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Tax client received a large 2015 payment under a minimum wage settlement including a separately stated interest component. All I see is a checkstub and a reference to Division of Labor Standards investigation, a statement that deductions may have been taken( what type and by whom, it isn't clear), that a tax liability may result and to contact the employer for specific legal deductions made on the employer behalf.

Question is what the tax preparer needs to do to make sure the correct amount is included as taxable income. Employee refuses to ask employer( still works for same company) whether the wages paid were included on his W-2 and NYS DOL has not sent a 1099 of any type. Employye does seem to think these additional wages were not on his 2015 W-2. I spoke to DOL, who could said I should contact Taxation and Finance( no doubt not a productive use of my time).

Has anyone experience this issue recently?

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Michael Jaffe
CPA
MICHAEL B. JAFFE, CPA PC
Commack NY
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Unless a check was issued by DOL, extremely unlikely in this matter, it would not issue a 1099.  I can understand your client's reticence to inquire of his employer, so the simplest way to address this would be for him to authorize you to make the inquiry on his behalf. I cannot imagine why DOL suggested that you reach out to Taxation & Finance other than passing the buck!

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Ruth Kraft
RUTH B. KRAFT, ESQ.
Mineola NY
516-466-9789

Original Message:
Sent: 02-17-2016 16:11
From: Michael Jaffe
Subject: NYS DOL MINIMUM WAGE/INTEREST PAYMENT

Tax client received a large 2015 payment under a minimum wage settlement including a separately stated interest component. All I see is a checkstub and a reference to Division of Labor Standards investigation, a statement that deductions may have been taken( what type and by whom, it isn't clear), that a tax liability may result and to contact the employer for specific legal deductions made on the employer behalf.

Question is what the tax preparer needs to do to make sure the correct amount is included as taxable income. Employee refuses to ask employer( still works for same company) whether the wages paid were included on his W-2 and NYS DOL has not sent a 1099 of any type. Employye does seem to think these additional wages were not on his 2015 W-2. I spoke to DOL, who could said I should contact Taxation and Finance( no doubt not a productive use of my time).

Has anyone experience this issue recently?

------------------------------
Michael Jaffe
CPA
MICHAEL B. JAFFE, CPA PC
Commack NY
------------------------------

Original Message------

Unless a check was issued by DOL, extremely unlikely in this matter, it would not issue a 1099.  I can understand your client's reticence to inquire of his employer, so the simplest way to address this would be for him to authorize you to make the inquiry on his behalf. I cannot imagine why DOL suggested that you reach out to Taxation & Finance other than passing the buck!

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Ruth Kraft
RUTH B. KRAFT, ESQ.
Mineola NY
516-466-9789
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I assume employer pays DOL and DOL pays employee, Not sure who is obligated to do what under DOL procedures re: 1099's. Without knowledge of facts, I guess I should not prepare this return. What do you think?

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Michael Jaffe
CPA
MICHAEL B. JAFFE, CPA PC
Commack NY

Original Message:
Sent: 02-18-2016 08:22
From: Vincent Preto
Subject: NYS DOL MINIMUM WAGE/INTEREST PAYMENT

I had a similar situation as it pertains to overtime. For those individuals that were still employees at the time the checks were issued, it was included in their W-2. For those that were no longer employed (since this went back a few years) they received a 1099.

 

We had this structure all spelled out in the attorney agreements for the settlement, as we (the CPA firm) was involved in the process from the beginning and made sure they payment structure was addressed.

 

 

 

 

 

Vincent J. Preto, CPA

Senior Partner

Wagner & Zwerman LLP

450 Wireless Blvd.

Hauppauge, NY 11788

Tel. (631) 777-1000 Ext. 340

Fax  (631) 777-1008 

 

 

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DOL did issue the check, I have the stub and was able to inquire with DOL as to the investigation, I was told that DOL made payments to my tax client in 2011 to date, of course I never knew that till yesterday, so this may not be the best tax client to have! DOL service advisor told me they don't issue 1099's!!! Hard to believe, even for the interest paid to him!  

