Two top issues in IRS tax compliance examinations are Worker Classification and Fringe Benefits. The compliance audit spotlight is on Accounts Payable, where your organization risks exposure to significant monetary penalties in the following fact situations: workers were paid as independent contractors when they should have been paid as employees – or AP paid expenses for taxable benefits used by employees and the dollar value was not reported through Payroll on the employee Forms W-2. We’ll cover:
- Worker classification audits, which are a top target of the IRS and state tax agencies, particularly now that there’s extensive information sharing between states and the federal IRS and DOL. Misclassification errors carry great risk and high cost as employment and unemployment taxes and other costs are assessed. They could be former employees who’ve returned to do much the same work on a contract basis, or groups of workers who are labeled “contractor” when the weight of factual information puts them in the employee category. This program will show you the factors that count in worker classification and how to identify them in your organization including control and oversight over the worker, factors that could indicate the worker actively has an independent business, the important facts of business expense reimbursement, and how and when the worker is paid by your organization.
- Fringe benefit audit activity, including the top categories of mishandling exclusions from reportable compensation income, and how the IRS instructs examiners to search for inaccurate characterizations of payments.
- Identify the primary factors in classification of workers as either employees or independent contractors; identify fringes excludable from compensation income versus those that aren’t excludable.
Marianne Couch, JD - Principal, Cokala Tax Information Reporting Solutions, LLC
Marianne Couch, JD, is a Principal in the Cokala tax group and an experienced and well-known advisor on U.S. federal and state tax information reporting compliance. She is a frequent lecturer at major tax conferences and the author of The Master Guide to Form 1099 Compliance, The Master Guide to Form 1042-S Compliance and numerous published articles. Prior to co-founding Cokala in 2007, she was for many years the Research Director of the tax reporting specialty firm Balance Consulting, and chaired special training and advisory services provided to large organizations and academic and nonprofit institutions.
Marianne was an appointee for three years to the IRS Commissioner’s Information Reporting Program Advisory Committee (IRPAC), where she was Chair of the IRPAC Subcommittee on Small Business and Self-Employed (SBSE) tax issues.
Marianne formerly served as a Research Attorney for the Michigan Court of Appeals, and earlier as a litigator for a large Michigan law firm, where she represented individuals and large clients in many types of civil actions. She received her JD, cum laude, from the Michigan State University School of Law, and is a member of the State Bar of Michigan.
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