BACKGROUND

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).

ISSUES

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?