- 11 - Petitioner treated Kovacevich as an employee. Sec. 530(a)(1)(A). Petitioner’s board of directors voted to pay Kovacevich a $60,000 salary and issued a Form W-2, Wage and Tax Statement, relating to 1991. In addition, Kovacevich, in his capacity as petitioner’s president, filed an amended Form 941 for 1991, with the following statement: The amount of earnings of Employee Robert E. Kovacevich was not clear, hence was left off. The Employee paid all Income Tax due, hence the withholding is unnecessary. However the Social Security Tax is due. A completed W-2(c) term is included. [Emphasis added.] Furthermore, petitioner did not file Forms 1099 relating to payments made to Kovacevich. Sec. 530(a)(1)(B). Thus, petitioner fails the first two requirements and, accordingly, is not entitled to relief. IV. Liability for Employment Tax Petitioner paid Kovacevich $132,000 and $33,250 in wages during 1994 and the first quarter of 1995, respectively. Because we have determined that Kovacevich is an employee under sections 3121(d)(2) and 3306(i), petitioner is liable for FICA and FUTA taxes as determined by respondent. See secs. 3306(a)(1) and (b), 3111(a) and (b). V. Penalties Under Sections 6656 and 6662(a) Section 6656 imposes a penalty equal to 10 percent of the portion of an underpayment in tax that is required to be deposited if the failure to deposit is more than 15 days beyond the prescribed deadline. See sec. 6656(a); secs. 31.3402(b)-1,Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011