Tax Alert: Detailed Federal Employment Tax Audits to Begin in November
6/09/2009
The Internal Revenue Service recently announced that, under its National Research Program (NRP), it is developing a program to conduct detailed employment tax examinations. NRP was introduced in 2002 as a taxpayer compliance measurement project as a replacement for the long dormant Taxpayer Compliance Measurement Program (TCMP). NRP audits are normally more intrusive than regular audits as the IRS seeks to extract data from its sample population to determine taxpayer compliance trends.
The employment tax NRP is expected to involve 2,000 tax examinations during each of the next three years with a focus on the following issues:
(1) Worker classification (employee vs. independent contractor);
(2) Fringe benefits;
(3) Officer's compensation; and
(4) Reimbursed expenses.
The reporting of imputed income attributable to the personal use by employees of employer-provided vehicles has historically been an area that the IRS focuses on. In recent years compliance with the “accountable plan” rules for reimbursing employees for out of pocket expenses has become a priority.
Please contact your J.H. Cohn professional at 877-704-3500 with any questions.
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