CSLB Contractor's Law & Business Practice Exam

What obligation does an employer have concerning employment taxes?

1. They are optional

2. They must be reported monthly

3. They must be reported annually

4. They are handled by subcontractors

The correct answer is: They must be reported monthly

Employers are legally required to report employment taxes monthly. This obligation is critical because it ensures that Social Security, Medicare, and federal income taxes withheld from employees' paychecks are properly accounted for and submitted to the government in a timely manner. The requirement for monthly reporting helps maintain the flow of revenue that supports various federal programs. By adhering to this schedule, employers fulfill their responsibilities and avoid potential penalties or interest for late payments. This regular reporting also facilitates the government's ability to monitor compliance with tax laws and regulations. While there may be instances where employment tax reports are submitted on a different schedule (like quarterly for some employers based on their tax liabilities), the core obligation of timely reporting aligns primarily with a monthly framework for many businesses, especially for those with higher payroll.