Employment Tax Compliance, Benefits

In November 2009, the IRS) has adopted a new National Research Initiative (Initiative: a random audit of all the sectoral employment taxes for 6000 launched by companies including during the thirty-six months ahead. The scope of the initiative has a dual nature: first, to determine compliance with systemic employment tax, and the second, the collection of contributions from delinquent employers.

With declining tax revenues has the economy down, pay the U.S. Treasury Department stepped up its efforts to the tax gap, the difference between total liabilities and taxes to the IRS. Audit work is collected by the tax authorities as a central instrument for closing the tax gap. For fiscal 2001, for example, the difference between the gross tax by the IRS was estimated at over $ 345 billion, with under-reporting of non-wage costs make up about 17% of the variance tax.

The IRS will review the companies to ensure that federal tax deductions to be deducted and the government paid the wages of workers to Social Security and Medicare, and federal unemployment taxes. An employer can be found in non-severe penalties and interest on unpaid taxes face. Those fines would have a particularly severe impact on small business owners.

The IRS has prioritized four areas to focus their testing efforts within the Initiative, including:

Classification of workers: ie, if an employer treats an employee properly classified as an employee or independent contractor for tax purposes. Determine which depends on behavioral finance and the type of relationship the company has with the person doing the work.

Advantages: a contribution in kind is a form of compensation for services. ie services such as insurance, company cars or child care, etc., which are provided by employers tax-free employees, not independent contractors.

Reimbursed business expenses, for example, to make reimbursement of a customer to lunch, my office supplies, have a written business expenditures may be required. This means you must pay or costs that are deductible if the provision of services as an employee. You need to take sufficient account of the employer for these expenses within a reasonable time, and you have excess reimbursement or allowance within a reasonable time back.

Compensation to owners who are also employees of the company, the outstanding taxes be conducted in May, the personal liability for the employer.

As employment tax audits initiative began, it was reported that the IRS has already begun to review the process for selecting companies for their employment taxes. Non-compliance with employment tax laws can have serious consequences for employers. To ensure that procedures are in place in order to meet the compliance requirements for tax laws to save time, money and stress in the case of an audit.

For example, the Internal Revenue Code requires that employers ensure their qualification to properly classify the employee not only that they are consistent with the tax laws, but also in a position to properly manage their staff. Employers should consider consulting a lawyer experienced in the preparation of the initiative and, if a test of their employment taxes.