or email us at the Tax Resolution Institute.  You do not want to waste any more time letting these issues remain unresolved.  Time is money…a lot of money in this case.

Filed Under: Payroll Tax Problems, Tax Resolution Services Tagged With: , , , ,

The Tax Resolution Institute Helps Orange County Staffing Agency Keep Doors Open After Payroll Tax Crisis

March 9, 2011 By

With the expansion into Orange County, the Tax Resolution Institute has encountered a number of companies experiencing severe payroll tax problems in a challenging economy that need tax resolution services. Stealing from Peter to pay Paul, these companies often dip into their employee’s Trust Fund in order to cover payroll and a variety of unexpected expenses. Such a choice is often disastrous because the IRS considers the Trust Fund to be a legal responsibility of an employer, and they react to payroll tax cases with alarming swiftness and vigorous enforcement of penalties. Since the Trust Fund Recovery Penalty also is known as the 100% penalty, it can lead directly to an economic tidal wave that overwhelms a company and leads to their doors being forever closed. A perfect recent example of such an unpaid payroll tax problem came when the principals of a local Orange County staffing agency found themselves pressed by tough economic times.

Orange County Staffing Agency

Orange County Staffing Agency With Payroll Tax Crisis

Since the Orange County staffing agency has to pay their employees every week even though they often do not receive payment for their services and the services of the temps until the end of the month, they often find themselves in tough economic territory. Although this staffing company is doing well and their services were in demand, they discovered that the more temps they sent out into the workforce, the higher their bills seemed to be. In addition, their employer clients were not quite paying their bills at the end of the month, but rather putting them off until later. Sometimes payment for services would not arrive until 45 days after the fact or even longer in the most egregious cases. However, since the temps are contract employees at a relatively low hourly wage, they need to be paid on time in order to keep working and stay available. As a result, the temp agency began dipping into the trust fund, putting off the payroll tax deposits to the IRS, in order to cover the differences.

Believing they would make up the difference when the next deposit was due, the principals of the Orange County staffing agency believed that everything would be okay. When they were hit by unexpected costs, they realized that they could not cover the amount taken from the previous trust fund deposit. In addition, caught between a rock and a hard place, they were forced to take money from the next trust fund deposit as well, making a bad payroll tax problem even worse. When they came to understand that they were caught in what was quickly becoming a vicious circle, they had no choice but to take proactive action. Luckily, they stopped the storm that could destroy the future of their successful business in its tracks by making a smart choice — they contacted Peter Stephan and the Tax Resolution Institute to access the very best in tax resolution services.

The Best in Orange County Tax Resolution Services

The Best in Orange County Tax Resolution Services

Realizing how serious the situation had become, the TRI tax experts brought the principals of the staffing agency into the office and went over the recent books with them. They were informed that if they had money saved up for a rainy day, it was time to access those funds because it was pouring. Coming up with a workable game plan, Peter Stephan approached the IRS with a major payment to cover a majority of the depleted Trust Fund. By coming to the IRS with a plan of action and an initial payment, Peter Stephan was able to have the majority of the Trust Fund Recovery Penalty waived. In these difficult economic times, IRS Revenue Officers tend to react well to proactive action when a tax problem is brought to them before it is discovered. Negotiating a workable installment plan, Peter Stephan was able to put the Orange County staffing agency back on track while keeping their doors open.

The Tax Resolution Institute has opened an office in Orange County in order to help business owners across that part of Southern California from Irvine to Newport Beach, from Tustin to Anaheim. If your company is in an economic crisis and it ha sled to a problem with unpaid payroll taxes, please do not hesitate any longer. It is essential to take action today. If you need tax resolution services, feel free to contact the Tax Resolution Institute at 877-829-8370 or fill out our  tax resolution form.

Filed Under: Tax Relief Tagged With: , , , ,

A Hard Truth: Payroll Tax Cut Provides Zero Relief For Business Owners In Trouble And Hurts the Poor

January 18, 2011 By

Secretary Treasury Tim Geithner is leading an Administration effort to publicize in glowing terms the tax cut deal passed by Congress and signed by the President during the lame duck session in December. The Tax Resolution Institute wishes that the payroll tax cut actually was a positive that was going to help troubled business owners in a payroll tax crisis and impoverished workers, but it is not. Geithner claims that 159 million workers will benefit from the payroll tax cut, and there’s no reason to doubt him on that point.

