Nanny Tax & Payroll Updates! HomeWork Solutions

A former Armonk, NY investment banker, Richard Josephberg, was convicted of 21 counts of tax evasion on April 19, 2007, including an "Nanny Tax" evasion count alleging that Josephberg paid his housekeeper and nanny in cash to avoid filing the required tax reports and paying Social Security and Medicare taxes for them. Sentencing is scheduled for July 19, 2007.

US Attorney's Press Release.

Labels: nanny tax conviction, nanny tax criminal conviction, nanny tax evasion

Illegal immigrants, motivated by the promise of legal status, are lining up to pay their income taxes according to several news reports. This includes non-documented domestics, employed as maids, housekeepers and nannies, who in the past have worked off the books for cash wages.

The IRS reports a significant increase in the number of Individual Taxpayer Identification Numbers (ITINs) issued in 2006. ITINs are used by individuals inelligible for Social Security Numbers for the filing and tracking of tax payments. The various immigration reform proposals under consideration by Congress all include some type of amnesty linked to payment of taxes. Immigrant workers, anxious for legal status and the ability to freely travel between the US and homelands, are voluntarily stepping forward to pay income taxes in record numbers. HomeWork Solutions' Payroll Tax Practice experienced a steady flow over the last year of employers registering to pay the "nanny taxes" who open the dialogue with statements such as "My housekeeper wants to file taxes this year." Employers typically find that paying their worker's on the books increases their costs by 10%. In the past, nanny tax compliance was largely driven by the employer, who many times had to pay both employer and employee taxes to retain their workers. Today, much more compliance is driven by the workers themselves. These workers, anxious to normalize their status, are willing to take a cut in take home pay in order to eventually qualify for legal immigration status.

My nanny (housekeeper) is not a legal resident. What should I do about employment taxes?

Labels: illegal immigrant taxes, immigrant domestics, immigrant housekeepers, immigrant nannies

Employment tax non-compliance issues and enforcement are part of an IRS agency-wide strategy to reduce the "tax gap", according to John Tuzynski, IRS Chief of Employment Tax Operations. Mr. Tuzynski made his remarks at the American Payroll Association's conference March 23.

Among several identified non-compliance issues identified, two are often associated with household employment. They are:

• Non-payment of employment taxes following cash payments to employees


• abuses in worker classification, especially treating employees as independent contractors, consequently failing to withhold and remit employment taxes

Mr. Tuzynski also discussed IRS efforts to implement and expand information sharing arrangements with state workforce offices. These offices are responsible for the management of unemployment insurance programs.

Labels: nanny tax enforcement, nanny tax evasion

4nannies.com, the on-line nanny recruiting site, announces that a National Criminal Records Locator and a National Sex Offender Registry Search are now available to hiring families. 4nannies.com's on-line nanny recruiting experience emphasizes "Safety First."

These new investigative tools allow families to economically include "broad net" search options, commonly used by HR professionals, in their nanny screening.

The National Criminal Records Locator, maintained by 4nannies.com partner Verifications Inc., is a proprietary database containing over 200 million criminal records. If there is a "hit" in the database, an in-court criminal records search will be obtained.

The National Sex Offender Registry Search (NSOR) is recommended as part of any childcare or eldercare background screening to reduce the risk of hiring someone with a prior history of sex offenses. The NSOR accesses public information from every state made available through the U.S. Department of Justice. The NSOR search provides a comprehensive, nationwide alternative to a single state sex offender search.

HomeWork Solutions, along with 4nannies.com, strongly encourages families to conduct thorough pre-employment screening before leaving any individual in sole charge of their children. This includes a thorough interview, obtaining a formal job application, verifying all references [and not accepting family members as references], and conducting a criminal background search.

HomeWork Solutions publishes TIP SHEETS to assist families in recruiting, screening, hiring, and setting up the nanny payroll.

Labels: nanny background check, nanny background investigation, national sex offender registry, verify nanny background