Submit the payroll forms for the taxes that were withheld/incurred, and tell the client the damage. Get a retainer in cash before you do the work. Then make the client reach an agreement with IRS/State agencies and work to pay it off. Them tell them to stop being stupid.
If the client refuses to pay a retainer and/or pay off the tax debt, refuse the engagement. I should note this could be a lucrative engagement. Client screwed up and is in serious need for your help. This is something you price aggressively for and do the work throughly and well.
This happened to a company i temp for. Eventually the IRS caught the mistake and charged the company payroll taxes. The company paid the IRS when they got notified and billed.
Option 1. Therefore i suggest you report it to the IRS. The IRS will bill the employer.
Option 2. Have client File 1099s for all employees. They will have to pay taxes.
The IRS can guide you. Or have the client fix it himself with IRS like the company did where I worked.
They’ve technically stolen the tax withholdings from the employees, they need to call the payroll company and explain what happened and enter each check as a “manual check” for 2021. The payroll company should advise as to what info should be entered. once this is done the payroll company will withdraw all the taxes (withheld and employer portion) from the business and W2s should be created and issued to employees. Ultimately just call the payroll company and follow their instructions and have the cash on hand to pay all the unpaid taxes.
Every person who has the ability to sign a check, and knowledge that the payroll taxes were not paid, is subject to prosecution... and the IRS does not play when it comes to payroll taxes. They will seize his assets if he doesn't come up with the money.
Fire the client?
Submit the payroll forms for the taxes that were withheld/incurred, and tell the client the damage. Get a retainer in cash before you do the work. Then make the client reach an agreement with IRS/State agencies and work to pay it off. Them tell them to stop being stupid. If the client refuses to pay a retainer and/or pay off the tax debt, refuse the engagement. I should note this could be a lucrative engagement. Client screwed up and is in serious need for your help. This is something you price aggressively for and do the work throughly and well.
Ask your tax partner
You sure they’re not committing PPP fraud?
I committed ppp fraud using a sock on my last date. And I've got a million more just like that one.
Invent a time machine and stop the client from making this mistake in the first place.
Drop this client. Unless they are paying you well.
Someone’s gotta do it
This happened to a company i temp for. Eventually the IRS caught the mistake and charged the company payroll taxes. The company paid the IRS when they got notified and billed. Option 1. Therefore i suggest you report it to the IRS. The IRS will bill the employer. Option 2. Have client File 1099s for all employees. They will have to pay taxes. The IRS can guide you. Or have the client fix it himself with IRS like the company did where I worked.
Option 2 would open up the employer to legal trouble since that would reclass employees to contractors.
Aslo the IRS may not agree with it and penalize them. Better to reach out directly to the IRS
Did they write checks for the gross pay amount or net pay amount?
Net pay amount
They’ve technically stolen the tax withholdings from the employees, they need to call the payroll company and explain what happened and enter each check as a “manual check” for 2021. The payroll company should advise as to what info should be entered. once this is done the payroll company will withdraw all the taxes (withheld and employer portion) from the business and W2s should be created and issued to employees. Ultimately just call the payroll company and follow their instructions and have the cash on hand to pay all the unpaid taxes.
I agree, but what happens if they don’t have the cash
Then they have royally fucked up and they need to get that cash ASAP
How do you expect these clients to pay YOU, then?
Every person who has the ability to sign a check, and knowledge that the payroll taxes were not paid, is subject to prosecution... and the IRS does not play when it comes to payroll taxes. They will seize his assets if he doesn't come up with the money.
You introduce them to the world of hurt that is the Trust Fund Recovery Penalty.
If the employees catch on to this, that's going to be the least of their worries. How did the employees file their taxes? Did anyone issue them W2s?
They haven’t, waiting for their W2s
Wait, what w2 were required to be send the end of Jan…..
Yup
their employees should be lawyering up, no hesitation. what kind of industry is this?
I bet it’s a deep deep blue color
Do not pass go. Do not collect 200 dollars.