A family member runs a business ( LLC) and was paying employees by 1099. Was audited by the state and it was determined that the employees did not qualify as 1099 employees and now will owe a good amount of back unemployment tax to the state. Can this be paid back in payments or will the entire amount be due at once?

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festerwl t1_isjqflj wrote on October 16, 2022 at 2:46 PM

They can negotiate a payment plan. Be advised that if the state has determined they aren't 1099 eligible the IRS won't be far behind.

Speaking from experience get in front of the situation, the sooner you get to them the better. Interest/penalties will be applied from the date of the first infraction until the day you reach an agreement. The IRS is far more aggressive in collection than the state.

Lulubean16 OP t1_isjt772 wrote on October 16, 2022 at 3:05 PM

Thank you for the info. We do work with an accountant, how does one go about “ getting ahead” of a potential issue with the IRS?

festerwl t1_isjugdg wrote on October 16, 2022 at 3:14 PM

Basically either head down to the local office or call them. Tell them you become aware of a mistake and you need to figure out what you need to do to rectify it.

Honestly it'll be a huge pain in the ass and it's going to take awhile, get an accountant who's very familiar with business tax filing, go back to the date the PA office says you had an issue and start there.

Lulubean16 OP t1_isjypyx wrote on October 16, 2022 at 3:42 PM

Ok thank you

Unique-Public-8594 t1_isjifa5 wrote on October 16, 2022 at 1:45 PM

Edit: deleted.

Lulubean16 OP t1_isjk0pu wrote on October 16, 2022 at 1:58 PM

This is Pa state unemployment, not the IRS. The money is due to the state of Pa

Unique-Public-8594 t1_isjk6ja wrote on October 16, 2022 at 1:59 PM

My mistake. Apologies.

aust_b t1_isjprbl wrote on October 16, 2022 at 2:41 PM

Sounds like a question for an attorney, not Reddit lol

dmriggs t1_isjt2t0 wrote on October 16, 2022 at 3:04 PM

Probably trying to put some feelers out- I'm sure they know they need an attorney

Lulubean16 OP t1_isjtii1 wrote on October 16, 2022 at 3:07 PM

Was told a lawyer really want help as they are dealing with the state Labor department.

billstrash t1_isjwi0g wrote on October 16, 2022 at 3:28 PM

Spend every nickel you can tomorrow. Then go to the IRS and make a deal (via a tax acct or atty). This will be very expensive, very time consuming, and very crushing to your bottom line. So, for every 1099 that's determined to be an employee, you will need to pay the matching taxes (SUI, FUI, SS, Medicare - ~8+%) for every check you've ever written them. IF you get in front of it with the IRS they will make a deal. But do it tomorrow. I mean Monday 10/17/22 and not Tuesday... Spend the cash on the atty because it will be way less than paying the IRS. Good luck. Next time, get an opinion letter from an atty on the specific circumstances of your 1099 hires.

Lulubean16 OP t1_isjyknw wrote on October 16, 2022 at 3:41 PM

Thank you, please explain what an “ atty” is?

PawBandito t1_isjz4kk wrote on October 16, 2022 at 3:45 PM

Attorney.

Lulubean16 OP t1_isk0q00 wrote on October 16, 2022 at 3:56 PM

Thank you