Monday, December 7, 2009

Audits for Employer Issues Coming SOON!!!

IRS has formed a special division, JUST FOR EMPLOYMENT ISSUES. They have been training their staff in this specialty and NOW:

* * NRP Employment Tax Audits to Begin in February 2010 * *

In February 2010, the IRS will begin its first Employment Tax National Research Project (ET NRP). Business practices regarding employment tax issues may have changed significantly over the last 25 years since the last IRS employment tax study in the 1980s.

Examinations comprising the study will be conducted to collect data that will allow the IRS to understand the compliance characteristics of employment tax filers. The results will allow the IRS to gauge more accurately the extent to which businesses properly comply with employment tax law and related reporting requirements.

When completed, this information will help the IRS select and audit future employment tax returns with the greatest compliance risk.

There are two main goals:

• To secure statistically valid information for computing the Employment Tax Gap (ie. find out how bad the abuse is and catch those employers paying CASH wages and/or claiming employees as independent contractors), and

• To determine compliance characteristics so IRS can focus on the most noncompliant employment tax areas. (in other words find out where the majority of Employers are breaking the rules and zero in on those areas for more widespread audits).

The IRS will randomly select 2,000 taxpayers each year for the next three years. The examinations will be comprehensive in scope.

Records pertaining to employment tax returns and issues will be subject to review during these examinations. Employers should have all of their records available to expedite these examinations.

My suggestion, if you are not claiming full or part time employees as wage earners instead of subcontract labor, you may want to clean up your act!

Remember, IRS and the States are BROKE, they are looking for money from ANY source they can find, and this issue has been abused for so long, they are going to push it to the max!

If you have concerns in this area, and would like more information on whether your worker is an employee or an independent contractor, give us a call!! OR better yet, send me an email debbie.sherwoodquality@yahoo.com.

Sincerely, Deborah Sherwood, EA

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