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I was told by a few restaurants in my area that they do not…

Customer Question
I was told by...

I was told by a few restaurants in my area that they do not pay federal withholding taxes, medicare or social security on their employees. They give them a 1099 at the end of year instead of a W2. Is this legal?

Accountant's Assistant: The Accountant will know how to help. Is there anything else important you think the Accountant should know?

No. I have been arguing that I do not see how they get around not paying taxes.

Submitted: 26 days ago.Category: Tax
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Answered in 1 hour by:
3/27/2018
Tax Professional: Barbara, Enrolled Agent replied 26 days ago
Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 5,789
Experience: 20+ years of experience in tax preparation; 30+ years of experience as a real estate/corporate paralegal.
Verified

Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

The IRS has strict guidelines regarding classification of employee vs. contractor.

See the following:

https://www.irs.gov/newsroom/understanding-employee-vs-contractor-designation

Once you review the information, please feel free to follow up.

Thank you and best regards,

Barb

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Customer reply replied 26 days ago
I read this information before I send this question. I still do not see how a restaurant can get away with not paying taxes on waitresses and waiters.
Tax Professional: Barbara, Enrolled Agent replied 26 days ago

I apologize, but I would have no idea of what you know or read before you submitted your question.

They are getting away with it because none of the workers has requested reclassification by the IRS of the employer.

I would imagine they are fearful of losing their jobs.

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Customer reply replied 26 days ago
I will have to call later. I am just really frustrated because one of my boyfriend's friends told him that he does not take out taxes on his staff that work for him in a food booth so he thinks he can do the same thing.
Tax Professional: Barbara, Enrolled Agent replied 26 days ago

Any offers of calls are site generated. Please ignore the offer.

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Tax Professional: Barbara, Enrolled Agent replied 26 days ago

The IRS has no way of knowing what is going on unless someone reports it and asks for re-classification as an employee.

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Customer reply replied 26 days ago
I will call later. I am in my office and it is hard to talk at this time.
Tax Professional: Barbara, Enrolled Agent replied 26 days ago

Not a problem.

Let me know when you're ready.

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Customer reply replied 26 days ago
okay thank you.
Tax Professional: Barbara, Enrolled Agent replied 26 days ago

You're welcome.

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Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 5,789
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