Wages to employees in cash!

[Brad Imsdahl]

NYEA cited Rev. Rul. 86-14 which says, “Payments by an employer of employee FICA tax without deduction from employee's wages under an agreement between them are additional wages for FICA purposes, the amount of wages to be determined by a formula. The additional FICA wages so determined are includible in the employee's gross income and are wages for purposes of income tax withholding…”

So in other words, OldJack and everyone else who came down on the side of grossing up the wages are correct. If the employer pays the employee’s share of FICA for the employee, the employer paid FICA is considered additional wages. The cash wages paid must be grossed up on the W-2.

[OldJack]

....I would also have a "come-to-Jesus-meeting"

Good grief Snag! Does the IRS (pcir 230?) require you to keep minutes of that "come-to-Jesus meeting" or is that just a state statute requirement in your state.

[Joe Btfsplk]

Good grief Snag! Does the IRS (pcir 230?) require you to keep minutes of that "come-to-Jesus meeting" or is that just a state statute requirement in your state.

It comes under a law requiring separation of church and state. A come-to-Jesus meeting is part of rendering unto Caesar before Caesar renders unto you.

[JG EA]

One more thought.

Don't you think some of the money coming in to the employer was "overlooked" to make up for the money going out? Surely the employer didn't consider the cash to employees a gift - a way to save on employer taxes and miss that little fact that their income was too high.

[taxea]

Wages to employees in cash! Reply to Thread

My thought...don't touch it!