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Michael Jaffe
CPA
MICHAEL B. JAFFE, CPA PC
Commack NY

Original Message:
Sent: 02-18-2016 08:18
From: Ruth Kraft
Subject: NYS DOL MINIMUM WAGE/INTEREST PAYMENT

Unless a check was issued by DOL, extremely unlikely in this matter, it would not issue a 1099.  I can understand your client's reticence to inquire of his employer, so the simplest way to address this would be for him to authorize you to make the inquiry on his behalf. I cannot imagine why DOL suggested that you reach out to Taxation & Finance other than passing the buck!

------------------------------
Ruth Kraft
RUTH B. KRAFT, ESQ.
Mineola NY
516-466-9789

We too had a similar situation to Vincent's. We were required to give 1099's because the company was no longer in business, but it was part of the settlement requirements.

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Abby Alhante
KURCIAS & ALHANTE, CPAs LLC
Melville NY

Original Message:
Sent: 02-17-2016 16:11
From: Michael Jaffe
Subject: NYS DOL MINIMUM WAGE/INTEREST PAYMENT

Tax client received a large 2015 payment under a minimum wage settlement including a separately stated interest component. All I see is a checkstub and a reference to Division of Labor Standards investigation, a statement that deductions may have been taken( what type and by whom, it isn't clear), that a tax liability may result and to contact the employer for specific legal deductions made on the employer behalf.

Question is what the tax preparer needs to do to make sure the correct amount is included as taxable income. Employee refuses to ask employer( still works for same company) whether the wages paid were included on his W-2 and NYS DOL has not sent a 1099 of any type. Employye does seem to think these additional wages were not on his 2015 W-2. I spoke to DOL, who could said I should contact Taxation and Finance( no doubt not a productive use of my time).

Has anyone experience this issue recently?

------------------------------
Michael Jaffe
CPA
MICHAEL B. JAFFE, CPA PC
Commack NY
------------------------------

I wonder if each affected employee is aware of the settlement particulars, do they get a copy of a document spelling them out? 

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Michael Jaffe
CPA
MICHAEL B. JAFFE, CPA PC
Commack NY

Original Message:
Sent: 02-18-2016 09:28
From: Abby Alhante
Subject: NYS DOL MINIMUM WAGE/INTEREST PAYMENT

We too had a similar situation to Vincent's. We were required to give 1099's because the company was no longer in business, but it was part of the settlement requirements.

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Abby Alhante
KURCIAS & ALHANTE, CPAs LLC
Melville NY

My client is located up in Rockland County.  First time US Labor "grabbed them" {four years ago} client issued to "underpayment" checks to the employees and provided US Labor with copies of the "cancelled checks"  {There were no penalties paid to the US Labor Department}  Our payroll service included these payments on the employee W-2's and included the payments with the applicable 941's, 940, NYS-45 and MTA-305.  "Nice and clean!"

They were revisited about fifteen months ago. (No real surprise!)  This time they assessed a higher "payroll underpayment" this time and required that the client pay in full or over a sixteen month period with 40% paid up front PLUS penalty.  Each quarter, after our payroll has already been run, my client finds out how much has been paid to which employees (for which US Labor deducts FICA/Medicare and FWT from current/former employees - who knows what will happens to those "unknown employees"- and they provide us with the gross and net.  We have to report said wages for NYS withholding and UI but the US DOL is providing the employees with W-2's.  We get a bill from IRS concerning the employer share of FICA/Medicare. 

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David Rothfeld
DAVID J. ROTHFELD, CPA
Hicksville NY
516-433-2129

Original Message:
Sent: 02-18-2016 10:37
From: Michael Jaffe
Subject: NYS DOL MINIMUM WAGE/INTEREST PAYMENT

I wonder if each affected employee is aware of the settlement particulars, do they get a copy of a document spelling them out? 

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Michael Jaffe
CPA
MICHAEL B. JAFFE, CPA PC
Commack NY