Here are some ways your tribe can avoid IRS penalties related to Employment Taxes. This is especially important when you hire new employees and file tax returns. There are four main things to consider: Identification numbers, timeliness, accuracy, and resources for help. First, be sure to get valid Taxpayer ID numbers from all employees and vendors before you make the first payment to them. You can use Form W-4 for employees and Form W-9 for vendors. These ID numbers could be Social Security numbers, Individual Taxpayers Identification numbers, also known as ITINs, and Employer Identification Numbers. Second, make tax deposits on time. If your tax liability reaches $100,000, remember you must deposit the tax it so the IRS receives it by the next business day. It's important to file and furnish information returns, such as Forms 1099, and Forms W-2 on time. If you don't, the penalties can add up quickly for information returns filed late. Remember to respond to notices right away. Next, remember to verify the information before filing Forms 941 and W-2. Check your payroll records against totals reported on Forms 941 and W-3 to make sure they match exactly. Check Form 941 and Schedule B to make sure the total tax liability matches exactly between the two forms. The same applies to Form 945 and Form 945-A. Finally, keep Publications 15, 15-A, 15-B, 15-T, 5343, and 4268 nearby for guidance. These will help you go through the process of paying and reporting employment taxes. Visit IRS.gov/tribes for more information.
