Question

Name at least two of the most common pitfalls employers should be aware of

when dealing with their tax responsibilities.

Answer 1

Misclassificationof workers: Usually employers classify an employee as an independent contractor rather than a employee. If this happen the IRS can collect taxes back for 3 years up to 45%

Failing to pay payroll taxes: This is a very common mistake, specially for small businesses. The fines that are applicable depend on the number of days late. See the table below:

# Days Late Penalty

1 – 5 days 2%

6 – 15 days 5%

16+ days 10%

10+ days 15%

after first IRS

bill