IRS and States will share information

[DaveinTexas]

regarding employment tax examination results; from IR-2007-184:

"Officials from the IRS and more than two dozen state workforce agencies today announced they have entered into agreements to share the results of employment tax examinations."

The states that have signed partnership agreements with the IRS thus far are:
Arizona, Arkansas, California, Colorado, Connecticut, Hawaii, Idaho, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Nebraska, New Hampshire, New Jersey, New York, North Dakota, Ohio, Oklahoma, Rhode Island, South Carolina, South Dakota, Texas, Utah, Vermont, Virginia, Washington and Wisconsin.

Just thought I'd mention this; I hadn't seen it posted yet. I would've thought that this was already happening, but now they have made it official. Beware of more workforce agency audits and IRS SS-8 determination letters. I've had two so far this year.

[Joe Btfsplk]

Form 1099 employees

A lot of small businesses hire people who should get a W-2 and give them a 1099. I'm surprised that little or nothing is done about it. One guy who has a C Corp paid himself over $100,000 and withheld no SS tax but all the IRS did was to make him pay the Soc Sec, but did not make him pay the Unemployment tax.

I realize that once in a while someone gets audited for underpaying Unemployment tax, but it must be rare and must be based on something other than classifying employees as contractors.

[joanmcq]

Here in CA its more often the state that gets involved before the IRS because someone that got a 1099 files for unemployment. We also have state disability ins, an employee training tax, and maybe some others that the state misses out on when employment taxes aren't paid.

[sea-tax]

My understanding that here in Washington state it has been going on for awhile now . Even with Department of Revenue audits, where by the DOR auditor discovers unreported income for sales tax purposes they will send a little notice to the IRS to make them aware. I have heard the IRS does the same . Fortunately I have not had any first hand knowledge but have heard some horror stories.