If an employee is paid by commission, who is responsible for withholding taxes?

Career / Compensation, Taxes
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November 2016
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The real question should be is the person an employee or independent contractor? If the person is an employee, you need to follow the employment law (in your state), but it is a good chance the Employer is responsible for withholding taxes (Federal, State, FICA, etc.,) including the employer portions of taxes, such as Social Security, Medicare, etc..

If the person is an independent contractor, then the person is responsible for taxes.

The one caution is, employers need to be very careful calling people working for them independent contractors, when they are performing pretty much employee job functions. Employment law, and I am not an attorney folks, is pretty clear on who is an employee. If a company hires a person and they are required to work regular hours, the job is pretty open ended with no clear end date, is similar to other employees and functions pretty similar to employees, reports to a manager similar to other employees, does not have any real autonomy on how to do a job or when or where, if challenged or audited, the person stands a good chance to be considered an employee. The Employer could be liable for benefits, overtime, taxes, penalties, and fines by the Department of Labor or other State or Federal agencies.

If you are an employer, it is very prudent to have your policies and procedures reviewed by an employment attorney to ensure your company is compliant with all the rules, regulations of the City, State and Federal government and common sense, but to also ensure the company is following their policies and procedures.

November 2006