Hard Truths About The Payroll Tax Cut

Hard Truths About The Payroll Tax Cut

But the analysis suffers because it avoids the two major negatives: Beyond omitting that the bill does not reduce the payroll tax benefit of the people who most need it — the lower middle class, the poor and the impoverished — the bill also fails to provide any tax relief for companies in crisis and businesses who are experiencing payroll tax problems due to the recession. If your company is having problems covering its portion of the payroll taxes and you find yourselves dipping into the trust fund to make up the difference due to the lousy economy, there is no relief in sight for you.

Geithner said that the payroll tax cut, totaling about $110 billion according to new estimates, will lead to an increase in take-home pay for the average worker by about $700 a year, and for the average working family about $1,000 a year. Not helping business owners with payroll tax problems, this payroll tax cut applies to every worker in America: Bill Gates, Alex Rodriguez, and Paris Hilton will get a payroll tax cut. However, any individual making under $20,000 a year or family making under $40,000 a year will see less of a benefit under the payroll tax cut. That comes out to roughly 50 million workers, or close to 1 in 3.

Payroll Tax Cut Fails To Help Poor & Unemployed

Payroll Tax Cut Fails To Help Poor & Unemployed

Ultimately, the payroll tax cut ends up a worse deal for low-income workers, who would spend the money, and a better deal for high-income workers, who probably won’t. Whether you live in Los Angeles or San Diego, Las Vegas or New York City, this highly touted payroll tax is going to provide zero relief for the workers who truly need it while even hurting business owners who needed a payroll tax cut in order to stimulate the economy and hire the unemployed. The phony use of “average tax cut” belies the fact that it’s a worse deal for 1 in 3 workers. Under the logic of the administration, the payroll tax cut effectuated a tax increase for 50 million workers while leaving business owners in the lurch.

The Administration and leading economists are sticking to their predictions that the economy will grow 3-4% in 2011. They hope that this so-called universal package, in the words of Geithner, will add at least 1.5 million jobs. So far, economic indicators are decidedly mixed on that front. If your company is experiencing a payroll tax crisis, contact the Tax Resolution Institute. Rather than offering you big words and faulty promises, we can provide actual tax relief to resolve your payroll tax problems.

Filed Under: Payroll Tax Problems, Tax Planning, Tax Relief Tagged With: , , , , ,

Unexpected Payroll Tax Problems Arise As A Result Of New Homeland Security & ICE Enforcement Policies

December 2, 2010 By

United States Immigration and Customs Enforcement (ICE), the largest investigative agency in the Department of Homeland Security is taking federal enforcement of immigration and hiring policies to the next level, resulting in financial trouble and sudden payroll tax problems for a multitude of employers across the country. Recently, the owners of Hi-Tech Trucking and SeaLands Food were sentenced to 18 months jail and 2 years probation on top of forfeiting $1.2 million. In October 2010, retailer Abercrombie and Fitch was fined $1.1 million for technology-related deficiencies in its electronic I-9 verification system. In San Diego, the federal government is seeking to seize the property of a bakery owner who has been charged with hiring illegal immigrants.

ICE Enforcement of Hiring Policies Leads To Payroll Tax Probelms

ICE Focus On Employers Leads To Payroll Tax Problems

Although the fines, seizures and jail sentences were in relation to immigration and hiring violations, the Tax Resolution Institute (TRI) recognizes the financial pressure these changes have put on employers. Challenging economic times combined with an increased government focus on employers as the scapegoats can result in sudden tax difficulties Fixing violations and revamping hiring policies can lead an employer to borrow from the Trust Fund to cover unexpected costs.

The problem is that not depositing your payroll taxes is a potential death sentence for a business, resulting in bigger problems with the Internal Revenue Service like the Trust Fund Recovery Penalty. By becoming compliant with Homeland Security, an employer can create a whole new set of payroll tax problems. In business, it is never wise to steal from Peter in order to pay Paul. If this is what happened to you and your company, contact the Tax Resolution Institute today.

