Tax Penalty of Compan Y Employee Versus Contract Worker

Employers misclassifying thespians could be subject to large penalties [APA shop]: The American Payroll Associations (APA) 29th Annual Congress included a virtual shop called Employee or Independent ContractorHow to Determine a Workers Status. The workshop was conducted by Steve Hodgson, CPP, who is APAs Director of Payroll Training. Hodgson noted that employers that misclassify employees as nonemployees or independent contractors go out face substantial financial penalties as the result of not withholding income tax, flunk to withhold and kale employment taxes, and impuissance to bill the correct reports and returns with the IRS, Social hostage Administration (SSA), and state government agencies. The IRS penalization for unintentionally failing to withhold national income tax is 1.5% of the wages paid. This assessment is three-fold to 3% if the employer failed to file an information return (Form 1099-MISC) for the worker with the IRS. The IRS punishment for unintent ionally not withholding the employees share of Social trade protection measure and Medicare taxes is 20% of the employees share of the tax. The penalty is doubled to 40% if the employer failed to file an information return for the worker with the IRS. If an employer intentionally misclassifies the worker as an independent contractor, even after determining that an employer-employee kinship exists, the in a higher place penalties do not apply, and the employer is liable for the full amount of federal income tax that should arrive at been withheld, and 100% of the employees and employers share of Social security department and Medicare taxes. An employer misclassifying workers will also be subject to state penalties. ex support facto employment benefits. An employer that misclassified workers as independent contractors may have to retroactively pay employment benefits in addition to employment taxes. In 1996, a federal appeals court held that Microsoft Corporation, which had agreed to reclassify freelancers as employee! s after an IRS employment...If you want to get a full essay, set up it on our website: OrderEssay.net

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