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"the IRS has a better chance of "convincing" individual contractors to pay taxes correctly" Two things here: 1. Auditing GE's centralized payroll system is a
by ShabbyDoo 17y ago
"the IRS has a better chance of "convincing" individual contractors to pay taxes correctly"
Two things here:
1. Auditing GE's centralized payroll system is a lot easier than auditing 10K little businesses. Also, GE has so much to lose that it likely obeys the letter of the law.
2. GE doesn't pay its employees and then realize on April 15th that it doesn't have any money in the bank. Tons of small businesses end up owing money to the IRS because the owner (the painting contractor, etc.) didn't plan ahead.
Edit: Please note that I was referring specifically to payroll taxes in my original comment -- not international tax law, etc.
- protomyth 17y agoGE can lawyer up pretty fast, most individuals will do exactly what the IRS tells them since they can freeze your accounts and put liens on you without a court date. As I pointed out elsewhere, this isn't driven by logic or the IRS, it is driven by lobbying money.
- ShabbyDoo 17y agoThere clearly are many grey areas in corporate taxation, especially when certain laws only apply to a few large companies. However, payroll taxes are not such a beast. The rules for how much must be paid as a percentage of W2 wages are pretty simple and easily audited. Furthermore, there's a built-in cheating detection system -- employees file individual income taxes and assert the tax payment details provided by their employers. So, it's easy for the IRS to figure out where fraud is happening. Dispatching an army of lawyers to argue against the obvious is of little value.