In February
2010, the Internal Revenue Service will begin its first EmploymentTax National
Research Project (NRP) in 25 years. The IRS will randomly select 2,000
taxpayers each year for the next 3 years. Taxpayers will receive notices
describing the NRP process similar to those used in recent NRP studies for
individuals and Form 1120S corporations.
Examinations
comprising the study will be conducted to collect data that will allow the IRS
to understand the compliance characteristics of employment tax filers. When
completed, this information will help the IRS select and audit future
employment tax returns with the greatest compliance risk.
The IRS
will:
- Review
employment tax filings,
- Review
business records for improperly classified independent contractors,
- Review
S corporation owner wages for reasonableness, and
- Review
accountable plan compliance for travel and auto reimbursements.
To conduct its
audit, the IRS is probably going to request the QuickBooks file for the
business. The IRS reportedly purchased 800 licenses from QuickBooks for
training its auditors. If the client provides his or her QuickBooks file to the
IRS auditor, he or she also will give the examiner access to more than 1 year's
information. Will this lead to more multi-year audits? To limit the client's
exposure and provide data only between certain dates, perhaps "Data
Transfer Utility"
will help.
