ployees Explained ORP, OR LLC G IT DOWN Win of the Month SALE OF BUSINESS CREATES AN IRS NIGHTMARE
CASE SNAPSHOT
to help them deliver a high volume of production. In many cases, 1099 contractors may complete work for several employers at once and are considered to be self-employed. Thus, the employer does not withhold or file payroll taxes — they pay their own taxes and provide their own benefits. A W-2 worker is an actual full-time or part-time employee of a business, and they adhere to company policies, schedules, and protocols. In many cases, they participate in benefit programs that provide health, vision, and dental insurance; paid time off; and even overtime pay. W-2 employees are guaranteed minimum wage.
Client: Frustrated Businessman Type of IRS Issue: Personal Tax Audit Tax Year in Question: 2020 IRS Claimed Liability: $3,048,324.02 Savings: $3,048,324.02
Employers with W-2 employees are required to withhold Social Security and Medicare taxes
Our client, a very successful but highly frustrated businessman, came to us in desperate need of relief from his IRS nightmare. Having sold several businesses during the tax year in question, his accountant asked for an extension so he could properly prepare the returns. A fairly complex tax return was completed and filed, including the check for the very sizeable taxes that were due. His accountant double-checked everything, then mailed it in.
and to file payroll taxes. Essentially, if a worker does not meet the classification
of a 1099 contractor, they are considered a W-2 employee by default.
End of story, right? Wrong!
The issue? The IRS claimed that the taxpayer did not file on time, which led to a $2,986,040.50 “failure to file” penalty, $62,353.52 in interest for late payment, and adding insult to injury, a $30 “late payment” penalty. Not knowing what to do, the client reached out to IRS Trouble Solvers. After a careful review of the situation, including combing through all the documents to ensure there were no further underlying issues and obtaining proof of the submission of the returns, our tax professional got down to work. Our specialist was diligent in working with the IRS and provided proof of filing and payment on time, which only led to more frustration. It was clear with the documentation he had that the client DID file and pay on time! However, this only made him even more determined to win. He was diligent and escalated the issue up the chain of command at the IRS. Finally, after reaching some of the upper layers, he was able to submit the receipts that showed the payment and return were both mailed on time, and therefore, the penalties and interest were unreasonable and should be canceled, to which the IRS finally agreed! But that’s not the end of it — we had to pull the tax advocate into the conversation as the penalty abatement was taking longer than it should. But finally, after months of aggravation and stress, we were able to inform our client that the additional $3 million-plus in taxes was abated and he did not, in fact, have to pay them. Our client was truly doing the happy dance!
INGREDIENTS
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2 tbsp olive oil
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1/4 tsp pepper
1 onion, chopped
4 cups chicken broth
2 garlic cloves, minced
4 cups water
3 carrots, sliced
1 1/4 lbs bone-in, skinless chicken thighs 1 cup uncooked white rice
3 celery ribs, sliced
2 chicken bouillon cubes 1/2 tsp dried parsley
• •
Salt, to taste
DIRECTIONS
1. In a large pot over medium-high heat, warm the olive oil. Add the onion and garlic and sauté for 5 minutes. Add the carrots and celery, then sauté for 1 more minute. 2. Add the bouillon, parsley, pepper, chicken broth, and water. Stir, then add the chicken thighs. 3. Cover and simmer on medium-low for 30 minutes, then add the rice. Stir, cover, and simmer for 15 more minutes. 4. Remove the pot from the heat and transfer the chicken to a large bowl. Shred the meat and add it back to the soup. Discard the bones. 5. Stir, salt, and serve!
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