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Tax Penalty of Compan Y Employee Versus Contract Worker Essay

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Below is an essay on "Tax Penalty of Compan Y Employee Versus Contract Worker" from Anti Essays, your source for research papers, essays, and term paper examples.

Employers misclassifying workers could be subject to large penalties [APA workshop]:   The American Payroll Association's (APA) 29th Annual Congress included a virtual workshop called “Employee or Independent Contractor–How to Determine a Worker's Status.” The workshop was conducted by Steve Hodgson, CPP, who is APA's Director of Payroll Training. Hodgson noted that employers that misclassify employees as nonemployees or independent contractors will face substantial financial penalties as the result of not withholding income tax, failing to withhold and pay employment taxes, and failing to file the correct reports and returns with the IRS, Social Security Administration (SSA), and state government agencies. The IRS penalty for unintentionally failing to withhold federal income tax is 1.5% of the wages paid. This assessment is doubled to 3% if the employer failed to file an information return (Form 1099-MISC) for the worker with the IRS. The IRS penalty for unintentionally not withholding the employee's share of Social Security and Medicare taxes is 20% of the employee's 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 relationship exists, the above penalties do not apply, and the employer is liable for the full amount of federal income tax that should have been withheld, and 100% of the employee's and employer's share of Social Security and Medicare taxes. An employer misclassifying workers will also be subject to state penalties.
Retroactive 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 employees after an IRS employment...

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MLA Citation

"Tax Penalty of Compan Y Employee Versus Contract Worker". Anti Essays. 9 Dec. 2018

<http://parimatch-stavka7.com/free-essays/Tax-Penalty-Of-Compan-Y-Employee-321067.html>

APA Citation

Tax Penalty of Compan Y Employee Versus Contract Worker. Anti Essays. Retrieved December 9, 2018, from the World Wide Web: http://parimatch-stavka7.com/free-essays/Tax-Penalty-Of-Compan-Y-Employee-321067.html


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