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They need to know EVERYTHING concerning your business to prevent Tax Services penalties or fines they may be subjected to because of your untruths. So, tell them everything.
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If the auditor reassigns your payments as “employee wages,” a consequence of disastrous with regard to your customer, because additional money for work comp or payroll taxes would be owed from your customer, not by the person. Plus, there will probably be penalties in conjunction with the tax returns. Penalties are quite steep, and are not tax deductible.
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