by Fresh Start Tax | Jun 5, 2013 | Tax Audit
IRS Business, Payroll – IRS Tax Audits
One of the new hot button topics around the Internal Revenue Service are the IRS business and payroll tax audits specifically targeting the “worker classification issues.”
Both the state and the federal government know that they are losing millions and millions of dollars here because of unreported and misclassified of employees.
As a result they are launching 6000 new investigations regarding business and payroll tax audits alone.
The Internal Revenue Service have special groups of agents that specifically target payroll tax audits.
They are trained to look for any problems or concerns, tax abuses or criminal fraud in regarding payroll taxes.
If you have any concerns over being under tax audit by the Internal Revenue Service for business or payroll taxes. contact us today.
We are A+ rated by the Better Business Bureau and have been in practice right here in South Florida since 1982.
We have 206 years of professional tax experience and are comprised of tax attorneys, CPAs and former IRS agents, managers and tax instructors.
Worker classification
Worker classification enforcement is a top priority for the IRS and state labor agencies. The IRS launched a new audit initiative to audit 6,000 businesses for worker classification.
Taxpayers and businesses may be at risk no matter the size of their business!
The IRS needs money and EVERYONE is fair game to the IRS and state labor agencies. Failure to plan can be extremely costly and in some cases it can cause a business to close its doors.
Documents Requested by IRS for a Worker Classification Examination
The typical Initial Information Document Request (IDR) will include the following:
- Copies of the following returns/forms for the agent’s case file:
- Form 940 for prior years, exam year, and subsequent years.
- Form 941 for each quarter in prior years, exam year, and subsequent years.
- State unemployment tax returns for each quarter for prior years, exam year, and subsequent years.
- Form 1096 and Forms 1099 for prior years, exam year, and subsequent years.
- Forms W-2, W-2C, W-3, and W-3C for prior years, exam year, and subsequent years.
- Forms W-4 if any were completed by workers.
- Forms W-9 obtained from workers.
Other Documents that are normally requested
1. Payroll Journal for exam year (including work papers reconciling it to the employment tax returns).
2. Cash Disbursements Journal for exam year.
3. General Journal for exam year including any adjusting entries.
4. Trial Balance for exam year.
5. Copy of the prior years’ federal audit reports (if applicable).
6. Copies of the contracts between the company and its workers.
7. Additional documentation may be requested.
Contact us today regarding an IRS business or payroll tax audit. We have practice in South Florida since 1982 and tax experts for business and payroll tax audits. Come by and see us for an initial contact consultation. We are the friendly and affordable tax firm.
IRS Business, Payroll – IRS Tax Audits – Ft.Lauderdale, Miami – Affordable Tax Audit Experts
by Fresh Start Tax | Jun 3, 2013 | Tax Audit
IRS Tax Audit Representation, Appeals, Settlements
We are a local tax firm located in South Florida that specializes in IRS tax audit representation, IRS tax appeals and IRS tax settlements.
We are comprised of tax attorneys, certified public accountants, and former IRS agents, managers and tax instructors who have over 60 years of direct working experience in the local South Florida Internal Revenue Service offices.
We have over 206 years a professional tax experience and have been in private practice since 1982 in Fort Lauderdale and Miami.
We are A+ rated by the Better Business Bureau and are without complaint.
Come and visit us today for a free initial tax consultation and see how we can reduce or minimize the consequences of your IRS tax audit.
Due to our vast experience at the Internal Revenue Service we know all the protocols, the formulas, and settlement techniques on how to reduce your exposure with the Internal Revenue Service.
We are also experts on IRS appeals. On staff is a former IRS appeals agent of 35 years
Should you wind up owing tax as a result of an IRS tax audit we can work out effective tax settlement.
Do not be worried or stressed if you are undergoing an IRS tax audit or IRS appeals hearing.
Common questions – How far back can the IRS go to audit my return?
Generally, the IRS can include returns filed within the last three years in an audit. Additional years can be added if a substantial error is identified.
Generally, if a substantial error is identified, the IRS will not go back more than the last six years.
The IRS tries to audit tax returns as soon as possible after they are filed. Accordingly most audits will be of returns filed within the last two years.
If an audit is for an older year, you may be requested to extend the statute of limitations for assessment of your tax return. The statute of limitations limits the time allowed to assess additional tax.
