Orange County Payroll Tax Audit Representation
California Payroll tax audits are extremely complicated and can arise for any number of reasons. If your business is facing an upcoming audit by the Employment Development Department (EDD), it is crucial that you have experienced tax counsel on your side.
Paul W. Raymond is a skilled business and tax lawyer who can help protect you and potentially represent you as your negotiator when you are confronted with payroll tax audits either at the state or federal level.
Employees or Independent Contractors?
The tax laws covering the classification of various workers is extremely complex. If your workers are deemed to be employees, you are required to withhold payroll taxes and pay unemployment taxes on their wages. If they are deemed to be independent contractors, the employer generally does not withhold or pay taxes on compensation paid to them but, minimally need to report those independent contractor payments on a 1099 form each year. Obviously, it is less burdensome and thus more desirable if workers were Independent Contractors – so much so that wishful thinking sometimes gets in the way of how the workers should be classified. Given the choice, most employers would desire that their workers to be independent contractors. That said, the classification for Independent Contractor is quite narrow and is narrowed more and more as government agencies pass more regulations defining who IS and IS NOT an Independent Contractor. The IRS scrutinizes worker classification issues and if employees are classified incorrectly as independent contractors, the employer can be liable for employees’ employment taxes, as well as significant penalties.
Paying Workers with Cash
Many businesses, get in trouble with the IRS and State tax authorities when they pay their employees in cash without paying the required payroll withholding taxes to the government. It often gets worse in that paying workers with cash, and keeping less-than-complete accounting records, can morph over into the criminal area. By overlooking recording payroll expenses and then failing to account for those payments you are essentially evading your taxes in this way resulting in criminal behavior. If you have been paying a cash payroll and not reporting some or all you need to make a plan to put a stop to it, and come up with a sound plan to get squared up with the taxing authorities before you get dug in so deeply that there might not be a way out of the hole you will find yourself in. Tax attorney, Paul W. Raymond can help analyze your business structure and figure out a plan to fix your current dilemma and limit your exposure to future tax liability through competent tax planning.