So IRS is asking FTX to pay millions of dollars in unpaid payroll taxes as result of classifying FTX workers from contractors to employees. Will IRS refund said workers the payroll taxes workers paid as part of their Schedule-C? (Contractors pay their own payroll taxes when they file Schedule-C; companies pay payroll taxes for their employees, but not for their contractors)
I have had requests from the IRS and state taxing authorities to garnish wages for employees that didn't pay their taxes in both of the past two years and were hit with liens. They send me a bill, due immediately, and then leave it to me to subtract the funds from payroll to pay myself back. In one case it was more than the total post tax payroll amount for the employee for the month.
That's actually the IRS having special standing (which it shouldn't, arguably). If it's a private contract, you'd have to go to court over breech of contract and probably end up settling.
IRS has happily kept thousands of dollars of my money when I filed incorrectly. A few years later I went to the IRS office for an unrelated matter and I asked the agent “can you look up year XXXX and see if I was owed a refund?” Agent looks up and says yup, you were owed a large refund. Too late to get it back now, but we strongly encourage you to correctly refile your taxes for that year.
So they had done my taxes and knew they owed me money and, basically, stole my money. If I owed them money they would have immediately hit me with a bill or an audit. And on top of it they wanted me to refile my taxes “correctly” after they had already done my taxes.
This “do your thing and we’ll do it, too, and we’ll see if you got it wrong” is one of the most stressful aspects of American bureaucracy.
As a funny anecdote, I know one person who did so much wrong with his taxes for a high value personal business that he received a check from the IRS each of the 3 times he was audited after the business folded. I don't know the specifics, but apparently, his business was some sort of an anomaly and the IRS was sure that he underpaid his taxes for a number of the years the business was running. He was sort of clueless about his expenses, so when the IRS audited, they ended up finding a whole lot of expenses that he hadn't properly accounted for and when he refiled, he got a rebate check. This happened 3 times before the IRS finally accepted that his taxes were correct.
It matters though because they didn't change their designation before acting differently, which would make them liable. Not sure to whom they'd be liable though, other than the IRS.
My accountant (who is really an EA) sorted it today. She has a special (paid!) phone number that goes direct into the FTB/IRS.
Apparently, they have been having "computer problems" and have been sending out letters to people who don't actually owe any taxes (because I've been f'cking paying my taxes), like me. I'm not her only client that got jacked by this.
I'll be getting a full refund, including fees, in 4-6 weeks.
We can still appreciate progress. And this is progress.
Although if the IRS is gonna audit when I under pay, they technically already know how much I owe. Why not just tell me? Reckon it's since people also over pay, and there's no refunds for doing that.
reply