IRS Letter 3897- Employee Assistance to the Form SS-8 Group

IRS Letter 3897- Employee Assistance to the Form SS-8 Group

IRS uses Letter 3897 to notify you to request that you complete Form SS-8 Determination of Workers Status for the Purpose of Federal Employment Taxes and Income Tax Withholding, for one or more of the worker names listed on the notice. This means that a worker hire as an independent contractor believes they should be classified as an employee.

This is a very serious situation and you should probably seek representation. If the IRS rules that the worker(s) are an employee, your company will be held responsible for both the employees and employers portion of Medicare and Social Security withholdings for the time period the worker(s) were classified as an independent contractor.

This could lead to an assessment of the Trust Fund Recovery Penalty being assesses an and all “responsible persons”.

The TFRP may be assessed against any person who:

Is responsible for collecting or paying withheld income and employment taxes, or for paying collected excise taxes, and
Willfully fails to collect or pay them.

A responsible person is a person or group of people who has the duty to perform and the power to direct the collecting, accounting, and paying of trust fund taxes. This person may be:

An officer or an employee of a corporation,
A member or employee of a partnership,
A corporate director or shareholder,
A member of a board of trustees of a nonprofit organization,
Another person with authority and control over funds to direct their disbursement,
Another corporation or third party payer,
Payroll Service Providers (PSP) or responsible parties within a PSP
Professional Employer Organizations (PEO) or responsible parties within a PEO, or
Responsible parties within the common law employer (client of PSP/PEO).

For willfulness to exist, the responsible person:

Must have been, or should have been, aware of the outstanding taxes and
Either intentionally disregarded the law or was plainly indifferent to its requirements (no evil intent or bad motive is required).

What are your options?

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What is my first step?

If you received a letter or notice, a decision has to be made. Do you feel confident to handle this situation on your own? If it is a simple issue and you already know the answer, call or write them. If the issue is more complicated, you need to hire a Certified Tax Resolution Specialist. The IRS or State will take full advantage of your lack of knowledge and experience.

What is Your Next Step?

The next step is to determine if the notice was sent in error. Do you have an outstanding tax liability? Do you have unfiled or incomplete returns?

Is There a Time Limit?

Yes, each letter or notice from the IRS or State will indicate a date that you MUST to contact them by. If you need more time, call the number on the notice or letter and request an extension. DO NOT ALLOW the time to expire without contacting them or hiring a representative to contact them for you.

What You Don’t Want to Do!

What you don’t want to do is nothing. Your tax problems will only get worse if you ignore them. If you cannot pay, there are a number of potential solutions available to those who are otherwise in compliance. In compliance means having all tax returns filed and any balances paid or on a payment plan. If you have outstanding debts or unfiled returns, you need to get hire a Certified Tax Resolution Specialist.

Get Some Help

If you don’t know how to address the issue(s), have unfiled return/unpaid balances or just done feel confident, let the experts at Legacy Tax & Resolution Services represent you. Work with our team of Certified Tax Resolution Specialists to resolve your issue(s) quickly. Best of all, you don’t have to talk to the IRS or State; we can speak on your behalf.