Mortgage professionals…you may think this doesn’t apply to you…and maybe it doesn’t. This purported gray area has caused many employees and companies to grapple with the rules with many debates on this topic. Until now!
On October 8, 2019, the CA Supreme Court ruled that if companies have misclassified employees, the state can go back FOUR YEARS; to calculate back state and withholding taxes, state unemployment taxes, penalties and interest. Were they eligible for retirement benefits, health insurance and other employment benefits? Do I have your attention?
Logic would dictate that if you did have 1099 workers, the state may look at all payments made to all individuals to be sure the 1099s were filed, even if they should have been W-2. And then there is the IRS.
And…what about those “employees”? Did employees report 1099 wages on their federal 1040? Will employees be on the hook for unpaid taxes? Will tax returns need to be amended? Will all business expenses no longer be tax deductible? Did they comply with banking law?
If you haven’t paid attention, this might be the time to start!
If you missed it, watch our 4 Part Mini- Series
- Dynamex Operations West Inc, v CA Superior Court decision
- Exempt workers from W-2 status
- Penalties for misclassified workers
- Proactive steps businesses should consider
These educational videos are intended to create awareness of issues that may impact your business. If you are not sure if this applies to you, please consult a tax attorney or CPA for professional advice.
Charter Oak Systems, LLC does not provide compliance, legal, tax or accounting advice.
Contact: Debra Killian firstname.lastname@example.org (866) 256-3766
#W-2 #1099 #employee #Dynamex #IRS #penalties #retoractive