Employment Tax Liability of Businesses Operating in the U.S.
Meeting the requirements of state taxing authorities and the IRS is an essential part of operating a business in the U.S. While many businesses handle employment tax requirements with ease, almost any kind of business can run into tax problems. This is especially true when there has been a change of staff or financial difficulties within the company.
Another business challenge that can lead to employment tax issues relates to the type of employees a company hires. Businesses that employ seasonal labor, immigrant workers, and contract workers are often more susceptible to employment tax difficulties.
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At the law office of Kundra & Associates, our employment tax attorneys provide sound legal advice and defensive representation for business clients. We represent businesses in Maryland, Virginia, and Washington, D.C., as well as international companies doing business in the U.S.
If you have a question about how to meet your legal obligations regarding employment taxes, or if you are facing an employment tax audit, we can assist. Contact our Rockville, Maryland, law office to schedule a consultation.
Federal and State Employment Tax Considerations
Paying Taxes: An employer must collect and remit federal and state income tax, Medicare tax, Social Security tax, and unemployment tax on behalf of its employees. Failure to do so in a proper and timely manner can result in heavy fines and tax assessments. It may also expose the business owner, business management and other responsible parties to personal liability for unpaid taxes.
Worker Identification: The federal government aggressively pursues business owners who fail to obtain and maintain proper tax identification numbers (Social Security numbers) of every employee. If the IRS conducts an audit and finds that an accurate tax identification number is not on file, they will impose heavy fines on the employer. It is critical that businesses have proper procedures in place to collect and store this information so they are able to readily respond to an IRS or state tax department inquiry.
Classification of Employees: The employment tax requirements for a regular employee differ from those of a contract worker. Independent contractors are responsible for paying their own taxes. The employer does not need to pay Social Security, Medicare, or unemployment tax on their behalf.
It can be difficult to determine how an employee should be classified. While the federal government has set out a three-factor test to determine who is a contractor, your local government may have stricter rules. If you are unsure if you have properly classified an employee, an employment tax attorney at Kundra & Associates can review your case.
If you have misclassified an employee as a contractor, your business faces significant financial risk of IRS fines, including liens and levies against your business for unpaid taxes for incorrect classification.
The tax defense lawyers at Kundra & Associates work to protect your interests with skillful and aggressive defense. We may be able to prevent seizure of your assets. We negotiate with the IRS to reduce penalties and fines.
Whether you have questions about corporate tax liability for employment taxes, are facing an investigation, or you have been fined by a tax authority for failure to collect and remit employment taxes, contact Kundra & Associates.
