Terry D EA Posted January 30, 2013 Report Share Posted January 30, 2013 Had an ex-client call me and inform me that he has received a notice from the IRS telling him he owes 5k in employment taxes for 2010. I was retained as the accountant for this guy's auto business in 2009 and thru the 3rd quarter of 2010. We had discussions regarding him miss classifying employees as sub contractors. I told him he was doing this and advised him of the consequences and told him to stop immediately. We discussed the responsibility of backup withholdings and he refused. I do not know who prepared his tax returns as our discussion got a little heated, I gave him a copy of the IRS regs showing how an employee was determined and then stayed away for the first part of 2010. He got into another location where he again asked me to help him with the service department, I did and after I discovered that all the books were screwed up, I began fixing them also. Again, he hired employees and wanted them classified as subs. This time I pulled my engagement in writing and haven't spoke to him since the other day. I reminded him of our conversations and told him to pay the bill becuase he has the burden of proving the 1099's he filed were indeed subs and not employees. He wants me to help him with the language in his response to support his position that they were subs. As I told him when I pulled my engagment I want no part of this. What responsbilitlity do I have if any to this guy? Quote Link to comment Share on other sites More sharing options...
Guest Taxed Posted January 30, 2013 Report Share Posted January 30, 2013 Terry, maybe you don't want my suggestion. But if I was in your shoes I would stay away from this guy for ever. He has burned you twice now! Many years back I inherited a client that had a similar issue (not remitting employment taxes on time and even skipping one year). I put it in writing that he should pursue Closing Agreement process to settle the matter with IRS because this issue does NOT go away even in bankruptcy as you know. So now he is on an installment agreement. He has not seen his Fed refund for the last 5 years! I hope you kept good documentation from previous years in case this guy tries to hang this problem around your neck. There was or still is a IRS program for employers to voluntarily comply with worker misclassification after paying a penalty. Perhaps you can point him in that direction, but again if you want to wash your hands off that is your call. Quote Link to comment Share on other sites More sharing options...
CathysTaxes Posted January 30, 2013 Report Share Posted January 30, 2013 Had an ex-client call me and inform me that he has received a notice from the IRS telling him he owes 5k in employment taxes for 2010. I was retained as the accountant for this guy's auto business in 2009 and thru the 3rd quarter of 2010. We had discussions regarding him miss classifying employees as sub contractors. I told him he was doing this and advised him of the consequences and told him to stop immediately. We discussed the responsibility of backup withholdings and he refused. I do not know who prepared his tax returns as our discussion got a little heated, I gave him a copy of the IRS regs showing how an employee was determined and then stayed away for the first part of 2010. He got into another location where he again asked me to help him with the service department, I did and after I discovered that all the books were screwed up, I began fixing them also. Again, he hired employees and wanted them classified as subs. This time I pulled my engagement in writing and haven't spoke to him since the other day. I reminded him of our conversations and told him to pay the bill becuase he has the burden of proving the 1099's he filed were indeed subs and not employees. He wants me to help him with the language in his response to support his position that they were subs. As I told him when I pulled my engagment I want no part of this. What responsbilitlity do I have if any to this guy? Terry, stay away from him. He won't listen to you anyway. I think he's trying to find a scapegoat. Quote Link to comment Share on other sites More sharing options...
cathyan Posted January 30, 2013 Report Share Posted January 30, 2013 You've done all that you can do. He chose to ignore the rules, after you informed he was doing it wrong. You don't owe him anything more. Quote Link to comment Share on other sites More sharing options...
Roberts Posted January 30, 2013 Report Share Posted January 30, 2013 Terry, stay away from him. He won't listen to you anyway. I think he's trying to find a scapegoat. This is what I 100% agree with. Quote Link to comment Share on other sites More sharing options...
TRX 1 Posted January 30, 2013 Report Share Posted January 30, 2013 Terry I agree, and he reminds me of a customer I had one time. update 4.0.0.17 is ready and working great I will give you an update on States a little later today. Doug Quote Link to comment Share on other sites More sharing options...
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