I have a client who came to me in spring of 2009 and I did their s corp return and personal return for 2008 during the summer. Ex preparer had died and wife took over business and they didn't feel she really knew what she was doing and a friend recommended me.
They had not been doing payroll and I explained the process to them and told them they needed to be doing this. Well, rest of 2009 went by and they didn't do any payroll. But they did start doing payroll in February 2010. We have done deposits and reports on schedule.
When I met with her in February she gave me a "Stack" of letters from IRS. They wanted payroll reports for all quarters of 2008 and 2009. I am marking these as "no employees during period. Payroll started 2/2010.
I am just wondering if this is going to start a hornet's nest for them and IRS might try to reclassify his distributions or his income from the K-1 as payroll.
They have been in compliance for a year now. Except for the last part of 2009 they knew they needed to do payroll but didn't understand how to do it. Even though I explained it all to them. We had a little language barrier. If I see them in person it goes much better, but they live in a different town.
Linda, EA
They had not been doing payroll and I explained the process to them and told them they needed to be doing this. Well, rest of 2009 went by and they didn't do any payroll. But they did start doing payroll in February 2010. We have done deposits and reports on schedule.
When I met with her in February she gave me a "Stack" of letters from IRS. They wanted payroll reports for all quarters of 2008 and 2009. I am marking these as "no employees during period. Payroll started 2/2010.
I am just wondering if this is going to start a hornet's nest for them and IRS might try to reclassify his distributions or his income from the K-1 as payroll.
They have been in compliance for a year now. Except for the last part of 2009 they knew they needed to do payroll but didn't understand how to do it. Even though I explained it all to them. We had a little language barrier. If I see them in person it goes much better, but they live in a different town.
Linda, EA
Comment