Coming this November: More IRS surprise audits
Tell your A/P staff to be ready. Starting this November, the Service is planning the first of the 6,000 random employment tax audits that it will perform over the next three years.
According to the Kiplinger Tax Letter, that’s up from the 4,500 IRS originally had planned.
The main areas agents will be looking into are:
- Worker classification errors
- Exec pay and fringe benefit issues, and
- Whether expense reimbursement plans qualify as “accountable plans.”
IRS will be checking to if expense reimbursement plans qualify as “accountable plans” by ensuring the reimbursement meets the following three (3) criteria:
- There’s a “bona fide” business reason for the expense
- There’s adequate expense documentation, and
- If employees receive cash advances, unspent amounts are returned.
If the reimbursement plan doesn’t qualify as an accountable plan, all reimbursements to staffers should be taxed.
In addition to sterling documentation, doing an audit of your own in the above areas may help ensure A/P and Payroll are thoroughly prepared should the IRS come knocking.
- Share on
Free Training & Resources
White Papers
Provided by Personify Health
White Papers
Provided by UJET
Further Reading
Heads up: Two pieces of legislation would provide more health savings account (HSA) flexibility for employees, increasing the value of this...
A federal court found a worker had been misclassified and identified more than 800 hours of potential overtime. But the Fifth Circuit still...
Interest rates for the second quarter will drop, the IRS recently announced. According to Revenue Ruling 2026-5, the rates for April, Ma...
The Secure 2.0 Act became law just before the close of 2022, as part of the federal spending bill. Roll up your sleeves – the list of ...
You’d think a near-400 % pay increase for a group of women in the spotlight would finally ease the tension over pay disparity. But...
There’s no need to panic if you or one of your staffers discover they’ve made mistakes with your company’s 401(k) plan.&nb...