The statute of limitations is generally three years after a return is due or was filed, whichever is later. There is also a statute of limitations for making refunds.
If the audit is not resolved and the statute of limitations date is nearing, you may be asked to extend the statute of limitations date. This will allow you additional time to provide further documentation to support your position, request an appeal if you do not agree with the audit results, or to claim a tax refund or credit.
It also allows the IRS time to complete the audit and provides time to process the audit results.
You do not have to agree to extend the statute of limitations date. However, if you do not agree, the examiner will be forced to make a determination based upon the information they currently have. Therefore, the examiner may not be able to consider additional adjustments, such as expenses, that could lower the amount of tax due.
IRS Facts for Tax Audits
The IRS audits about 1 percent of the individual tax returns.
- 143.4 million: Individual federal tax returns filed in 2011.
- 1.4 million: Individual tax returns examined by the IRS, resulting in notices being mailed or in-person audits.
- 90 percent: Tax returns audited in person resulting in a recommended change in taxes.
- 85 percent: Tax returns audited via mail resulting in a recommended change.
- $15.1 billion: Amount of recommended additional taxes from the audits.
- $16,851: Average recommended additional taxes per in-person audit.
- $8,241: Average recommended additional taxes per mail audit.
This Source material is from the 2012 Internal Revenue Service Data Book.
Ft.Lauderdale, Miami – IRS Tax Audit Representation, Appeals, Settlements – Attorneys, CPA’s, Former IRS
by Fresh Start Tax | Jun 3, 2013 | Tax Audit
IRS Help – Tax Audit Representation 954-492-0088
There is nobody better to help defend an IRS tax audit than a former local IRS agents, managers or tax instructors.
Since we were trained by the Internal Revenue Service we know all the IRS tax audit protocols, the IRS tax audit systems, and all the IRS tax audit settlement formulas.
We have represented thousands of taxpayers before the Internal Revenue Service right here in South Florida and you should let that experience work for you.
Not only were we former IRS agents, and managers we also taught tax law at the Internal Revenue Service. We are experts for IRS Tax Help for tax Audit Representation.
As some practical advice, before you make a decision to hire an IRS tax audit representative for IRS tax help, make sure you personally meet and talk directly to the tax professional who will be working your case. Find out for yourself about their work experience, their ethic and their fees.
Common questions asked by clients
Does filing an amended return affect the return selection process?
Filing an amended return does not affect the selection process of the original return. However, amended returns also go through a screening process and the amended return may be selected for audit. If you have found an error in your tax return it is important you correct your return and file an amended 1040 X.
Why was my tax return selected for tax audit?
When returns are filed, they are compared against “norms” for similar returns. The “norms” are developed from audits of a statistically valid random sample of returns.
These tax returns are selected as part of the National Research Program which the IRS conducts to update return selection information.
The tax return is next reviewed by an experienced auditor. At this point, the return may be accepted as filed, or if based on the auditor’s experience questionable items are noted, the agent will identify the items noted and the return is forwarded for assignment to an examining group.
Upon assignment to a group, the return is reviewed by the manager.
Items considered in assigning a case are: factors particular to the area such as issues pertaining to construction, farming, timber industry, etc. that have specific factors and rules that apply.
Based on the review, the manager can accept the return or assign the return to an auditor. The assigned auditor again reviews the return for questionable items and either accepts it as filed or contacts the taxpayer to schedule an appointment. Many times the manager will not schedule the tax at an all because of high inventories in the local offices.
Where will the IRS Tax audit be held?
It depends on the type of audit being conducted.
- Audits by Mail,Correspondence Audit.
Some audits are conducted entirely by mail. If the audit is conducted by mail, you will receive a letter from the IRS asking for additional information about certain items shown on the tax return such as income, expenses, and itemized deductions.
- In-Person Audits are audits conducted either at a local IRS office or at your business location.
Can you request the IRS Tax Audit be conducted at the IRS office instead of at your place of business?
If the audit has been scheduled to be conducted at your location, it will generally be conducted where the books and records are located. Requests to transfer the audit to another location, including an IRS office, will be considered but may not be granted. Treasury Regulation 301.7605-1(e), Time and place of audit, discusses the items considered when a request for a change in location is made.
It is always best to hire a tax professional and transfer your books and records to the office of the tax representative that you have hired.
