When an employer utilizes a common paymaster agreement:
A.
any burden for failure to pay taxes is not shared with the related corporations.
B.
each related corporation must withhold and pay social security and Medicare taxes.
C.
the related corporations cannot be treated as a single employer for FUTA tax purposes.
D.
the total FICA taxes paid are determined as if the employees had one employer paying all wages.
The Answer Is:
D
This question includes an explanation.
Explanation:
Comprehensive and Detailed in-Depth Explanation:
Acommon paymasterallowsrelated corporationsto treat one entity as the employer for FICA purposes. Thus, employees working for multiple related corporations are taxedas if employed by a single employer, avoiding duplicate FICA tax.
Applies only to FICA,not FUTA.
Helps avoid exceeding wage base multiple times.
[References:, IRS Regulation ยง31.3121(s)-1, The Payroll Source, Chapter 4: Multi-State and Multi-Entity Employment, ]
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