Did you know that IRS penalties may be charged to you even if you deposited your tax liabilities on time?
The IRS may assess an "averaged" failure-to-deposit (FTD) penalty of 2% to 10% if you are a monthly schedule depositor and did not properly complete line 15 of Form 941 when your tax liability (line 10) shown on Form 941 exceeded $2,500. IRS may also assess an "averaged" FTD penalty of 2% to 10% if you are a semiweekly schedule depositor and your tax liability (line 10) shown on Form 941 exceeded $2,500 and you:
· Completed line 15 of Form 941 instead of Schedule B (Form 941),
· Failed to attach a properly completed Schedule B (Form 941), or
· Improperly completed Schedule B (Form 941) by, for example, entering tax deposits instead of tax liabilities in the numbered spaces.
The FTD penalty is figured by distributing your total tax liability shown on line 10 of Form 941 equally throughout the tax period. As a result, your deposits and payments may not be counted as timely because the actual dates of your tax liabilities cannot be accurately determined. You can avoid an "averaged" FTD penalty by reviewing your return before you file it. Follow these steps before submitting your Form 941.
· If you are a monthly schedule depositor, report your tax liabilities (not your deposits) in the monthly entry spaces on line 15.
· If you are a semiweekly schedule depositor, report your tax liabilities (not your deposits) on Schedule B (Form 941) in the lines that represent the dates your employees were paid.
· Verify that your total liability shown on line 15 of Form 941 or the bottom of Schedule B (Form 941) equals your tax liability shown on line 10 of Form 941.
· Do not show negative amounts on line 15 or Schedule B (Form 941). If a prior period correction results in a decrease to your tax liability, reduce your liability for the day that you discovered the error by the tax decrease resulting from the error, but not below zero. Apply any remaining decrease to subsequent liabilities.
StaffScapes, a Professional Employer Organization (PEO), takes over the responsibility and liability of tax deposit and reporting for our clients. Please call (303)466-7864 and ask a StaffScapes’ representative how we can reduce your tax administration liability.
New law requires construction industry to verify workers’ compensation coverage of subcontractors.
House Bill 1366, which makes a change to workers’ compensation coverage for workers in the construction industry, has officially gone into effect as of October 1, 2007. This new law requires that every person performing construction work on a construction site be covered by workers’ compensation insurance or have a Rejection of Coverage Form that has been filed with the Division of Workers’ Compensation when the subcontractor is the sole owner or partner with no employees.
Under this law, the person on the construction site who contracts work from another party is responsible to either provide workers’ compensation coverage to the contracted employees or require proof of coverage from the subcontractor employing these workers. The “responsible person” may also accept a Rejection of Coverage Form from sole proprietors or partners (general partner, limited partner, limited liability partner, limited liability limited partner) that have no employees and have filed the form with the state Division of Workers’ Compensation. Owners of a personal residence are specifically excluded from this law unless the worker is an employee of the owner. If the requirements of the law are not meet then a penalty of up to $500 per day may be assessed by the Division of Workers’ Compensation.
For more information regarding HB 1366 and its requirements, you can contact StaffScapes or click on the links below.
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New Bill introduced would substantially increase penalties to employers knowingly employing illegal immigrants.
A Republican House Representative from NC, Rep. Sue Wilkins Myrick, has introduced a new bill increasing the penalties under the Immigration and Nationality Act. The bill, called 10k Run for the Border Act (HR 588), would increase the fines to employers who knowingly hire illegal aliens (or undocumented workers) to between $10,000 and $80,000 for each first violation up to $200,000 for each repeat violation and a potential $1.6 million for “pattern” violators. If enacted the bill would increase the fines by 4,000% from the current penalties of $250 to $2,000 for first offenders.
Employers need to stay aware of the employment status of their employees, and make sure that they are following the current employment verification requirements of the federal government and state governments that they are working in.
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