Robbing Peter (IRS) To Pay Paul (ICE)

Robbing Peter (IRS) To Pay Paul (ICE)

The revised enforcement approach by Immigration Customs Enforcement (ICE) has been in effect since July 2009 after John Morton, assistant secretary of U.S. Immigration Customs Enforcement, announced a change in strategy with a focus on employers. This revised strategy includes utilizing Notices of Inspection that allow enforcement agents to inspect immigration documentation, including I-9s. This shift in strategy echoes the words of Homeland Security Secretary Janet Napolitano, who in January of 2009 stated, “You really have to look at the demand side for illegal labor and go after the employers as strongly and as effectively as you can.”

Since this announcement, more than 2,500 employers have received Notices of Inspection and had their paperwork audited. From these audits, over $35.7 million in fines and penalties have been levied against employers. It is not difficult to envision how such steep penalties could result in delinquent payroll tax problems as an employer steals from Peter to pay Paul. The Tax Resolution Institute is ready to help companies who have been placed in such jeopardy by the pressures of policy changes. If you have a payroll tax problem because you have dipped into the Trust Fund for any reason and you need help, contact the Tax Resolution Institute today.

Filed Under: Payroll Tax Problems, Tax Resolution Services Tagged With: , , , , ,

Payroll Tax Problem Solved In California — San Diego General Contractor Keeps Building!

September 7, 2010 By

In a challenging California economy, TRI realizes that general contractors have found their work schedules shortened and the best jobs more competitive to bid on. After thriving in the first part of the decade, many of these companies have been forced to make tough decisions in order to keep their doors opens and the profits flowing. Recently, a major San Diego general contractor approached the Tax Resolution Institute because the recent difficulties had led to poor decisions in regards to unpaid payroll taxes that placed their future in jeopardy with IRS Revenue Officers.

When crunch time came and bills needed to be paid, the general contracting company found itself short of the cash necessary to cover the costs. Believing that a number of major payments were on the horizon, the principals made the mistake of taking money from the payroll tax trust fund owed to the IRS to make up for the lack of funds. What they did not realize is that messing with Payroll Tax payments to the IRS can often be the final straw that breaks the proverbial camel’s back.

IRS Payroll Tax Debts In San Diego

IRS Payroll Tax Debts In San Diego

When the San Diego general contractor came to the Tax Resolution Institute, one bad move had snowballed into a full blown crisis. When the payments did not come in and the bills continued to pile up, the first choice to take from the trust fund made the second one easier to make. By the time the IRS caught up with the lack of payroll tax payments, there would be enough money in the company coffers to cover both the payroll tax debt and the resulting penalties. What the company did not realize was that the Trust Fund Recovery Penalty also is known as the 100% penalty. Not only would the trust fund have to be paid in total, there would be a staggering amount owed due to the Trust Fund Recovery Penalty plus the resulting interest. As time passed, the vigilant IRS Revenue Officers discovered the discrepancy and came after the San Diego company with a vengeance. As the largest collection agency in the world, the IRS never forgets. Sooner or later, if you have unpaid payroll taxes, the IRS will catch you and will prosecute to the fullest extent of the law.

Luckily, before the problem led to the San Diego general contractor being forced to close their doors and add to the unemployment rolls, the principals came to the Tax Resolution Institute. Although the payroll tax debt owed to the Internal Revenue Service was well into five figures (we cannot be specific because TRI always protects the anonymity and privacy of our clients), the tax experts at the Tax Resolution Institute were able to use their experience and expertise to work out a viable and beneficial deal for the San Diego general contractor. The Trust Fund Recovery Penalty did not end up destroying the future of the company.

In the end, the general contractor survived the payroll tax crisis with the ability to keep their doors open. As a result, their workers are continuing to build today, helping keep the revival of the California economy moving forward and renewing the prosperity of the San Diego business world. If your company has unpaid payroll taxes and is in a payroll tax crisis with the IRS, please contact the Tax Resolution Institute so you can maintain your future productivity and profitability.

Filed Under: California Tax Relief, Payroll Tax Problems Tagged With: , , , , , ,
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