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R. Klein, EA
R. Klein, EA, Enrolled Agent
Category: Tax
Satisfied Customers: 3375
Experience:  Over 20 Years experience
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I have a client that is required to do certified payroll for

Customer Question

I have a client that is required to do certified payroll for Tex Dot. Every one that works with him is a contract laborer. My question is can you do certified payroll for contract workers since they are liable for themselves. This is a valid document my thoughts were he could not do it but not for sure. Please let me know something
Submitted: 4 years ago.
Category: Tax
Expert:  R. Klein, EA replied 4 years ago.

Randalltax : Your first concern is whether the workers are truly employees and not contractors. Very often businesses misclassify workers. The government is cracking down.
Randalltax : What type of work is being done by these contractor?
JACUSTOMER-bsbyj2at- :

The are construction laborers

Randalltax : One of the reasons certified payroll exists is to make sure employees are not mislabeled as contractors. In the construction industry, most of the laborers are indeed employees. Here in Texas, there are a lot of undocumented workers that cannot be employees so employers stick them on as contractors.
Randalltax : It would be virtually impossible to have a construction company with no employees or supervisors.
Randalltax : So the answer is, this client is going to need certified payroll and, no, he probably does not have a workforce of 100% contractors.
JACUSTOMER-bsbyj2at- :

I was asking if you can do a certified payroll with contract laborers .

Randalltax :

The answer is there is no such thing as Certified Payroll for vendors.

Contract Laborers are vendors and are not part of the payroll.

Randalltax :

Your client's bigger issue will be dealing with TWC and IRS on employment tax issues, however. TWC will come down hard as soon as one unhappy worker files a complaint with TWC.

Randalltax :

If your client has set up a corporation or an LLC taxed as a corporation, he MUST have at least one employee (himself), and that would then require certified payroll.

Randalltax :

If he is a sole-proprietor, then he does not need to be on the payroll himself.