Auditing/SS-8

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Expert: Consuelo Herrera, International Accountant and Fraud Examiner - 6/17/2009


Question
Hi.  I worked for a company as a regular employee.  After some time, the company re-classified me as a independent contractor 1099.  They did this so they could save money by not paying tax on me and promised I would take home more money.  This was in 2002, 2003 and 2004.  Being a nieve young adult, I filed regular taxes 1040ez and received refunds for those years.  In 2005 or so I got huge bills from the IRS and now have a tax lein.  In 2009 I heard about Tax advocate service and filed a SS-8 to have the filing status investigated and hopefully reclassified as regular employee.  The IRS has been keeping my returns for the past 3 years and I have paid off around $6000 of a $14000 bill.  My question is: If my status is reclassified as regular employee, will the former employer have to pay some of the remaining bill?

Answer
Dear Eric Jorgensen,

Thank you for contacting me.

This is what the Internal Revenue Service, IRS states:

Treating employees as nonemployees:(From the Employer's Tax Guide)

You will be generally be liable for social security and Medicare taxes and withheld income tax if you do not deduct and withhold these taxes because you treated an employee as a nonemployee.

you may be able to calculate your liability using especial rates for the employee share of social security and Medicare taxes and the federal income tax withholding from the employee. You are liable for the income tax withholding regardless of whether the employee paid income tax on the wages. You continue to owe the full employer share of social security and Medicare taxes.

Hope it helps and I wish you the best in resolving this matter.

Sincerely,

Consuelo Herrera, CAMS, CFE

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Consuelo Herrera, International Accountant and Fraud Examiner

Expertise

I can answer questions concerning internal and operational auditing, fraud prevention procedures, internal control, the Sarbanes-Oxley Act, COSO control concepts, and management oriented auditing. I would love to provide business-owners with suggestions on how to prevent and detect fraud so that they are proactive in protecting their wealth since the very beginning of their entrepreneurial affairs. I can answer questions to both English and Spanish population. I am very committed to keep my standards up today so I know many resources where I can direct those seeking advice.

Experience

I have rendered services for private companies, profit and non for profit, in two countries. As independent consultant I have provided advice to managers in implementing procedures that streamline their operations and enhance their activities. As a staff accountant in a US CPA firm, I performed regular auditing procedures for different engagements.

Organizations
AICPA (American Association of Certified Public Accountants), ACFE (Association of Certified Fraud Examiners), ACFEI (American College of Forensic Examiners.

Education/Credentials
Bachelors of Sciences in Business Administration – Accounting University of South Florida USF – Tampa Florida Catholic University – Colombia Title earned: Specialist in Tax and Customs Central Foundation University – Colombia Title earned: Certified Public Accountant. On August, 2006 I passed all four sections of the Certified Fraud Exam which tests for proficiency in the following areas: Criminology and Ethics, Financial Transactions, Legal Elements of Fraud, and Fraud Investigation.

Awards and Honors
As employee of Forensic Technology Inc. a Canadian company with locations and sites worldwide, I was the winner of the 2005 President's award in the category of Cost Savings through Efficiency or Innovation granted in January 2006 in Montreal, Canada.

Past/Present Clients
I have provided advice to all kind of companies: manufacturing, service, consulting, non for profit organizations, etc.

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