Quickbooks withholds zero federal tax

[lorne]

Hello, I have a client who let his Quickbooks subscription expire (or maybe deactivated it, not sure) and it now withholds no federal from his employees payroll checks. but it does calculate and withhold the corect SS and Medicare amounts. He seems to like it this way, more $ for workers, and from his talk I gather he's been reading some of patriot stuff.

I'm trying to talk some sense into him - that he is responsible for the correct amount of fed withheld according to W4 regardless of software. Sent him IRS and Tax Protester FAQ links but not sure. Thinks he can just blame the program. Long-time client and I don't want to push to hard and lose him.

TIA, Lorne

[webhick]

Your client is going to have a tough time feigning stupidity and blaming the program when all the payroll subscription expiration warnings tell you that it'll stop calculating the taxes properly.

And while he may think this is a good thing, his employees will not be happy come tax time next year as their returns will be considerably less than what they're used to getting or they'll owe more than what they're used to. At which point they may get together and hang him.

[LOBO]

I've seen a lot of people blame software errors for tax return mistakes. (They're usually user errors anyways, which is what his case is if he let the subscription expire.) The IRS still makes them responsible for correcting the errors and are still responsible for penalties and interest for any underpaid taxes.

His employees might get more in their paychecks, but 1: they will have to pay more on April 15 and 2: They might be charged with an estimated tax penalty for underwithholding.

As for employers not withholding because of "patriot stuff", there's some threads around here about Richard Simkanin (sp?). He's just ending a prison sentence for using frivolous arguments for not following the withholding requirements.

[LPC]

Your client is going to have a tough time feigning stupidity and blaming the program when all the payroll subscription expiration warnings tell you that it'll stop calculating the taxes properly.

And while he may think this is a good thing, his employees will not be happy come tax time next year as their returns will be considerably less than what they're used to getting or they'll owe more than what they're used to. At which point they may get together and hang him.

What she said.

(Or, in Quaker-speak, "that Friend speaks my mind.")

[lorne]

Yes, he said it did give warnings but no warnings now. As I understand it, his version is old and it wants him to buy the newest ver. which wont run on his old computer/OS. So you're saying both he and employees (who did nothing wrong) will be in hot water - employees get interest & penalties for underwithholding, and same for him with possible crim. charges added like Richard Simkanin. I will look him up.
Meanwhile, He's given me 2 books by Ron Weston and Peter Henderson, who I see was just convicted.

thanks, Lorne

[Thule]

Meanwhile, He's given me 2 books by Ron Weston and Peter Henderson, who I see was just convicted.

Hendrickson (not Henderson) is a going away for a while. For all his blustering and cage-rattling, his ideas have been proven wrong. The worst part is that he drags a lot of people down with him. Even after his conviction, new victims are cueing up at Lost Horizons. If he takes Peteys advice over that of his trusted accountant(?), something is definetly wrong.

You might want to ask about the state of his firm and see if there is a reason why he takes this risk. A lot of tax deniers and sovruns start up because of financial troubles. "Discovering" that they don't have to pay tax is a convenient way of solving their woes and blaming their problems on others.

You might want to put your advice in writing. One disgruntled employee, and the game is up. If the IRS comes around to ask a few questions, it could save you a lot of trouble if you right away can show that ignoring withholding was done against your expressed opinion.

[wserra]

You might want to put your advice in writing.

Amen. And if that costs you the client, that's one client you're better off without.

[notorial dissent]

The point here that your client very obviously isn’t getting, is that as the employer, HE is REQUIRED to, and personally responsible for, taking out and paying to the treasury those payroll taxes. There is NO way of explaining that away, particularly since he had been doing it up until he started having software problems and was getting the warnings.

You don’t say what kind of business entity you client has, but they WILL come after those taxes, either against the business or him personally if the business doesn’t have it, and the fines will be quite hefty, particularly if it is over a long period of time, and the “Oh, my software wasn’t calculating correctly” excuse will fly exactly like a lead balloon, which is to say not at all. What this is going to cost him in fines will be considerably more than what either a new, and probably better computer, and the upgrade to Quickbooks would have.

My main concern, however, is for his employees who are going to be in for an incredibly nasty shock when tax time rolls around, and they have to not only pony up the entire amount they owe in one great big chunk, but the late penalties as well since they weren’t paying current on their taxes. At which point they will not be so pleased with the favor he has done them.

Just think, could you come up with what your entire tax payment should be on what will undoubtedly be short notice? I certainly don’t know many who can, and I’m betting his employees will be in that camp when it falls apart. Having been there in my younger days when an employer quite merrily filled out the proper paperwork, took the taxes out of my paychecks and then never paid any of them. Fortunately I had my records when it all blew up showing that the taxes had been taken out of my pay, so my employer got to take the heat for it. Your client’s employees won’t be so lucky, since their documents clearly will show NO taxes taken out.

Your client is a fool and an idiot heading for disaster. You might consider pointing out to him what happened to Dick Simkanin and a few of his ilk who thought they didn’t have to pay taxes either. They got to go to jail and not longer have that problem since they no longer own anything, or very likely ever will again.

[Harvester]

Lorne, know that opinions other than the mainstream, as espoused by "national descent" and others, do exist. Not everyone here is taken in by the social engineers who would, by degrees, enslave the entire nation. Your client may be onto something, something big. Although admittedly, he's playing with fire, and may get burned if not careful.

