1099-R 945 and withholding not done?
Posted 26 January 2011 - 12:48 PM
Is the correct thing to do still send in the $100 with the 945, show the withholding on the 1099-R and request the $100 pack from the part? That seems like the way to do it but wanted to know if anyone else has run into this before.
Posted 26 January 2011 - 01:16 PM
Posted 26 January 2011 - 01:43 PM
Failure to withhold, deposit, or pay taxesIf you do not withhold income, social security, or Medicare taxes from employees, or if you withhold taxes but do not deposit them or pay them to the IRS, you may be subject to a penalty of the unpaid tax, plus interest. You may also be subject to penalties if you deposit the taxes late. For more information, see Publication 15.
Fell under this rule and the Plan Adminstrator (the client) is still responsible for the unpaid taxes they were supposed to withhold but did not.
I was trying to findout what the actual penalties are though and must admit I'm coming up blank despite going through the penalty section of Pub 15 (circular E).
Posted 26 January 2011 - 03:16 PM
If you fail to withhold, a problem doesn't typcially surface until the taxpayer fails to pay the taxes owed on the distribution. Could happen I suppose, but pretty unlikely.
Biggest threat is probably a tongue lashing from the IRS/DOL if they ever did an operational audit of the plan.
Posted 26 January 2011 - 05:19 PM
I guess my confussion is where does the mandatory requirement come in if there is no real penalty for failure to comply?
Posted 27 January 2011 - 01:51 PM
I agree with others that there might be a tongue lashing or hand slap for the Plan if the problem was found, but again it is the participant who is responsible for proper reporting and payment of the appropriate taxes on the distribution.
My vote is to do the 1099-R as the payout was done. We have had clients proceed in this manner and never had any backlash. That being said, I do think that if you were talking about a much larger distribution and or tax amount, then I might have to rethink my position....
Posted 28 January 2011 - 09:34 AM
I don't think there was a problem of participants not voluntarily reporting distributions because 1099s were being issued, even in those dark ages.
Posted 22 December 2011 - 10:39 AM
As far as I can tell the client isn't at much risk as seems to be the concensus in the thread. But if someone knows of anything else we need to know about I wouldn't mind a heads up.
We are planning preparing the 1099-R as the distribution was done show no tax withheld.
As an aside my memory is the same as Bird's. These rules were set up to give a one year boost to gov't revenue by taking it from a future year. (Warning ideological soap box coming) One of the reasons our government is so screwed up is because that actuallymakes sense to those people. I swear one of the best changes that could happen is if someone in our political leadershop made Uncle Sam use GAAP. That kind of shift would not change the income statement, just be prepaid revenue on the balance sheet. Enough of my CPA rant.
Posted 22 December 2011 - 11:30 AM
One of the reasons our government is so screwed up is because that actuallymakes sense to those people. I swear one of the best changes that could happen is if someone in our political leadershop made Uncle Sam use GAAP. That kind of shift would not change the income statement, just be prepaid revenue on the balance sheet. Enough of my CPA rant.
Yup. Not that I have time for this but I saw a letter in the WSJ a couple of days ago that concluded something to the effect of "we need people with new ideas." We don't need new ideas, we just need people with spine to match revenues and spending. There is mass delusion that there is an easy fix to our massive deficit problem, if only someone is brilliant enough to think of it.
Posted 22 December 2011 - 01:25 PM
Yeah it was the Unemployment Compensation act of 1992. It was supposedly used to fund additional federal unemployment benefits during that particular recesssion by collecting the taxes sooner.
As an aside my memory is the same as Bird's. These rules were set up to give a one year boost to gov't revenue by taking it from a future year. (Warning ideological soap box coming)