Businesses need to be aware of their obligations to file certain employment tax returns and collect and remit those taxes to the taxing authorities at both the federal and state levels. On the federal level, Employers have a duty to collect and remit payroll taxes for their employees. These taxes usually get paid on a daily, weekly, semi-weekly, or monthly schedule according to the amount of payroll processed and the federal deposit schedule. For most employers, the IRS requires the filing of form 945 or 941 on a quarterly basis to account for these taxes. The federal government also collects federal tax for unemployment. These are filed yearly on form 940.
An employer has a duty to file, collect, and pay over these payroll taxes. If an employer does not pay these taxes, the individual responsible for paying the tax, whether they are the owner of the company or an employee, can be held personally responsible for the trust fund portion of the liability through assessment of a trust fund recover penalty.
The attorneys at Orlando Tax Law frequently represent businesses and their owners in payroll audit/examination and collection matters, including trust fund recovery matters. It is extremely important to retain representation in these types of matters because of the exposure to potential personal liability. Furthermore, there are strict deadlines and procedures to follow to dispute the assessment of trust fund recovery assessments.
Our Orlando employment tax lawyers also represent clients before the State of Florida if they have Florida Reemployment tax matters, including both audit/examination and collection matters. If you or your business are facing the IRS or Florida DOR tax issues with employment, payroll, or reemployment tax matters, we can help.
Paying FICA Taxes – Medicare and Social Security Taxes
Both employees and employers must pay a portion of the employee’s wages as FICA taxes, and both pay FICA taxes at the same rate. The FICA taxes are made up of the Social Security Tax and the Medicare tax. The Social Security Tax rate is 6.2% of wages and the Medicare tax rate is 1.45% of wages, for a total of 7.65%. If you are an employer, you deduct the employees portion or 7.65% as part of payroll. Payroll software calculates this automatically. The employer part is also 7.65%. Self-employed individuals must pay both employer and employee portions for the total 15.3%. This tax is in addition to income tax.
Additionally, certain high-earning workers are subject to an additional surcharge of Medicare taxes. All workers who earn in excess of $200,000 a year must pay an additional 0.9% Medicare tax. Businesses bear the burden of withholding these taxes from an employee’s paycheck.
Employers must take special care in properly classifying its workers as well. Improperly classifying a “W2 employee” as a “1099-Misc. Independent Contractor” to get out of their obligations for filing payroll returns and collecting and remitting taxes has steep consequences, including catching an employee classification audit/examination and penalties.
Providing Tax Payments for Unemployment at the State and Federal Levels
At the federal level, any business with at least one employee in a calendar quarter must pay a Federal Unemployment Tax Assessment (FUTA). Payroll software automatically calculates and remits the tax, as well as files the 940s. But if a business isn’t using software for their payroll and employment tax responsibilities, this can be a trap for the unwary.
The Florida Department of Revenue (DOR) also collects reemployment taxes in order to fund the state unemployment/reemployment program. Like the IRS, if the DOR believes there is a classification issue, they can audit the business.
Our Orlando employment tax attorneys have experience in handling DOR and IRS unemployment, reemployment, and classification tax matters.
Affordable Care Act (ACA) Obligations
Employers may also have reporting requirements under the Affordable Care Act with regards to filing forms 1095 regarding employer-sponsored health care. Failure to file these forms can lead to penalties. These audits and assessments are extremely complex. If your business has an ACA tax or reporting compliance issue, please contact us. We can help
Reach Out to an Orlando Employment Tax Attorney Today
Orlando Tax Law can assist you with any of your Employment Tax issues, whether it is a payroll audit or examination, a collection matter, a trust fund recovery assessment, ACA issue, employee classification audit, or Florida Department of Revenue Reemployment audit. Please give us a call so an Orlando employment tax lawyer can discuss how to get you past your issue and back to business today.