Archives: Employment Taxes

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Justice Department Announces Employment Tax Enforcement Actions

Consistent with its ongoing employment tax enforcement efforts, the Justice Department recently announced developments in two cases involving the failure to properly withhold and remit federal employment taxes from employee wages. On April 25, the Justice Department announced that Kae Wook Lee, the sole owner and CEO of Mona Lisa 7 Corporation, was sentenced to … Continue Reading

IRS Announces Results of Employment Tax Campaign

On April 11, 2019, the IRS announced the results of a national two-week education and enforcement campaign to combat employment tax crimes.  Payroll taxes account for approximately 70% of all revenue collected by the U.S. Treasury.  Given the significance of payroll tax collections to the federal government, IRS revenue officers across the country visited   nearly … Continue Reading

Federal Court Allows Claim to Proceed Against Employer for Fraudulent W-2s

On March 5, 2019, the U.S. District Court for the District of Maryland determined that an employee was potentially entitled to relief under section 7434(a) of the Internal Revenue Code when an employer purposefully reports a portion of their wages on Form 1099-MISC as income from self-employment rather than on the Form W-2.  In Greenwald … Continue Reading

IRS Releases Withholding Guidance

Earlier today, the IRS released new percentage method withholding tables for 2018 implementing the changes to major withholding provisions following the enactment of tax reform legislation.  In the revised Notice 1036, the IRS provided new withholding tables utilizing the value of personal exemptions that would have existed in the absence of tax reform and the existing … Continue Reading

IRS Withholding Guidance Expected in January

In a news release, the IRS today announced that it anticipates issuing initial withholding guidance to implement the changes under the tax reform bill in January 2018.  Employers and payroll service providers are encouraged to implement the changes in February.  In the release, the IRS indicated that the withholding guidance will work with the existing … Continue Reading

Senate Tax Reform Legislative Text Clarifies Some Provisions

Earlier today, the Senate Finance Committee released legislative text of its version of the Tax Cuts and Jobs Act.  Up until now, only “conceptual language” had been available.  The text clarifies some of the provisions that we have previously discussed in our posts about the Senate bill (see earlier discussion here) and includes new information reporting … Continue Reading

Tax Court Expands Section 119 Exclusion in Boston Bruins Decision

In a much anticipated decision, the U.S. Tax Court ruled yesterday that “the business premises of the employer” can include an off-premises facility leased by the employer when its employees are on the road.  The decision in Jacobs v. Commissioner addressed whether the employer (in this case, the professional hockey team, the Boston Bruins) was … Continue Reading

Revised House ACA Repeal Will Delay Repeal of AMT until 2023

Last night, Republican leadership released a manager’s amendment to the American Health Care Act (AHCA) that would delay the repeal of the additional Medicare tax (AMT) of 0.9% imposed on certain high-income individuals from 2017 until 2023.  The move is an effort to shore up Republican support for the bill in advance of an expected … Continue Reading

House Republicans Pull ACA Replacement Bill

Facing likely defeat, Republicans have pulled the American Health Care Act, which would have made numerous changes to the information reporting provisions and employment tax provisions of the Affordable Care Act (ACA).   The legislation would have also created a new information reporting requirement by adding Section 6050X to the Code.  The House was scheduled … Continue Reading

Refusal to Allow Closing Agreements on FICA Timing May Lead to Challenge

In an IRS Chief Counsel Advice Memorandum released on January 13, the IRS concluded that it should not enter into closing agreements with employers who failed to subject amounts of nonqualified deferred compensation to FICA taxes under the special timing rule in Section 3121(v)(2)(A).  In the past, some employers have been able to obtain a … Continue Reading

Two District Courts Rule Stock Option Income Subject to RRTA Tax

Two more railroad companies have failed in their efforts to obtain Railroad Retirement Tax Act (RRTA) tax refunds based on the application of RRTA’s definition of “compensation” as it relates to nonqualified stock option exercises by employees.  Just a week apart, the U.S. District Courts for Nebraska in Union Pac. R.R. Co. v. United States  and … Continue Reading

IRS Issues Regulations Relating to Employees of Disregarded Entities

Yesterday, Treasury and the IRS released final and temporary regulations under Section 7701 meant to clarify issues related to the employment of owners of disregarded entities.  In 2009, the IRS issues regulations that required disregarded entities be treated as a corporation for purposes of employment taxes including federal income tax withholding and Federal Insurance Contribution Act … Continue Reading
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