(PRWEB) March 19, 2013
HomeWork Solutions (http://www.homeworksolutions.net/), an industry leading provider of household payroll and tax services, encourages any family employing domestic workers to note the pending deadline for the IRS Voluntary Worker Classification Settlement Program, or Nanny Tax Amnesty. Applications for the 2012 tax year must be received by June 30 2013. Qualifying families that do not take advantage of the program may be leaving themselves vulnerable to stiff penalties and back taxes.
“These voluntary disclosure programs are typically followed by stepped up enforcement activities,” reports household employment expert Kathleen Webb, the President of HomeWork Solutions Inc. She notes that the recent program for voluntarily reporting off-shore bank accounts, which 12,000 taxpayers untilized, was immediately followed by a 12 percent increase in audits of high net worth taxpayers.
The IRS' Voluntary Worker Classification Settlement Program, as reported in the Wall Street Journal on Friday, March 8, is a tax amnesty program for families with household employees. The program targets employers who improperly classified employees as independent contractors, allowing them to voluntarily agree to begin treating these workers as employees going forward, while virtually eliminating any liability for past unpaid taxes. For more information on the program, visit http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Voluntary-Classification-Settlement-Program.
A majority of families who privately hire household workers simply ignore these nanny taxes all together. The process is complicated and the taxes add to the employers’ expenses. Skipping nanny tax obligations is the norm. In 2008 3.9 million households reported income of $200K or more and fewer than 5 percent acknowledged having any type of household worker. Economists estimate that as many as 80 – 95 percent of families with domestic employees do not pay nanny taxes (http://www.prweb.com/releases/2012/12/prweb10219091.htm). The resulting tax shortfall may range between $3 and $10 BILLION per year. By comparison, the proposed Buffett Rule – increased taxes on high earners – raises only an extra $5 Billion per year.
“While preparing to file their 2012 income tax returns, families would be wise to rethink their current tax strategy,” said Webb. Budget deficits and immigration reform efforts further suggest that increased enforcement may be the wave of the future. Federal legislators are scrambling to raise revenues to reduce deficits, and the IRS is under considerable pressure to improve tax collections.
Immigration reform proposals include a requirement to prove prior tax compliance, putting pressure on families who employ undocumented workers and pay them off the books. These workers will themselves demand proper tax reporting so they may qualify for any proposed amnesty program.
Employers who are interested in getting right with the IRS on their Nanny Tax obligations are encouraged to call the specialists at HomeWork Solutions at 800-NaniTax (800-626-4829) for a free telephone consultation. For information on the full range of tax and payroll services HomeWork Solutions offers, visit http://www.homeworksolutions.net/index.cfm/services/our-household-employment-tax-services/.
800-NaniTax (800-626-4829) or 703-404-8151