Discussion:941 Frustration/Ethics?

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Discussion Forum Index --> Tax Questions --> 941 Frustration/Ethics?

Cpasupport (talk|edits) said:

16 November 2005
If you have a client make an extra salary payment (7 instead of 6) in a quarter and thereby going over the $2,500 941 limit and forcing monthly deposits instead of pay at the end of the quarter, what do you do?

I've been sucking it up and filing the 941 as done. Then because the $3,000 is over the $2,500 they get a penalty for 10% or $300 which then I send in a penalty waiver and 75% of the time the IRS waives the $300 penalty. It creates client/cpa strife, it adds more work to the IRS for penalty considerations & it is extremely annoying when the 25% happens and the IRS is stubborn for no reason or with reason. Its crazy. Here are people paying the tax like good law abiding citizens (as opposed to tax evaders) and they are getting hit with pretty stiff penalties sometimes and/or more work.

A)Continue as above.

B)File the tax return and shove the 7th check into the next Qtr. and pleade temporary timing difference if audited (I've never seen a 941 audit before) Downside is you have to file a tax return that you know is incorrect.

C)Document the 7th check as a loan (even though you know it is salary) and then clear the check as salary or even have the client take a $0.01 check with Gross less tax less "Loan" and document the salary check as the next quarter. Benefit is that it does B but has some form of paper trail that says next quarter. Still, I question filing a tax return that is based on a manufactured loan.

Any other ideas?

Dwlacroix (talk|edits) said:

18 November 2005
In this and similar situations, I use a lower amount than the IRS. For example, if a client expects to have $2,000 in 941 taxes, I recommend that they make monthly deposits.

Snooks (talk|edits) said:

18 November 2005
I almost always recommend monthly deposits and for some clients I suggest they become weekly depositors (when they do payroll). Nothing says you can't make deposits more frequent. For our very small business clients that are often dealing with cash flow issues, I would rather they clear the liability as soon as possible. I have found at the point of preparing payroll works real nice and then you don't risk them spending the money on something else.

Spetti (talk|edits) said:

19 November 2005
I also ALWAYS recommend (forcefully) monthly deposits.

Tchromczak (talk|edits) said:

22 November 2005
I offer the only two solutions that work for me. First I provide in writing the deposit requirements, I go over it with them and they sign a copy acknowledging they understand their responsibility. I tell them to call whenever they have a question (billable hrs of course) then if they continue to ignore their responsbility I tell them they have to use a payroll service to handle the withholding everytime they write a paycheck (mine preferrably) or else they need to find another accountant. If you follow this suggestion I guarantee you and your client will be happier - and you will make more money too!

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