As a former IRS agent I would never recommend any taxpayer ever have an audit conducted at their house, office, or place of business.
Can the audit be transferred to another IRS office?
You can request a transfer of an audit if you have moved. Several factors will be considered such as your current location, the location of the business and where the books and records are maintained.
If the audit is by correspondence, you can request a face-to-face audit because the books and records may be too voluminous to mail. A decision is made on a case-by-case basis and there is no rule of thumb.
How long should the records related to a business or other long-term asset be kept?
In the case of an asset, records related to the asset should generally be kept for as long as you have the asset plus three years.
If the asset was exchanged, the basis for the new asset may include the exchanged asset so the records for both assets will need to be retained until the new asset is disposed plus three years from the file date of the tax return for the year of disposition.
How long should IRS payroll records be kept?
In general, payroll records should be kept for six years with a review of the file to see if any items relating to current employees should be retained with current records.
After an auditor completes the audit, will the case be reviewed to ensure the audit results are correct?
All cases may be reviewed by the auditor’s manager either during the audit or upon completion.
If errors are noted by the manager, the auditor will contact you to advise you about the proposed correction and what impact this may have on the amount of tax due.
How far back can the IRS go to audit my back tax return, The Statute of Limitations.
Generally, the IRS can include returns filed within the last three years in an audit.
Additional years can be added if a substantial error is identified. Generally, if a substantial error is identified, the IRS will not go back more than the last six years.
The IRS tries to audit tax returns as soon as possible after they are filed.
Accordingly most audits will be of returns filed within the last two years.
If an audit is for an older year, you may be requested to extend the statute of limitations for assessment of your tax return. The statute of limitations limits the time allowed to assess additional tax.
The statute of limitations is generally three years after a return is due or was filed, whichever is later. There is also a statute of limitations for making refunds.
If the IRS tax audit is not resolved and the statute of limitations date is nearing, you may be asked to extend the statute of limitations date.
This will allow you additional time to provide further documentation to support your position, request an appeal if you do not agree with the audit results, or to claim a tax refund or credit. It also allows the IRS time to complete the audit and provides time to process the audit results.
You do not have to agree to extend the statute of limitations date.
However, if you do not agree, the examiner will be forced to make a determination based upon the information they currently have. Therefore, the examiner may not be able to consider additional adjustments, such as expenses, that could lower the amount of tax due.
IRS Help – Tax Audit Representation – Affordable Former IRS Agents – Ft.Lauderdale, Miami, Palm Beaches – Audit Experts
by Fresh Start Tax | Mar 19, 2013 | Tax Audit
IRS Tax Examination – Payroll, Employment Tax Audits – Former IRS Agents 1-866-700-1040
As a Former IRS Agent, I can tell you these are usually nightmare tax audits.
As a general rule IRS has received information that that an employer should have classified their employees under W-2 provisions. As a general rule the IRS does not random sample tax examinations for payroll, employment tax but usually has some solid evidence that a problem does exist.
It is in the best interest of the taxpayer, business, or corporation to get professional tax help to steer them through these tax audits simply because of the damaging results that can come out of the IRS findings.
As former IRS agents, managers, and tax instructors we know the exact strategies to use in your defense to help relieve you of any potential problems or issues.
IRS will use common-law factors to determine whether an employer should be deemed as self-employed or a true employee of the said company.
Please find below the law on these issues.
Should you have any questions contact us for a free consultation and we can review your specific case and issues that you have.
You will speak directly to a former IRS agent, certified public accountant, or a tax attorney. We have over 206 years of professional tax experience and over 60 years of working directly for the Internal Revenue Service.
As I mentioned earlier, do not take on these IRS tax examination audits for payroll and employment tax by yourself unless you have a clear-cut case. Also be aware that if you wind up owing IRS back tax dollars you will need a firm or a company to work out a tax settlement for you. we can handle the entire process.
As a last comment please be advised that IRS has a special audit group that only handles IRS tax examinations of payroll and employment taxes. This group is specifically designed to be IRS tax experts in the issue of employee employer business relationships.
Employee or Employer Test for IRS Tax Examinations for Payroll or Employment Tax Audits
The Internal Revenue Service Factors for Evaluation for Employee or Employer Test
There are two general tests the IRS uses for the determination for the Employment Tax Audits or Payroll Tax Audits
1. Common Law Test,
2. Reasonable Basis Test
Common law test for payroll tax audits or employment tax audits
a. Level of instruction.
