IRS provides guidance on employment tax questions regarding household employees

Article Abstract:

IRS Notice 95-18 has clarified the new withholding and reporting requirements for employers of household workers under the Social Security Domestic Employment Act of 1994. FICA and FUTA taxes are to be withheld on a calendar year basis for any employees paid $1,000 or more per year. Quarterly reporting and use of Form 942 is no longer required for workers working in the home. Employers should now file a Schedule H with their individual tax returns, and withheld taxes are due at the filing date for the tax return. Estates and state agencies must also meet these requirements.

Domestics, Withholding tax

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Purchasing a worker's services from an intermediary: how to ensure avoidance of potential employment tax liabilities

Article Abstract:

Buying the services of workers through middlemen involves tax risks. If the IRS can show that the business buying the worker's services and the worker have an employer-employee relationship, it may hold that business liable for employment taxes owed on wages paid the worker by the middleman. A business can avoid these taxes because of the 'control of the payment' rule in IRC 3401(d)(1), which states that in these tripartite employment relationships the person controlling payment of the wages is the employer.

Professional employer organizations, Payroll tax, Employee leasing services

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IRS issues section 401(k) guidance

Article Abstract:

Nondiscrimination rules under IRC subsections 401(k) and (m) are further explained in IRS Notice 98-1 concerning comparisons between actual deferral and contribution percentages of highly and nonhighly compensated employees. The rules reflect changes made by the Small Business Job Protection Act of 1996 and are effective for plan years beginning in 1997. The guidance includes rules concerning method changes, testing methods, and abusive uses.

Salary reduction savings plans, 401K plans

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