Oxnard Employment Tax Lawyer
The tax requirements for business entities and small business owners are more complex than those which apply to individual taxpayers. This presents a grave financial danger for business owners, as failure to comply with these employment regulations can lead to the imposition of civil penalties or even, in cases of willful misconduct, criminal prosecution by the Department of Justice (DOJ). Business owners must exercise great care to comply with the Internal Revenue Code (IRC), as an employment tax error could damage or even destroy the business with debilitating fines. Moreover, strategic tax planning is essential to ensure the greatest possible cost-efficiency of the business.
If you own or operate a C corporation, S corporation, limited liability company (LLC), or partnership in the Oxnard, California area, look to the Tax Law Office of David W. Klasing for skillful guidance and aggressive representation that is driven by over 20 years of tax law experience in California, out of state, and abroad. Featuring tax attorneys, CPAs, attorney-CPAs, and EAs, our versatile team of award-winning business and employment tax professionals is prepared to deliver an unparalleled level of customer service and satisfaction.
What Taxes Must Employers Withhold, Match, or Pay?
Employers are required to timely deposit and report an array of federal employment taxes. These tax obligations fall into four broad categories:
- Additional Medicare Tax – Effective January 1, 2013, employers are required to withhold the 0.9% Additional Medicare Tax on employee wages that exceed certain financial thresholds. These thresholds vary depending on the employee’s filing status (single, married filing jointly, married filing separately, head of household, or qualifying widower with dependent child).
- Federal Income Tax – It is typically mandatory for employers to withhold and deposit federal income tax from employees’ compensation. If you misclassify workers and fail to 1099 them, you can become liable for the income tax your workers failed to pay.
- Federal Unemployment Tax (FUTA) – The FUTA tax should not be withheld from your employees’ pay. As an employer, you alone are responsible for paying the FUTA tax.
- FICA Taxes – Medicare taxes and Social Security taxes, which are examples of payroll taxes, are also called “FICA taxes” relating to the Federal Insurance Contributions Act. Employers must generally (1) withhold, (2) match, and (3) deposit FICA taxes. Because the employer temporarily holds the funds before remitting FICA taxes to the IRS, these taxes are sometimes called “trust fund taxes.” As the next section explains, employers who fail to comply can face a hefty trust fund recovery penalty (TFRP).
These obligations are subject to various due dates. For example, FUTA taxes are generally due on January 31. Employers will need to timely file an array of tax forms, including:
- Form 940 (Employer's Annual Federal Unemployment (FUTA) Tax Return)
- Form 941 (Employer’s Quarterly Federal Tax Return)
- Form 944 (Employer’s Annual Federal Tax Return)
- Form W-2 (Wage and Tax Statement) for employees, or Form 1099-MISC (Miscellaneous Income) for independent contractors
Payroll Tax Fraud Penalties for Employers
While the Internal Revenue Service (IRS) is ever vigilant with an eye toward tax evasion, the Service is particularly aggressive when it comes to enforcing compliance with payroll tax laws due to the employer’s role as a trustee. In many cases, the IRS prioritizes allocating its resources toward investigating suspected payroll tax fraud before investigating tax evasion related to personal income tax returns.
The Trust Fund Recovery Penalty, “TFRP” is considerable, making noncompliant employers personally liable for the full 100% of withholdings or payments that were not remitted to the IRS. Two factors make this penalty even more devastating:
- In addition to owing the unpaid trust fund tax itself, the business owner will also owe interest and assorted fees.
- The TFRP is non-deductible.
- The IRS can and does collect interest on the same TFRP debt as many times as possible and multiple responsibly parties can find themselves simultaneously joint and severally liable for it.
- The TFRP is non-dischargeable in bankruptcy.
What Are the Tax Consequences of Misclassifying Employees as Independent Contractors?
Withholding, matching, and paying payroll and employment taxes are not the only issues with which business owners must concern themselves. In addition, it is critical for business owners to appropriately classify workers, as either (1) employees or (2) independent contractors.
Ironically, in their efforts to avoid expenses related to employee benefits, overtime pay, and workers’ compensation, all too many business owners have incurred heavy penalties for deliberately misclassifying employees as “independent contractors.” These errors may be detected through complaints filed by workers with the United States Department of Labor (DOL), or through audits conducted by the DOL or IRS. Penalties include fines for unfiled Forms W-2, failure-to-pay penalties, trust fund recovery penalties, and, most seriously, criminal penalties including IRS restitution, fines, and incarceration. If you have misclassified workers you should consider the IRS’s Voluntary Classification Settlement Program to fix the problem in the most economical manner possible.
Oxnard Employment Tax Attorneys for Small Business Owners in California
Business owners, investors, and shareholders risk being audited, prosecuted, and subjected to civil or even criminal penalties for the inadvertent or willful failure to pay payroll taxes, correctly classify workers, timely file tax forms, or maintain adequate financial records. If you are a business owner in the Oxnard, California area, and you are concerned about potential compliance and or collection issues relating to employment taxes or payroll taxes, it is imperative to discuss your tax matter with an Oxnard payroll tax attorney as soon as possible. The longer you delay, the greater the penalties that will accumulate – and the fewer, less desirable options for reentering compliance will remain available to you. To arrange a reduced-rate tax consultation with an employment tax attorney in Oxnard, contact the Tax Law Office of David W. Klasing online, or call (800) 681-1295.
Also, we’ve expanded our offices! In addition to our offices in Irvine and Los Angeles, the Tax Law Offices of David W. Klasing now have offices in San Bernardino, Santa Barbara, Panorama City, and Oxnard! You can find information on all of our offices here.
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Oxnard Tax Law Offices
For any of your tax planning compliance and controversy needs in Oxnard, contact the Lawyers at The Tax Law Offices of David W. Klasing today. Our experienced Tax Lawyers offer a reduced-rate consultation on new cases or engagements. Call 805-617-4566 or 800-681-1295 or contact us online today to schedule a reduce rate initial consultation at our Oxnard tax law offices, or at one of our other convenient locations across Southern California.