filing is based on the length of time the payment or return is late. The Internal Revenue Service imposes a penalty on failure to provide correct information on W-2 forms, and failure to provide a correct Taxpayer Identification Number. In addition, the Minnesota Department of Revenue imposes a penalty on failure to provide Form W-2 information to the department and for refusing to provide all information required on the forms. Any person responsible for paying withholding tax may be held personally liable for failure to do so. A penalty equal to 100 percent of the amount of income tax, Social Security and Medicare tax, withheld from an employee’s paycheck, may also be imposed. The IRS calls this the Trust Fund Recovery penalty. Interest is assessed on unpaid withholding tax (plus penalties). Interest accrues from the date the payment should have been made to the date the payment actually is made. The interest rate is adjusted to reflect market rates. CONTRACTOR AND SUBCONTRACTOR CLEARANCE A prime contractor, contractor or subcontractor who performs work on a project for the State of Minnesota or any of Minnesota’s political or governmental subdivisions (e.g., counties, cities, school districts) must file a Contractor Affidavit with the Minnesota Department of Revenue certifying that the contractor has complied with Minnesota’s withholding tax laws in order to receive final payment for the work. A contractor is a person who is awarded a contract to perform work and who performed the work personally or through his or her employees. A prime contracto r is a contractor who is awarded a contract to perform work but who subcontracts all or part of the work to other contractors. A subcontractor is hired by a prime contractor to perform all or part of the work on a contract. A subcontractor files a contractor affidavit when the subcontractor completes its part of the project. A prime contractor or contractor files a contractor affidavit when the entire project is completed. Go to the Minnesota Department of Revenue’s website to submit a withholding Contractor Affidavit for approval.
SUCCESSOR LIABILITY FOR CERTAIN TAXES WHEN A BUSINESS OR ITS ASSETS ARE TRANSFERRED
Whenever a business or its assets are transferred outside the ordinary course of business, and a lien for unpaid sales or withholding taxes has been filed, in certain situations the new owner can be liable for the amount of the lien and any related interest and penalties, and any other unpaid sales or withholding taxes. In order to avoid liability for these taxes, the potential new owner must send a notice to the Commissioner of the Department of Revenue at least twenty days before taking possession of the assets or paying the purchase price. That notice must contain information regarding the transfer of the business or its assets, the terms and conditions of that transfer, and the tax identification number of the business being transferred.
238
Made with FlippingBook - Online Brochure Maker