B asked:


I work at a company where the owner is asking us to reimburse relocation expenses without taxing or 1099′ing the employee. These are expenses like the deposit on someone’s apartment, the deposit on utilities, installation/startup costs of their digital cable tv, application fee for new apartment etc. These are for employees who are being relocated within the company (not new employees).

It seems like the owner wants to avoid paying the employer share of taxes or grossing up so that the employee gets their full reimbursement. He doesn’t care if its wrong but what are the consequences? Will he just get nailed during an audit since they aren’t valid business expenses? Should we put it through payroll anyway?

He also does this for things like phone allowances or home office allowances.. reimburse people for things that do not have receipts but not through payroll or 1099’s. He only wants to pay $70 and promised the employee he’d pay them $70 (doesn’t want them taxed).
I feel like its wrong to pay those expenses but what is the wrong of it? I feel for the employee who needs the $70 to pay their cell phone or the $100 to cover increases in utitlties because they were forced to work from home, but how is it a valid work expense? Its an allowance… in essence, a bonus. If there is no receipt, you can’t document it as a business expense.
If the owner wants the checks cut out of Accounts Payable (bypassing payroll) then what? They are subject to taxes but he’s insisting we do it wrong. We could 1099 the employee at the end of the year but that seems wrong/mean.

He knows this stuff is wrong but somehow doesn’t think the rules apply to him. What are the consequences?

Can he just do that? I don’t have the authority to insist things be done correctly, I’m just supposed to put them in the system the way I’m told. I’ve spoken up but the people above me can’t seem to reason with him.

Relocation to Atlanta

Gay B asked:


I will receive a substantial relocation bonus and need to know if Fed Withholding will be deducted at the time of the payment.

Relocation to Atlanta