My fiance worked for almost 3 years for B & B Construction company located at 150 Flochinni Cir., Lincoln, California 95648,916-645-9853. Who use the above mentioned company to do their payroll. The checks were paid on a weekly basis, with 2 checks, from 2 different accounts.
The employees hourly wage was divided unequally between the 2 checks. For example, a 12.00 hourly wage was paid as follows: 7.00 out of a regular account, 5.00 out of a trust account.
Due to the portion paid out of the trust account, at tax time, it generated 2 kinds of tax statements... A normal W-2, and a K-1. The K-1 being for the check paid out of the trust fund.
The trust fund pay looks to the IRS as dividend income... And caused us as well as others, not to qualify for some tax credits. Like for us, it was the earned income credit. This amounted to around 4000.00 a year for us.
This is not REAL dividend income to the employees and I tried to resolve this with the payroll company. I got alot of run around and little action. I also reported it to the IRS in April.
So far, no action has been taken (to my knowledge).
The office manager foe Labor Force, Lee Martinez, and I, had several conversations in which she said all companies they do business with are paid like this. That they found a "loophole" and are using that to pay out of the trust.
I explained to her that employees are being taxed on dividends that don't exist and are being disqualified for tax credits they SHOULD be getting. She simply said what they are doing looks legal on paper... (hmmmm, red flag to me...)
I finally stopped and decided to let the IRS do its job. Hopefully. Meanwhile, its almost tax time again, and tho my fiance has gone to another company to work, he was still employed with this company most of the year... And we will get shorted again this year.
I might also add that after hasseling back and forth with the construction company and payroll people, they did issue each employee certificates of Benefical Interest in the trust, which give employees nothing.
I will be happy to send you copies of said units of trust and the cover letter sent with them. This letter states that the employees AGREED to having a certain portion of their salary paid like this.
This statement is NOT true. The employees were never given the choice or option on how they were to be paid. Who in their right mind would give up 4000.00 a year to save a little on weekly social security taxes and such that are not paid on the trust portion of payroll?
I also might add that most of their employees are illegal workers and will not have reported these issues as they pay no taxes.
I hope I have explaine this in an understandable manner. Feel free to email me or call if you need more information. Thanks for your help and time.
0 comments