Keep Up To Date On Employment Tax


           The IRS just updated the information on how auditors will handle employment Tax exams. The key points will stay the same. Audits usually start off because of a risk area, or because of previous history with the employer. When the examination starts, they will look at the internal controls. That means they are looking to determine if the business keeps good written records and are in compliance with all applicable laws or obligations. If this can be proven, the audit tends to be quick, if not, the search will expand. Here are the consistent problems that are found in many cases.
          Wrongly categorizing employees as independent contractors. When this is done, the proper taxes are not being paid. That will lead to the taxes, along with penalties being assessed. Our previous post described some of the points that the IRS uses to make this determination. Businesses need to use this to avoid making a costly mistake. Fringe benefits is another common issue. The business needs to properly code expenses, like meals, and know how the IRS views these expenses.
          While audits are usually generated at random by a computer, the IRS does watch TV. If certain activities are reported on, it will catch their attention and lead to a financial examination of what a business is doing. Please contact a qualified Tax Professional sooner, rather than later, if you have tax questions regarding your business.

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