Business partner paying illegals

If this business is a true partnership, then you've got more than one problem, and best seek advice of an attorney.

On second thought, even if it is a corporation, e.g. a subchapter S corporation, you've still got a problem which should be resolved post haste.

ChEAr$, Harlan Lunsford, EA n LA

wrote

Why would you do that?

Surely you should have contracted or hired legal workers, and either issued

A cynic might wonder if you would be as concerned had he paid them in cash.

First of all, they probably don't even have social security numbers. Thats going to be a problem.

Secondly, they are more likely to be considered employees, for whom you should issue W2's.

Then you've got Federal & state payroll taxes to deal with.

___________________________________

-----> real address on hobokeni or hobokenx

Are you asking because you didn't know they were illegals and your partner has endangered your business OR are you asking because you knew from the beginning they were illegal, but didn't realize that your partner was leaving a papertrail and now you are trying to distance yourself from the mess?

Tax-wise, the end result is the same, you can't 1099 your partner. Legal-wise you need to see a lawyer regardless of the answer to my above question.

Any more help with this? I did not know about it and only he profitted from it. His name (signature) is on the checks.

Also, I'm sure they were illegal, but I have their names and address's. I've also been told I can send them 1099s with all the information I have on them. They were all fired as soon as I found out and this was last Oct. I believe the law change on how illegals are treated changed in Oct.

Thanks.

You're not making any sense. If you weren't involved in it then, and it wasn't an activity of your partnership, why are you invovled now?

As has been noted by several people, these are the only 1099's to be issued. Whether they should be issued by the partnership or by your partner as part of a side business beats me. The facts are too vague.

Well, now it sounds like it was your business. Regardless, nothing in pertinent tax law takes note of the worker's immigration status. If you're concerned that ICE is going to come haul you away, talk to a lawyer.

Issue the 1099's with the information you have and be done with it.

Sorry for being thickheaded, but I am still confused. I understand that you did not know about it, but if it was conducted as a business activity of the partnership, you will still likely be equally responsible. It is very common for a partnership to have a member that is not active in day-to-day management (which seems to be your case). However, you entrusted your reputation and business responsibilities to your partner in doing so. Ignorance is not a valid legal defense.

How did "only he profit"? Were the illegals paid less than minimum wage? Were they paid from company funds? Do the two of you share in profits from the business? Would the company have spent MORE if they hired legal workers? It seems unlikely that you did not profit in some way (otherwise why hire illegals). Even if the only result is that the business has lower personnely expenses, the business now looks more valuable to a potential buyer.

I commend you for trying to do the right thing, but a court may see your actions as admission that you were/are an active, decision-making partner in the business and therefore culpable.

YOU NEED A LAWYER.

Good Luck.

One last thought...

The issuing of the 1099's (with which you seem to be focused) is only a small part of your problem.

Section 8 of USC 1324 stipulates that EMPLOYING illegal aliens is a criminal act. That particular law doesn't care about any other aspect of employment. You can properly issue 1099's until you're blue in the face and your company has still violated that section of the code.

My boss used to say, "If you ever get mugged, don't worry about the guy with the bat, worry about the guy beside him with the gun." IOW, you have bigger problems than 1099s.

-IANAL