Home > DOL, Field Audits, payroll, Prime Contractor Liability, workers compensation compliance, Workmens Compensation > Cases Studies Appear Every Friday: Martinez Siding Co. vs. the Prime

Cases Studies Appear Every Friday: Martinez Siding Co. vs. the Prime

So many new immigrants are sole proprietors knowing very little about how to run a business. So many states do not enforce immigration laws and do not teach non-English speaking independent contractors compliance reporting. Mr. Martinez got caught in one of these scenarios.

According to the statutes in Washington State, a sole proprietor who works exclusively for one company is a covered worker under Labor & Industries policies. And WC premiums have to be paid by the Prime Contractor. A Russian siding company was assessed over $120,000 for thirty sole proprietors. For the record, an LLC does not protect anyone during an audit.

He was working on an Army base for a prime contractor residing residential houses. The prime contractor told him he had to deduct payroll, unemployment, and workers’ compensation premiums from his bid amount. The State auditor never looked at the new Prime Contractor Law in Title 51 that clearly states the prime in this case is responsible for all premiums and taxes—not to include payroll taxes (in Washington).

This resulted in Mr. Martinez getting taxed twice: Once for Labor and Industries as an Unregistered Employer, and again for workers’ compensation premiums for his workers. He even showed the auditor his payment deductions from the prime contractor who refused to cooperate during the audit. Also, Mr. Martinez did not have to pay payroll taxes from his bid contract, and never got a refund from the prime.

The persons of interest in these scenario were the Spanish and Russian (Ukrainian)bookkeeper. Why didn’t these people learn to protect their clients? As a matter of fact, why don’t most bookkeepers want to learn about compliance reporting? Answer: They do not want to get sued. Their attitude is: If it “ain’t in Quick Books”, they are not going to use it or study it.

My programs take care of this little problem and exports easily in all the five states requiring hourly reporting. Take a look and learn for yourself at: http://bit.ly/1cixrpg Bookkeepers like to charge for this extra work, too.

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