If the company directs when, where, and how work is done, this control indicates a possible employment relationship. The IRS will look for training manuals and policies the companies use.
The IRS can use former employees to answer these questions as well.
Amount of training. Requesting workers to undergo company-provided training suggests an employment relationship since the company is directing the methods by which work is accomplished.
The more training, the Service takes the position that the individual is an employer.
b.Degree of business integration.
Workers whose services are integrated into business operations or significantly affect business success are likely to be considered employees. Those whose services are for the production of income to a great level are scrutinized more closely.
Extent of personal services. Companies that insist on a particular person performing the work assert a degree of control that suggests an employment relationship. In contrast, independent contractors typically are free to assign work to anyone. Once again this goes to control.
c.Control of assistants.
If a company hires, supervises, and pays a worker’s assistant, this control indicates a possible employment relationship. If the worker retains control over hiring, supervising, and paying helpers, this arrangement suggests an independent contractor relationship.
d. Continuity of relationship.
A continuous relationship between a company and a worker indicates a possible employment relationship. However, an independent contractor arrangement can involve an ongoing relationship for multiple, sequential projects.
Also, does the individual have another job or is this the sole source of their income. Is their license available to everyone?
e. Flexibility of schedule.
People whose hours or days of work are dictated by a company are apt to qualify as its employees. Does the individual punch a time clock or is the employee free to come and go? Does the person have a key to the facility?
f. Demands for full-time work.
Full-time work gives a company control over most of a person’s time, which supports a finding of an employment relationship. The IRS will look to see if the individual has other W-2 income.
g. Need for on-site services.
Requiring someone to work on company premises—particularly if the work can be performed elsewhere—indicates a possible employment relationship. Are name badges and uniforms required?
h. Sequence of work.
If the company requires work to be performed in specific order or sequence, this control suggests an employment relationship. Does the employee do the same thing every day?
i. Requirements for reports.
If a worker regularly provides written or oral reports on their the status of a project, this arrangement indicates a possible employment relationship. Is there an evaluation given?
Method of payment. Hourly, weekly, or monthly pay schedules are characteristic of employment relationships, unless the payments simply are a convenient way of distributing a lump-sum fee.
Payment on commission or project completion is more characteristic of independent contractor relationships. Time clocks tend to look like hourly employees. What does the tax return of the individual look like?
j.Payment of business or travel expenses.
Independent contractors typically bear the cost of travel or business expenses, and most contractors set their fees high enough to cover these costs. Direct reimbursement of travel and other business costs by a company suggests an employment relationship. Does the individual have a company credit card or expense account, how about a possible credit card of the company?
k.Provision of tools and materials.
Workers who perform most of their work using company-provided equipment, tools, and materials are more likely to be considered employees. Work largely done using independently obtained supplies or tools supports an independent contractor finding. The checking of the individual 1040 for a schedule C expense form is a good cross check for the IRS.
l.Investment in facilities.
Independent contractors typically invest in and maintain their own work facilities. In contrast, most employees rely on their employer to provide work facilities. Are there incentive programs for the individuals?
Realization of profit or loss.
Workers who receive predetermined earnings and have little chance to realize significant profit or loss through their work generally are employees. Is the individual on a pension system or health insurance?
m.Work for multiple companies.
People who simultaneously provide services for several unrelated companies are likely to qualify as independent contractors. That is why the individual tax returns may be checked.
Availability to public.
If a worker regularly makes services available to the general public, this supports an independent contractor determination. Does the individual have other business cards and is their business open to the public?
Does the person have other work going on at the same time?
n. Control over discharge or firing.
A company’s right to discharge a worker suggests an employment relationship. In contrast, a company’s ability to terminate or fire the independent contractor relationships generally depends on contract terms. Is there a contract between both parties.Does it contain accurate details?
o. Right of termination.
Most employees unilaterally can terminate their work for a company without liability. Independent contractors cannot terminate services without liability, except as allowed under their contracts.
Summary.
