Articles and Tax Tips

On Wednesday December 15, 2010 The Internal Revenue Service announced it not only increased audits by 11 percent in the budget year that ended this past September but also that enforcement revenue climbed 18 percent. Moreover businesses were a prime target of these audits with a 7 percent increase in the number of audits of firms with $10 million or more in assets. One of the primary tools you can create to help in case you are audited is a policies and procedures manual….

Internal Revenue Code 6050W, regarding payment card transactions for payments made after December 31, 2010, though greatly easing the vast majority of payors information reporting requirements still contains a number of traps for the unwary information reporter....

Identifying “type two” errors in reporting is one of those compliance steps that we frequently take for granted as common knowledge. However, are you sure your staff can identify a type two error?

A type two error is one whereby the original return was filed with one or more of the following errors:

(a) No payee TIN (SSN, EIN, ITIN, QI-EIN)
(b) Incorrect payee TIN
(c) Incorrect payee name
(d) Wrong type of return indicator

See page twenty-one of this year’s version of Publication 1220 for more.

In response to numerous recently received questions on this matter here is a short run down on how to handle LLC's under current reporting requirements….

The IRS is continuing to expand its focus on worker classification reporting related issues. On August 27th the IRS put out a reminder that important IRS rules exist for the purpose of making sure you properly classify the workers you hire as either independent contractors or employees. Remember, if you misclassify a worker as an indepedent contractor when in reality the IRS says that worker is an employee you could be on the hook for costly penalties. 

As part of its ongoing effort to crack down on the mistaken classification of workers the IRS reminds business owners that there are several factors particularly important when it comes to hiring individuals as independent contractors versus hiring them as employees....