Employers are obligated to make periodic payroll tax payments to the IRS. The tax lawyers at Moskowitz LLP can help keep you in compliance with tax laws and avoid adverse consequences.
There are many mistakes that employers can make when it comes to payroll taxes. If the IRS discovers these errors, you may be subject to additional taxes and substantial penalties. You can stay ahead of the curve with periodic reviews and taking proactive steps to potentially avoid additional tax consequences and scrutiny.
Schedule a confidential consultation with the tax lawyers at Moskowitz LLP by calling us at 888-829-3325 to learn how we can help your business follow tax laws and make timely and correct payroll tax payments. Hiring a tax lawyer is an investment that can potentially save your business even more money in the long run.
Five Employment Tax Mistakes That Attract IRS
The IRS can impose substantial penalties on a business that either fails to pay payroll taxes on time or does not pay the full amount. A business can make a number of mistakes that can draw attention from the IRS. Here are some employment tax errors that your business can make and what you can do about them to avoid penalties from the IRS.
Misclassifying Employees as Independent Contractors
Businesses often have an incentive to classify as many workers as possible as independent contractors instead of employees. Workers classified as independent contractors avoid payroll taxes and other matters such as obligations to purchase workers’ compensation insurance. However, there is a strict legal test that businesses must meet to be able to classify a worker as an independent contractor. Misclassification can not only lead to wage and hour lawsuits, but it can also cause you to owe additional payroll taxes and significant penalties.
Missing Deadlines to Make Payroll Tax Payments
Employers have a schedule for making payroll tax payments to the IRS that they must strictly follow. These payments need to be made either bi-weekly or monthly. The IRS determines when you must pay payroll taxes based on your prior year’s filings. Missing these deadlines can have serious consequences for your business. The IRS will assess a penalty if you are late paying these taxes. At the same time, your business can also face consequences if you miss the quarterly deadlines to file returns with the IRS.
Making Errors on Your Withholdings
Not only do you need to make payroll tax payments to the IRS on time, but the amount that you withhold needs to be correct. Withholding an incorrect amount from employees cannot only cause you employee retention issues, but it can also lead to penalties from the IRS. The agency will need to be paid the correct amount of tax no matter what, and you may need to recoup overpayments made to employees.
Failing to Keep Proper Records
The IRS may judge the amount that you owe in payroll taxes based on your records. If your business is subject to audit, the IRS will inspect these records. If your records are incomplete, you may not be able to demonstrate to the IRS exactly what you paid in payroll taxes, causing you to owe more money.
Failure to Keep Up with Tax Laws and Regulations
How much you need to withhold, and the rates of payroll taxes, may change based on law and regulation. Federal tax laws are always changing, along with how the IRS interprets and enforces them. You must stay abreast of all developments and tax law, so you can withhold the correct amounts. An experienced tax attorney can help you stay ahead of the curve here.
How You Can Avoid These Mistakes
Your own diligence and level of preparedness can keep you from making common errors that can land you in trouble with the IRS and cost your business money. Working ahead of time to establish systems and procedures to meet your payroll tax obligations can both prevent errors and help you file your required taxes and returns in a timely manner. One of the most important steps that you can take towards full compliance is to reach out to an experienced tax lawyer to obtain legal advice and help with specific issues.
Contact a Tax Law Firm Today
You can be proactive in avoiding critical errors by speaking to a tax lawyer at Moskowitz LLP. It all starts by having a conversation with one of our tax attorneys, CPAs, and enrolled agents who will learn more about your business. You can schedule a confidential consultation by filling out a secure online contact form or by calling us today at 888-829-3325.