The Internal Revenue Service has announced the Employment Tax National Research Program will launch in early February. This study will involve the audits of 6,000 randomly selected companies and will be completed within three years. The audits will help the IRS guage revenue compliance with the employment tax laws and will assist with the selection of future audit targets. The good news for businesses is that only 6,000 of these audits are to be conducted. However, if you happen to be selected, you will find an audit such as this difficult and tedious.
These audits will be concentrated in the following areas:
- Worker classification
- Fringe benefits
- Officer compensation
- Non filers
Worker classification involves the on-going controversy regarding the classification of a worker as an employee or as an independent contractor. A set of tests and guidelines exist to assist employers in selecting the correct classification, but these guidelines can be confusing and ambiguous resulting in significant litigation with the IRS.
The non filer part of the program will focus on cash type businesses. The IRS estimates $110 billion dollars of lost tax revenue exists in the cash business environment.
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