Here we learned that the new client was not only behind in making tax deposits for prior periods, but also was using the wrong payment method (paper checks, as opposed to electronic transmissions), resulting in several thousand dollars in penalties per year. First, Rothrock structured the new client’s current tax deposits, so that they were being made timely via the proper payment method, stopping the vicious cycle of recurring new penalties. Then, Rothrock negotiated with the IRS to establish an installment plan for the client to payoff back taxes due, bringing the client into compliance.
 

The client response was simple – “This is a huge weight off my mind. We should have switched to Rothrock sooner!”

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WAGE & HOUR AUDIT

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The act of paying an employee for service is more than a transaction between and employer and employee. You don’t always think about it but over a dozen various government agencies are involved every time an employee gets paid. We remit withholdings to some of them while others only get involved if they believe there is a violation of law.
 

A good example of this is a Department of Labor Wage and Hour audit. While it is possible for a Wage & Hour audits to be performed via random selection, that’s usually not the case. Most of these audits are a result of a disgruntled current or former employee. Here is the recent experience of a Rothrock Payroll client;
 

A local hotel had hourly and salaried employees. Under the federal Fair Labor Standards Act, employees must be classified as exempt or non-exempt based on the duties they perform. Once classified, they must be compensated with minimum wage and overtime as applicable.
 

Rothrock recognized that the client did not have a good understanding of the pertinent laws; so they recommended that the hotel maintain job descriptions, time records and properly classify its employees; paying minimum wage and overtime as required.
 

As can happen to any company, there was a dispute with an employee and the employee contacted the Department of Labor; claiming they were due back-pay for overtime and etc. The Department of Labor issued an audit notice with a $60,000 assessment.
 

Thankfully the hotel operator followed the recommendations provided by Rothrock. With the documentation that was put in place, Rothrock was able to successfully defend the hotel.
 

When the audit was finished and the assessment was eliminated, the client offered the following to the auditor; “I am sure glad I’m with Rothrock; the procedures and processes they recommended that I have in place saved my business.”
 

You never know when a Wage & Hour audit will occur. Having a payroll provider that does more than just compute net checks will help you be ready.

CONSTRUCTION CONTRACTOR

A client in the construction contracting industry was lured away from Rothrock Payroll Services to a Professional Employer Organization by promises of human resources assistance and reducing employee risk; that is, help in screening potential hires, providing benefits, and processing workers compensation claims. He also increasingly assumed, since his company would be leasing his employees from the PEO, this would limit his 941 payroll tax liability (failure to pay the correct amount timely). Pursuant to Treas. Reg. 31.3504-2(b), if a business's PEO does not meet the service agreement test to be "designated to perform the acts of an employer" and/or has not obtained the IRS certification of "CPEO," the business will likely be held liable for unpaid employment taxes, even if the business made the necessary payments to the PEO. From the time this client left Rothrock until they went out of business the company revenue increased 28% while the payroll processing fee increased 1300%. This increase in payroll processing expense, among other increased cost, in a low margin environment, caused the owner to recently sell the business. Had this client stayed with Rothrock he would have had $13K per year more money with which to run his business.