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Cash Salary New York

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  • Cash Salary New York

    The labor department has asked that I provide proof of records for cash salaries paid to employees. They stated that they do not cross communicate with the IRS regarding any payroll or sales tax issues so if I am meeting labor wage and O/T requirement, I will be OK. I am confident that I do meet the minimum wage and overtime laws by paying my employees properly but I am concerned about whether providing them the cash portion of salary records will open up other cans of worms.

    should I just let them estimate the penalty without my records or provide them the records?

  • #2
    Are you deducting taxes from these workers and otherwise complying with all tax and wage-and-hour laws and just paying the net pay in cash? What type of records DO you have?

    Or are you treating them as independent contractors (very possibly, in error)?
    I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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    • #3
      They are not independent contractors (1099). I paid them gross cash which meets min. wage and OT pay but do not withhold taxes from the gross.

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      • #4
        Originally posted by potatosalon View Post
        They are not independent contractors (1099). I paid them gross cash which meets min. wage and OT pay but do not withhold taxes from the gross.
        You cannot legally do that. On the federal side of things, you are legally required to withhold FIT, FICA , pay FICA and FUTA employer taxes, make deposits, and file 941, 940 and W2s. This is discussed in IRS publication 15. IRS has had numerous annoucements that indicates that IRS does indeed communicate with the state on such matters.

        NY has similar requirements with SIT, SUTA and probably WC.

        From the Payroll Source Book:

        There is a 100% penalty for deliberately not withholding and paying taxes (IRC 6672a, IRS Reg 301.6672-1). This is also known as the "Trust Fund Recovery Penalty". This penalty can be applied against the individual managers responsible for the decision as well as the company. In addition to the 100% penalty, responsible persons who willfully fail to collect and pay taxes are guilty of a felony and can be fined up to $10,000 and/or imprisoned for up to 5 years (IRC 6672e).
        "Reality is that which, when you stop believing in it, doesn't go away".
        Philip K. **** (1928-1982)

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        • #5
          I suggest you get a tax attorney, and quickly.
          I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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