Payroll Taxes & Fringe Benefits

Payroll taxes – FICA and Federal income tax withholding – represent the single largest source of revenue for the federal government, amounting to 35 percent of total federal receipts. As a result, payroll taxes receive significant attention from the Internal Revenue Service (IRS), including a specific focus on fringe benefits provided to employees and independent contractors, worker classification, and tips earned by hospitality industry employees. Our Payroll Tax and Fringe Benefits lawyers are regarded as foremost authorities in guiding employers through the intricate rules governing the application of payroll taxes to compensation, the negotiation of voluntary corrections with the IRS, and the tax treatment of perks and accountable plans.

Our team helps clients minimize payroll taxes, maximize deductions, develop refund strategies, manage the audit and compliance process, and design favorable administrative solutions. We have a successful track record helping clients achieve their business goals through careful planning, as well as regulatory and legislative channels.  We complement these capabilities with our extensive knowledge of executive compensation issues, our experience handling the most complex tax issues, and our ability to litigate a matter if we cannot reach a satisfactory administrative solution.  Our team also helps clients navigate Form W-2 and Form 1099 reporting, penalty abatements for late deposits and CAWR mismatches, cross-border withholding (both domestic and international), tip reporting (including the distinction between tips and service charges), payroll tax aspects of corporate transactions (such as FICA re-start issues and agent appointments), payroll tax treatment of stock options, and the payroll taxation and allocation of employment-related settlements.

Our team has also advised clients on state payroll tax issues, including the proper tax treatment of various perks and employee benefits at the state level.  As employees become increasingly mobile both domestically and globally, our team have advised some of the nation's largest companies on the implications of employees moving across state lines and around the world including state income tax withholding requirements and payroll tax issues related to inpatriates and expatriates, such as potential treaty claims and tax equalization programs.