A firm that runs a limousine transportation business recently received bad news from IRS. It found out that it was liable for payroll taxes that were not paid by an employee leasing company.
The taxpayer leased its workforce from the leasing company and contracted with it to fulfill all employment tax obligations. But the taxpayer had dominion and control over the workers and was deemed the true employer.
The limousine company regularly sent the payments for payroll to the leasing company. It’s irrelevant that the leasing firm didn’t deposit the payroll or remit payments to IRS.
The employer is still on the hook, IRS privately rules.