|
|
|
IRS TO BEGIN CONDUCTING RANDOM AUDITS OF EMPLOYMENT TAX RETURNS Dateline: November 2009 As part of the National Research Program that collects data used to measure federal tax payment, filing and reporting compliance, the IRS is going to start conducting random audits of employment tax returns in November 2009. About 5,000 audits will be done over the next three years. Even if your company has done nothing wrong and everything right, it could be selected at random for an audit.
AREAS OF INVESTIGATION Here are the four main areas that the IRS will be investigating:
Worker classification - to see that companies are properly classifying workers as employees rather than as independent contractors, if indeed they are employees. |
|
|
Fringe benefits - to properly account for employee's personal use of business vehicles and other business property, as well as to make sure nondiscrimination standards are being properly applied.
Officer compensation - to be sure that salaries paid to owner-employees of C corporations are not unreasonably high so as to improperly reduce corporate taxes and that salaries paid to owner-employees of S corporations are not unreasonably low so as to avoid liability for employment taxes.
Reimbursed expenses - to make sure companies using accountable plans have proper substantiation and that reimbursements are being made for actual costs and not by flat dollar amounts or percentage allowances.
COMPANY RECORDS
|
|