News for Employers
Let me preface this section with this disclaimer: I am NOT an HR specialist. I have nothing to do with employment law. I am a tax CPA. I may help you run payroll or prepare payroll tax returns or answer tax notices or whatever, but I have nothing to do with your day-to-day running of your business and keeping up with employment law. But I will keep you informed of anything I hear from other CPAs and continuing education as it comes to my attention.
We’ve all heard/seen of all of the ICE raids and whatever else. You may think that you’re a small employer and it’s not going to get to you. What we are hearing is that there are going to be more I-9 audits of employers to make sure that your ducks are in a row. And if there’s an employer whose ducks look more like rabid squirrels on crack, that narrows down where ICE could go look for easy targets.
All employers must get a Form I-9 completed for each employee.
The employee fills out the top part of the form.
The employer fills out the second part of the form.
Both parties must sign and date and it’s supposed to be done within 3 days of hiring.
For the employer portion, you’re supposed to sit down face-to-face with your new employee and physically lay eyes on either one document from List A OR one document each from Lists B & C. Normally, that’s a driver’s license and social security card, but could also be a birth certificate, passport, etc., etc. You can google the document list and see what counts as identification.
What happens if you don’t have the information or the forms filled out correctly? Penalties and fines.
Once you get the form filled out, are you finished? Not necessarily. Employers with more than 25 employees (NC and SC have this rule) must also use e-Verify, which is an online system to report that you’ve hired the person and put in their data into the national database.
What happens if you don’t do this? Penalties and fines.
If you haven’t gotten I-9s, I would recommend getting it done ASAP. DHS may never knock on your door, but if they did, would you be ready? But if you use e-Verify now with an employment date of 2 years ago, what would happen? Honestly, I don’t know. It may open you up for penalties and fines now. I won’t recommend a course of action because I’m not an employment law expert, but if you fall into this category, check with an attorney.
Then I heard something from NC that was disturbing.
If you have any contractors who have an ITIN (Individual Tax Identification Number) - which is the parallel of a social security number for people who don’t have a social security number for whatever reason - you’re supposed to be withholding and remitting 4% tax to NC. Is this the disturbing part? No. Your payroll software can do this for you.
How do you know it’s an ITIN and not a social? It starts with “9”. It has the same xxx-xx-xxxx format of a social but ITINs start with “9”.
What if you haven’t been withholding and remitting the 4% to NC? They’re waiting. Yes, that’s what we were told by a labor attorney who sidled up to someone in the NCDOR (who he would not name). They’re waiting until they can come in and get you for years of back taxes, penalties, interest, etc., etc.
This may not apply to any of you, but I wanted to put it on your radar. Whenever you have an independent contractor, get that W-9! Even if they aren’t going to meet the threshold for filing a 1099 for their earnings, get the W-9 and keep yourself safe. If their social/ITIN starts with 9, do the withholding and remitting.