Trusted Paradise Valley Employment Tax Lawyers Ready To Assist You
Arizona is known as being a business-friendly state. In fact, the state is generally regarded as having favorable tax laws. Of course, Arizona businesses must still pay state and federal taxes. The Arizona Department of Revenue and the IRS have the ability to enforce these tax laws against Arizona businesses. A Paradise Valley business owner who does not fulfill the tax obligations of their company can, in some circumstances, face personal liability.
An unexpected tax bill is something that no business owner wants to face. At Kaczmarek & Jojola PLLC, our employment tax attorneys work closely with our business clients to ensure that they are in compliance with all state and federal tax laws and help to defend their business when the IRS claims they violated the Internal Revenue Code. With decades of collective experience handling even the most complex business tax cases, we are a natural choice to represent your business in whatever tax issues it is facing.
Misclassification of Employees as Independent Contractors
With all the hype surrounding the gig economy, independent contractors have recently become a hot topic. More businesses are realizing the benefits of using independent contractors instead of hiring employees. Indeed, according to a recent report released by the U.S. Department of the Treasury and the IRS, the number of workers who receive income from independent contracting has increased by more than 22 percent.
One of the benefits to an employer of using an independent contractor is that the employer will save on payroll taxes. However, there are strict rules governing when a worker can be classified as an independent contractor. Typically, this involves a three-part analysis:
- Control: Does the company control how the worker does their job?
- Financial: Are the business aspects of the work controlled or paid for by the company?
- Relationship: Is there a written agreement or contract providing any benefits that are typically provided to employees?
If the IRS suspects that a business is misclassifying an employee as an independent contractor, the IRS can require the business to pay both the employer’s share of the payroll taxes as well as the employee’s share. Thus, an employer could end up paying 100 percent of the payroll taxes. Additionally, the IRS can impose a $5,000 penalty for each misclassified employee, as well as 1.5 percent of the employee’s federal income tax liability and another 20 percent of FICA tax that should have been withheld from the employee’s pay.
Trust Fund Recovery Penalties
One of the more serious business tax issues relates to a businesses’ failure to pay trust fund taxes. Trust fund taxes are those payroll taxes that an employer is responsible for withholding from an employee’s paycheck and sending to the IRS. These taxes may include federal income tax, Medicare tax, Social Security tax, and state and federal unemployment taxes.
If a company does not pay trust fund taxes, the IRS will initiate an investigation to determine who specifically was responsible for collecting and making the payments. If the IRS is able to determine the person responsible for making the payments willfully failed to do so, it can assess a trust fund recovery penalty against their personal assets.
Trust fund recovery penalties typically are equal to the amount of unpaid taxes, meaning an employer who fails to send $2,000 in withheld payroll taxes may be required to pay the $2,000 in trust fund taxes as well as an additional $2,000 as a trust fund recovery penalty.
Speak With a Dedicated Paradise Valley Employment Tax Attorney
As a business owner, you are busy dealing with the daily operations of your business. Dealing with an outstanding tax issue adds to what is certainly an already busy schedule. Additionally, working through tax issues with the IRS is also often an incredibly stressful experience, especially when the IRS threatens a federal tax lien on business assets or pursues a Trust Fund Recovery Penalty. At Kaczmarek & Jojola PLLC, attorneys Derek Kaczmarek and David Jojola provide knowledgeable and effective representation to businesses of all sizes. As former IRS trial attorneys, our tax lawyers have an unrivaled knowledge of payroll tax law, setting Kaczmarek & Jojola PLLC apart from other Paradise Valley employment tax law firms.
If your business has an unresolved employment tax issue, we can help. By confidently assessing your situation and working with you to come up with an effective and manageable solution, our skilled Paradise Valley employment tax lawyers can provide invaluable peace of mind to busy business owners. In the event that litigation becomes necessary, as veteran trial attorneys specializing in tax law, we can aggressively defend you or your business from whatever IRS collection efforts you are facing.
Our highly-skilled legal team has also represented clients with other types of tax issues, such as:
- IRS Tax
- IRS Tax Collection
- Innocent Spouse Relief
- Trust Fund Penalty Recovery
To learn more about how we can help, contact Kaczmarek & Jojola PLLC to schedule a consultation. You can reach us by phone or through our online form.