Violation |
|
Potential
Fine |
| Failure to file W-2 or 1099 form |
|
The minimum fine is $50 for each
form that you failed to file. The maximum fine is $250,000 per business or $100,000 for
small businesses. |
| Failure to file quarterly return |
|
25 percent of the unpaid tax
liability. |
| Failure to pay taxes |
|
0.5 percent of the unpaid tax
liability for each month up to 25 percent. |
| Failure to get Social Security
number |
|
$50 for each Social Security number
you didn't get. |
There are also significant fines if the IRS
believes you committed fraud or were negligent, plus fines for many other situations.
Contact the IRS if you want further information. In addition, any responsible person
(including corporate officers and employees, or members or employees of a partnership)
with authority over the financial affairs of the business who willfully fails to collect
and pay over taxes may be held personally liable for the total amount of the
uncollected tax under the "100 percent" provisions of the Internal Revenue Code
(I.R.C). Another point to keep in mind is that the independent contractor who wrongfully
benefited as a result of being paid on a 1099 is virtually free from penalties. The IRS
may audit them and require them to eliminate any business deductions they took; however,
the main focus is on the entity with the deepest pockets, in most cases, the client
company.
Furthermore, if a company classifies workers
to avoid paying overtime according to the FLSA, the company can be subject to penalties
from the payment of unpaid overtime premiums to liquidated damages, fines of $10,000, and
six months imprisonment for willful violations. Unpaid overtime premiums alone may
represent substantial monetary liability depending upon the size of the work force and the
length of time that the company has failed to pay appropriate overtime.
Be advised that any relief of tax liability
provided by the IRS--such as Section 530 of the Revenue Act of 1978--is of limited
applicability in the staffing industry. This section, also referred to as the "Safe
Harbor Act," was amended in 1986 to not relieve engineers, designers, drafters,
computer programmers, systems analysts, or other similar skills or lines of work of tax
liability. |
