I have a client who worked for a small company (maybe 5 employees). The owner (sole prop) closed the business last April. He had the business for a few years and didn't send in any of the withholdings from 2 years ago thru April 2011. He told the employees that he closed the business as of the end of 2010 and he isn't giving any W2's for 2011. He has since moved out of the state. The employees got paid in cash without any backup, but can estimate their info for 2011. They want to file their taxes properly. Should they include the amount for 2011 on their return even though no money was sent to IRS and no info to the state or SS?
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Fill out a substitute W-2 (Form 4852) and put in the most accurate information you can based on pay stubs (if available). The IRS and state will be responsible for going after the ower for incorrect amounts not paid for income tax/FICA/FUTA/SUTA.Michael -
And report him!
The sub-W2 will do the reporting eventually but action on your part will insure that the Feds will start an investigation much sooner.Believe nothing you have not personally researched and verified.Comment
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Should they include the amount for 2011 on their return even though no money was sent to IRS and no info to the state or SS?
Yes they should include amounts, it's not employees fault no money was sent in.Comment
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Yes, report him. Since you dont't know any of the facts beyond what your client has told you, be sure and jump into the situation unprepared and ill informed. Cause him as much trouble as you possibly can, without regard to the possibility that you may be slandering or libeling someone. If you want that type of excitement, and if your E&O provider enjoys the challenge, then by all means go for it. All you have to lose is everything you've worked for."The only function of economic forecasting is to make astrology look respectful" - John Kenneth GalbraithComment
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