What is the penalty percentage assessed on improperly classified employees for FICA tax?

The correct penalty percentage assessed on improperly classified employees for FICA tax is 20%. This penalty applies when an employer fails to properly classify workers as employees rather than independent contractors, and it leads to a failure to withhold and pay FICA taxes appropriately.

Understanding this penalty is crucial for employers to ensure compliance with tax laws and avoid significant penalties. The 20% penalty represents an amount based on the FICA taxes that were not withheld or paid due to the misclassification. Proper classification of workers is essential not only for tax obligations but also for compliance with labor laws and employee benefits.

In this context, the other percentage choices do not reflect the actual penalty rates defined in federal guidelines for misclassification and FICA tax obligations, making them incorrect for this particular question.