7. The Truth
Regularly, 72% of employers make payroll errors! –
HelpDesk for Payroll Professionals via Jackson Lewis
Approximately 1 million workers each week suffer a
payroll error = $56,000,000 per week x 52 =
$2.9 Billion/year.
- The Payroll Answer Book
Most Errors Come from FLSA Violations
2013 –Estimated ¾ of employers are getting it wrong.
- Department of Labor
8. Vanburen v. Grubb 2013 also upheld personal liability.
- ‘Just in Case’ by HelpDesk
32
10. 1. What made you think you could do it that way?
- Reasonable Basis
2. Do you have training records?
- Due Diligence and Good Faith Efforts
3. Where are your written policies, procedures, and job
descriptions?
- Required to show during audits or lawsuits.
Top Three
Questions
11. EMPLOYEE CLASSIFICATION
• Common Law Employees
• Statutory Employees
• Statutory Non-Employees
• Independent Contractors
The Cost of Misclassifying
Employees is HIGH!!
1
12. IRS 20 FACTOR TEST
It’s All About Control
1. Behavioral
2. Financial
3. Relationship
2-3
18. Q.E.T.P.
Questionable Employment Tax
Practice Initiative
“Under QTEP, the IRS and more than three
dozen (37) state workforce agencies entered
into agreements to share the results of
employment tax examinations.”
- Payroll Answer Book, Answer 6:21 section 2
(IR-2007-184, Nov.6 2007; FS-2007-25,Nov.2007)
19. Federal Penalties for Misclassification
Unintentional with 1099s:
FITW – 1.5 % of wages
FICA – 20% of employers portion
Average Penalty = $168.80 / $1000 of wages
Fines DOUBLE if intentional!!
Be Careful and DOCUMENT Your Decisions!!
20. 1099 – MISC Reporting
< $600 or more
< Used for Non-incorporated Businesses
< Always Report Attorney Fees – > $600 and Inc.
< Payments Made to Healthcare providers > $600 and Inc.
NOT 3rd Party Payers!
< Payments made for the purchase of fish to anyone
engaged in the fish catching industry.
BOTTOM LINE
It is better to send too many 1099s than too few!
Sending ZERO 1099’s = $10,000 Fine!
9
21. 2015’s 1099 – K
In January 2016, your Merchant Processor will send a
1099K for all of your credit card income in 2015.
You are NOT required to reconcile their numbers with your own.
If your reported CC income is greatly different from the
1099 K totals, it MAY trigger an IRS audit!
Joe Kristan, writer of Tax Update Blog at Roth & Company writes,
“The real use of the 1099-Ks will be to identify people in the
eBay/Amazon economy who aren’t reporting their income.”
35. Science and Learning
Exemption
Must have 4 year degree – Usually
Must always need the degree for the job
---------------------------
Court in California held:
A receptionist cannot be exempt just
because a degree is held in business
communications or a person is highly
experienced in public relations.
17
44. Military Pay
•Supplemental Military Pay
•Compensation paid to employees while on military
duty that represents the difference between
employee’s regular pay and the pay provided by the
state or federal government.
•Temporary assignment – FITW, FICA, Medicare and
unemployment taxes
•Indefinite assignment - 1099-MISC (over $600)
42
45. Penalties for Non-Compliance
•For amounts not properly or timely deposited, the
penalty rates are as follows:
• 2% - Deposits made 1 – 5 days late
• 5% - Deposits made 6 – 15 days late
• 10% Deposits made 16 or more days late.
• 10% - Amounts (that should have been deposited) paid directly to
the IRS or paid with your tax return
• 15% Amounts still unpaid more than 10 days after the date of the
first notice the IRS sent asking for the tax due
•Plus interest compounded daily
•Penalties for MISSING Deposits can lead to Jail Time.
45
51. Answers: Testing Your Knowledge Workbook Page 46
1. False
2. True
3. (d) Four years … and
as long as valid
4. If the IRS requests in
writing
5. False
6. False
7. False
8. False
9. True
