EMPLOYMENT TAXES

Worker Reclassification Cases:  Both the United States and the State of California impose employment taxes on employers and require employers to collect and pay withholding tax from employee wages.  Business owners who treat their workers as independent contractors are often the focus of audits by the IRS and the California Employment Development Department (EDD).  A business can appeal a worker reclassification by the IRS to the U.S. Tax Court and a worker reclassification by the EDD to the California Unemployment Insurance Appeals Board (CUIAB).  Robert Horwitz is experienced in representing clients in worker classification cases before the IRS, the EDD, the U.S. Tax Court, U.S. District Courts, and the CUIAB.

Trust Fund Recovery Penalty:   A business that is strapped for cash can often find tax withheld from employee wages a tempting source of funds to pay other creditors.  Where this occurs, the IRS is not paid the withheld tax, although it is required to treat the workers as if they paid the withheld tax.  Failing to pay withholding taxes can have severe personal consequences to the owners and managers of the business.  The IRS can assess a trust fund recovery penalty against persons who were responsible for a business’s failure to pay withholding tax.  The penalty is equal to the amount of tax that was required to be withheld and paid to the IRS.  The EDD is also authorized to assess a penalty against persons responsible for a business’s failure to pay withholding and employment tax.  The amount of the penalty is equal to the entire amount of tax owed by the business plus penalties and interest. 

The Department of Justice Tax Division views failing to pay withholding tax a form of theft.  Because of this the Department of Justice Tax Division has made it a high priority to go after people who failed to pay withholding tax, including filing criminal charges against persons responsible for failing to pay withholding tax.  With his background as a Tax Division trial attorney and as an Assistant U.S. Attorney, Robert Horwitz has the knowledge and experience needed to represent you in a civil or criminal trust fund recovery penalty case.