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Tax Blawg

Tax Talk for Tax Pros

Introduction

Welcome to TaxBlawg, a resource for news and analysis of current legal issues facing tax practitioners. Although blawg.com identifies nearly 1,400 active “blawgs,” including 20+ blawgs related to taxation and estate planning, the needs of tax professionals have received surprisingly little attention. The Wall Street Journal's Tax Blog gives “tips and advice for filers,” and Paul Caron’s legendary TaxProf Blog is an excellent clearinghouse for academic and policy-oriented news. Yet, tax practitioners still lack a dedicated resource to call their own. For those intrepid souls, we offer TaxBlawg, a forum of tax talk for tax pros.

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Posts tagged Employment Tax.

The IRS released Notice 1036 to assist employer’s with determining the payroll tax consequences of the fiscal cliff.

2013 Withholding Tables. Notice 1036 includes the 2013 Percentage Method Tables for Income Tax Withholding. Employers should implement the 2013 withholding tables as soon as possible, but not later than February 15, 2013. Employers can use the 2012 withholding tables until they implement the 2013 withholding tables.

Social Security Tax. For 2013, the employee tax rate for social security increases to 6.2%. The social security wage base limit increases to ...

Employment Tax: Yet Another Opportunity to Come Clean -

Whether a worker is performing services as an employee or as an independent contractor depends on the facts and circumstances.  This determination may be difficult for many companies and may lead to significant exposure.  In order to facilitate voluntary resolution of  potential worker classification issues and achieve the benefits of increased tax compliance and certainty for all parties, taxpayers, workers and the government, the IRS established the Voluntary Classification Settlement Program (“(VCSP”) on ...

Despite the recent increase in online commerce, traditional methods of moving product, such as so-called “direct selling,” are alive and well.  Indeed, according to a recent IRS study, direct selling is a significant industry, with annual sales of nearly $30 billion and more than 13 million salespersons in the United States alone.  The IRS has intensified worker-classification audits over the past few years, generally claiming that workers should be treated as employees instead of independent contractors.  Theoretically, these audits should cause little concern for direct ...

The difference between what taxpayers should pay and what they actually pay the IRS is called the “tax gap.”  A significant portion of the tax gap is attributable to non-compliance with employment tax laws, including worker misclassification.  The IRS is currently conducting a three-year research project, which entails an additional 6,000 random employment tax audits.  This research will inevitably lead to the conclusion that worker misclassification is rampant and depriving the federal government of billions of dollars in tax revenues each year.  Therefore, the IRS likely ...

 
On September 21, 2011, the IRS announced the launching of the Voluntary Classification Settlement Program.  This program will provide employers with the ability to resolve past worker classification issues and achieve certainty under the tax law at a significantly reduced employment tax rate by voluntarily reclassifying their workers. Under the program, eligible employers can obtain substantial relief from federal payroll taxes owed for misclassification in the past, if they agree to prospectively treat workers as employees. In exchange, the employer will pay 10 % of the ...

On September 19, 2011, Commissioner Shulman and Secretary of Labor Solis signed a memorandum of understanding that will allow for the sharing of information intended to combat employee misclassification.  The sharing of information and collaboration between the two agencies is intended to help reduce the incidence of misclassification, reduce the tax gap, and improve compliance with federal tax and labor laws.  The increased collaboration will also strengthen the relationship between the IRS and DOL, enable both agencies to leverage existing resources and send a consistent ...

In a speech to a joint session of Congress on September 8, 2011, President Obama proposed cuts to both employee and employer payroll taxes for 2012 and tax credits meant to encourage hiring of unemployed workers.

The President's proposal, the American Jobs Act, would cut employee Social Security payroll taxes in half in 2012.  It would also reduce business payroll taxes by the same percentage on companies' first $5 million in wages and would completely eliminate payroll taxes for companies that increase their payroll by up to $50 million relative to the prior year. The payroll tax ...

The IRS National Employment Tax Research Project has started.  On November 9, 2009 the IRS announced its first employment tax research project in 25 years.  Under the program, which will last from 2010 through 2012, the IRS will audit 6,000 employers randomly selected from all employment tax filers.  It is our understanding that the initial letters for the first 2000 employees selected to be part of the study have gone out and the audits will commence in May, 2010.  The IRS will focus on historic areas of non-compliance including (i) the misclassification of employees as independent ...