INS Preparing for ‘Nanny Tax’ Crackdown?

Only one-third of Southern California parents employing a nanny pay their “nanny taxes,” according to a survey conducted by Lake Forest-based Southern California Nanny Center.

The center, which publishes the American Nanny Review, a quarterly newsletter, said most parents acknowledged failing to pay the taxes even though nine in 10 said they understood the laws. “Nanny taxes” are a combination of Social Security and Medicare taxes, which add up to 15.3% of the worker’s pay. The tax burden is split equally between the employer and the nanny.

Kimberly A. Porrazzo, the center’s director, said the survey results are particularly significant because it’s been two years since stiffer reporting requirements and penalties were instituted. Those changes were prompted by the controversy surrounding some politicians and their appointees who admitted not paying taxes for domestic employees.

Rumors are circulating, Porrazzo said, that the Internal Revenue Service is now prepared to step up enforcement of the laws. “The buzz is that this is the year they’re really going to shake things up,” she said.