[ProfHenryHiggins]

Harvester, if I might go off-topic for a moment... would you be willing to consider changing your avatar to something that is not in the "uncanny valley?"

Surfing in while Butterball was on my lap, he freaked out when your post appeared, and I'm very certain that it wasn't what you wrote that upset my cat.

[Cathulhu]

Harvester, if I might go off-topic for a moment... would you be willing to consider changing your avatar to something that is not in the "uncanny valley?"

Surfing in while Butterball was on my lap, he freaked out when your post appeared, and I'm very certain that it wasn't what you wrote that upset my cat.

Just proves Butterball is a cat of taste and discernment

[LPC]

Coincidentally, a Tax Court opinion from yesterday rejected reliance on TurboTax for failing to pay self-employment tax. See http://www.ustaxcourt.gov/InOpHistoric/ ... UM.WPD.pdf

[Investor]

Oh, Good Lord, I think I'm going to go into hiding. This really sounds like the type who searches me out for help when the stuff hits the fan...no thanks.

[lorne]

Yes i hear you on the "in writing" bit, but thing is we are friends somewhat, treading a fine line here. He's in construction and feeling the pinch economically. Whether he is "onto something" doesn't matter. Believe me i don't like paying taxes any more than the next guy, all the crazy stuff Congress comes up with, but i aslo believe we all must follow the law and pay taxes.

You should see this "From Freedom to Serfdom" book, so many typos its comical, i mean really bad. Whatever man, but this guy sure doesn't believe in editors.

Thanks again all, Lorne

[Gregg]

Yes i hear you on the "in writing" bit, but thing is we are friends somewhat, treading a fine line here. He's in construction and feeling the pinch economically. Whether he is "onto something" doesn't matter. Believe me i don't like paying taxes any more than the next guy, all the crazy stuff Congress comes up with, but i aslo believe we all must follow the law and pay taxes.

You should see this "From Freedom to Serfdom" book, so many typos its comical, i mean really bad. Whatever man, but this guy sure doesn't believe in editors.

Thanks again all, Lorne

There was no editor, like Pete's TP it's self published and the cheap vanity printers just take your type and set it and print it, typos and all.
Listen, just a little advice on the "friend"....it just might be the thing that whaps him back to his senses if his friend, who also happens to be an accountant, tells him he's wrong, and feels so strongly about it that he wants to put it in writing...just my thoughts on that.

[Nikki]

There's no way you're planning on signing any of his tax returns as a paid preparer, right?

[LOBO]

Yes, he said it did give warnings but no warnings now. As I understand it, his version is old and it wants him to buy the newest ver. which wont run on his old computer/OS. So you're saying both he and employees (who did nothing wrong) will be in hot water - employees get interest & penalties for underwithholding, and same for him with possible crim. charges added like Richard Simkanin. I will look him up.
Meanwhile, He's given me 2 books by Ron Weston and Peter Henderson, who I see was just convicted.

thanks, Lorne

I wouldn't say his employees would be in "hot water" unless they tried to use an evasion tactic also, just be more inconvenienced.

I don't know how much in contact with them you are, but if your friend refuses to withhold their taxes, they can always pay estimates as if they were self-employed or big-time investors. Again, its more of an inconvenience, but it can help avoid a large April 15 bill and the estimated tax penalty. Also, they wouldn't be charged interest unless that were unpaid past April 15.

[Lambkin]

I wouldn't say his employees would be in "hot water" unless they tried to use an evasion tactic also, just be more inconvenienced.

I don't know how much in contact with them you are, but if your friend refuses to withhold their taxes, they can always pay estimates as if they were self-employed or big-time investors. Again, its more of an inconvenience, but it can help avoid a large April 15 bill and the estimated tax penalty. Also, they wouldn't be charged interest unless that were unpaid past April 15.

The inconvenience of a big tax bill to a low-wage earner can mean eviction, car repossession, etc. in addition to their job when this turkey gets an IRS smackdown and closes his business. Collateral damage to include homeless kids, etc. This kind of BS can have real consequences. I hope none of the victims of this jerk's scam have families or live close to the financial edge.

[YAAFP]

The inconvenience of a big tax bill to a low-wage earner can mean eviction, car repossession, etc. in addition to their job when this turkey gets an IRS smackdown and closes his business. Collateral damage to include homeless kids, etc. This kind of BS can have real consequences. I hope none of the victims of this jerk's scam have families or live close to the financial edge.

I have several friends who were hit hard by the employer screwing up their payroll taxes... thankfully not to the extent quoted but one guy did have to sell his car.

[Dr. Caligari]

Yes i hear you on the "in writing" bit, but thing is we are friends somewhat, treading a fine line here.

If he is the kind of guy who will cheat on his taxes, he is the kind of guy who will turn on you in a minute when the Feds come after him. Even if it's only an e-mail, do something to put yourself on record advising him against this.

If you can't send anything to him-- and I really, really think you should-- at least make an entry in your own workpapers (and date it) saying that you advised him against this course of action. And, as others have said, whatever you do, do not sign a fraudulent tax return as a paid preparer. Losing one client is a lot better than losing your license to practice.