Discussion:Wage Garnishment Notice from IRS--"Employee" Paid off Books!
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| Revision as of 00:00, 2 September 2009 Sandy L (Talk | contribs) (Kevinh5: Yes, l) ← Previous diff |
Revision as of 03:11, 2 September 2009 Irsfixer (Talk | contribs) (The $30 per week) Next diff → |
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| Thanks for all of the responses. The client will be discussing the notice with the taxpayer by Fri. Will post follow-up regarding the taxpayer's input, just FYI.}} | Thanks for all of the responses. The client will be discussing the notice with the taxpayer by Fri. Will post follow-up regarding the taxpayer's input, just FYI.}} | ||
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| + | {{ForumReplyPost|UserID=Irsfixer|Date=2 September 2009|Text=The $30 per week tends to support the arguement that he is a contractor and not an employee.}} | ||
Revision as of 03:11, 2 September 2009
Discussion Forum Index --> Basic Tax Questions --> Wage Garnishment Notice from IRS--"Employee" Paid off Books!
Discussion Forum Index --> Tax Questions --> Wage Garnishment Notice from IRS--"Employee" Paid off Books!
| 31 August 2009 | |
| My client received a notice from the IRS today stating that it should withhold x-amount from an employee's wages. The issue? The man the IRS cited isn't on the books as either an employee or a vendor. Why?
My client just confessed that the person has been paid cash off the books for several months. I don't even know the man, as he comes in a couple times a week to do repairs and maintenance for the client. So, how in the heck did the IRS know he "works" for my client? Regardless, I am not a CPA, but I suppose the only thing I can suggest to the client is--if the man continues doing repairs and maint. for my client, then the man should be properly setup as an employee and paid wages accordingly. Naturally, the wages will then be garnished. We're not talking material amounts of money, I would imagine, although I cannot say in being out of the loop. From what I just learned, the man is supervised by my client in completing tasks, etc., specified by the client. As such, I would definitely say he's an employee--not a vendor. Anyone ever in this boat? Never a dull day... | |
| 31 August 2009 | |
| Does the guy do work for anyone else or is this his sole support of his family? | |
Death&Taxes (talk|edits) said: | 31 August 2009 |
| "My client just confessed that the person has been paid cash off the books for several months." This begs the question, 'was he paid on the books before that?' Perhaps he doesn't bring a lot to the table. Maybe he called IRS when he received a Final Notice and they asked where he worked | |
| 31 August 2009 | |
| Irsfixer: I am not certain.
Death&Taxes: I'm looking at the books right now--doesn't appear that he was ever paid on the books; neither as an employee nor as a vendor. I even looked up online the quarterly wage reports my client submitted to NC back to 2007--his name wasn't included on any of them. Did this in case he was reported and the client changed the books for some reason. Yes, you're prob correct. Bottom line being that my client must comply with the IRS notice. As such, my client must pay applicable wages going forward--there's no other option. I will not allow the client to pay the guy under the table and tell the IRS that the man isn't employed. | |
| 31 August 2009 | |
| "Any property you hold...... It's not only wages that can be garnished.
Let's say a hospital owes me money. I get a judgment against them. I can have the sheriff serve garnishments on the patients in the hospital to pay me MY share of what they owe the hospital. | |
| 31 August 2009 | |
| You can't see the forest for the trees. Your client should treat the levy on this delinquent taxpayer the same as one on any other person on the books or off. He ignores it at his peril. | |
| 31 August 2009 | |
| As to what I think Irsfixer is driving at, there is some exemption amount, i.e. some amount of
"wages" or property exempt from garnishment, usually defined by state law. However, I defer to Irsfixer, David, Mscash and others who have had more experience with IRS and garnishments. One thing for sure: carefully read over the paperwork. It can be a revelation! | |
| 31 August 2009 | |
| CrowJD: Thanks for the advice--will do. I will have a chance to review the paperwork myself in the morn.
Am also researching the state law re: the potential exemption you cite. | |
| 31 August 2009 | |
| You do not have enough information to make a decision or have us guess at it. We know what we want the answer to be. As for peril - I see no danger in the immediate future (two or three weeks). The IRS does not follow these things closely in the short run.
If he really is an employee - get him on the books and garnish. If he is a contractor, the levy affects one payment at the most. Go do homework. | |
| 31 August 2009 | |
| Irsfixer: You're right--will do. As a follow-up, will post full context tomorrow. | |
| 1 September 2009 | |
| Follow-up: The notice from the IRS says the man owes about 5k in taxes. As such, the IRS expects every dime the man "earns" to be paid directly to the IRS (until the amount's paid in full).
I learned that the man was, in fact, sent a 1099 for 2008. Total 1099 amount was about 1k. He was in QB under a different name than I'd searched. This resolves how the IRS got wind of his so-called "employment." He was correctly setup as a vendor in QB. Now, again, my client has been paying this man cash, off the books, thus far this year. According to the client, he is paid about $30/week. I tend to believe this considering the man's 1099 amount for 2008 was about 1k. | |
| 1 September 2009 | |
| you may not know enough about levies
Mscash and IRSfixer are correct. | |
| 1 September 2009 | |
| The levy only affects what was owed to the man on the day it was received. All future payments are unaffected unless another levy is served. The whole matter can be resolved if the "taxpayer" will enter into an agreement to pay about $100 per month or submit financial information indicating they can't afford that. He will also have to file any tax returns the IRS thinks are missing. The employer needs to cut a check in the future. | |
| 2 September 2009 | |
| Kevinh5: Yes, learning;o)
Irsfixer: Thanks for the info. I'm not certain of the taxpayer's financial position, however, considering he only earns about $30/week doing repairs and maint., one might assume he wouldn't enter into a monthly payment agreement. Not certain here. Not certain if he has other "employment." Not my hand grenade, I suppose. Thanks for all of the responses. The client will be discussing the notice with the taxpayer by Fri. Will post follow-up regarding the taxpayer's input, just FYI. | |
| 2 September 2009 | |
| The $30 per week tends to support the arguement that he is a contractor and not an employee. | |
