H-2A Workers: IRS Advises on W-2/1099 Reporting and Mandates Backup Withholding When SSN is Missing



With 2011 W-2s due right about now, the IRS is committing manpower and enforcement on compliance relating to 2011 compensation that a grower paid to its foreign agricultural workers admitted into the US on H-2A visas. See most recent IRS guidance. The IRS now mandates W-2 reporting of such compensation (and the grower must obtain the worker’s SSN or ITIN when reporting) and possible 28% backup withholding (where the worker fails to provide an SSN or ITIN).


Federal Tax Issues.

• What happens to the grower who filed 1099s for years prior to 2011?

• What happens to the grower who filed a W-2 or 1099 for prior years, but did not enter a worker’s SSN or ITIN?

• What happens to the grower who filed neither a 1099 nor a W-2 for prior years?

• How real is the IRS-threatened penalty on the grower who failed to backup withhold and remit that 28% (that is, the grower overlooked withholding or wanted to withhold but did not obtain an SSN or ITIN)?

• What happens to the (Mexican, Jamaican, for example) worker who was required, but never filed, a US tax return for prior years?

• What happens especially where that H-2A worker would have had enough exemptions such that the worker would not have owed any federal income tax?

Please see full article below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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