Case Study: Household Employer Federal ID and Filing

When it comes to the complicated process of obtaining all the correct information to become a household employer, it helps to have experts on your team, especially when it comes to providing accurate information to the government. The case study that follows is a good example of how a company like GTM can help with properly obtaining a household employer federal ID and ensuring the correct information is filed with federal and state offices.

The Situation

Although a household employer obtained a Federal Employer Identification Number (FEIN) from the IRS, he used his Social Security Number (SSN) as an identifier when contracting with GTM to do his household employment taxes. He then purchased workers’ compensation insurance through GTM, continuing to be identified with his SSN since the payroll ID is what the workers’ compensation insurance uses for an ID number.

Since the employer’s FEIN remained unknown to the New York State Workers’ Compensation Board, the board identified the holder of the SSN and the FEIN as two separate employers. Therefore, the board sent a warning letter notifying the employer that he would be fined retroactive to the beginning of employment and accruing for every additional day his employee worked without the employer’s meeting the state’s workers’ compensation coverage mandate. Yet, since he did have a FEIN and believing he complied with the state mandate, the employer filed the letter away and took no further action. During this time, the state imposed its fine, which continued to climb to $33,000.

GTM’s Solution

Because the household employer works with GTM for both his household employment taxes and workers’ compensation insurance, GTM investigated what instigated the fine. After detailed detective work, GTM found that the state misidentified the household employer as a different employer due to the confusion between using the SSN instead of his FEIN.

The Results

GTM corrected the problem by working with the state workers’ compensation board, replacing the employer’s SSN ID with his FEIN and corresponding with all affected parties to ensure the issue was resolved. All penalties were lifted—the employer owed $0.

For more information, contact GTM’s Household Employment Experts at (888) 432-7972.