Remember, each case is based on each set of unique facts and circumstances. Call us today and we will evaluate your IRS tax examination for payroll and employment tax to find out exactly where you stand.
by Fresh Start Tax | Dec 4, 2012 | New Jersey Tax, Tax Audit
IRS TAX ATTORNEY, TAX LAWYER, FORMER IRS – IRS AUDIT EXPERTS
Essex, Morris, Bergen, Passaic, Union – New Jersey
Let Former IRS agents handle your tax audit so you are worry free.
We are comprised of Board Certified Tax Attorneys, Tax Lawyers, CPA’s and Former IRS Agents, Managers and Instructors.
IRS Tax Audits.
IRS audits 1% of all tax returns.
If this is, call us today for a no cost consultation and let Former IRS Audit Agents, Managers and Instructors review your documentation and let you know how we can help and save you money.
We have over 60 years with the IRS and have represented thousands of clients. Let us give you your very best chance. We know all the tax policies and procedures of the IRS.
As Former IRS Agents and Managers we taught Tax Law to the new IRS agents. We know the system.
There are several types of IRS tax audits.
1. The most common type of IRS tax audit is the mail correspondence audit. IRS audits about 1.5 million taxpayers through mail correspondence. These usually occur as a result of 1099 and w-2 mismatches.
2. The high DIF score is the second most common way. The DIF score or the discriminatory index function score tax audit means your tax return fell out of the National Standards for various credits, expenses or something did not make sense on your tax return.
The computer will self generate these score and tax audits.
3. Random sample audit. You won the IRS lottery and IRS will use your tax audit results to set up future DIF scores.
4. National Program Audit. IRS runs market specialization program in different areas in the country for different industries. IRS tries to audit all industries to set National Standards.
6. The Office Audit. You will get a letter to appear in a local IRS office where a local office auditor will audit selected features of your tax return. These are small and quick tax audits.
7. The Field Audit. A more high skilled IRS Revenue Agent will spend days combing through your records. These are more advanced and complicated tax audits conduct at your home, place of business of at your representatives office.
If you have simple issues and you have nothing to worry about we recommend you handle the IRS tax audit yourself. If you have any skeletons in the closet make sure you are represented.
IRS Tax Audit Help – IRS TAX ATTORNEY, TAX LAWYER, FORMER IRS – Essex, Morris, Bergen, Passaic, Union – New Jersey
1-866-700-1040
by Fresh Start Tax | Nov 29, 2012 | IRS Tax Audit, New Jersey Tax, Sales Tax, Tax Audit, Tax Lawyer
IRS Tax Audit – Sales Tax Audit – Former Agents
We are a professional tax firm specializing in IRS and New Jersey Tax Audits;
On staff are Tax Attorneys, Tax Lawyers, CPA’s and Former IRS agents.
Fresh Start Tax LLC – New Jersey
209 Cooper Ave,
Upper Montclair, NJ 07043
1-866-700-1040
We have 60 years of direct IRS work experience and have worked in conjunction with the State in various forms of Sales Tax Audits.
You may call us for a no cost professional tax consult so you can learn about the scope and direction of a IRS Tax Audit or a Sales Tax Audit.
All work is done in house by certified tax professionals.
There are different type of tax audits. The most common type of tax audits:
1. A mail correspondence tax audit. Over 1.4 million tax returns are audited this way. the IRS simply sends a notice advising you there was a math or computation error on your tax return.
2. The DIF tax audit. Your tax return fell out of the national standard for income and expense ratios. Each return has a DIF number attached and is classified information.
3. Specialty program. IRS runs special programs on industries and businesses. Many times this can relate to the area abuses.
4. Whistle blower. Someone rats you out.
5. National Research Projects
Importance of National Research Projects Results. ( in depth look )
Because NRP results are used to develop or update formulas for scoring returns as to their probability for additional tax or additional income, it is essential that examinations be thorough. Examiners should remain mindful of causing undue burden for the taxpayer.
Scope of Examination .
Every classified item must be examined. An inquiry or an inspection of records and documents must be made for all classified line items.
Expansion of Audit Scope.
If the examination reveals changes to any of the classified items, the examiner usually considers expanding the examination to include other items, if any, on the return or supporting schedules. These audits become more in depth.
NRP selection is not a basis for expanding the scope of an examination, if the examination was in process prior to the return being designated by NRP.
For any return closed prior to its designation as an NRP return, an NRP report will be completed based on the results of such examination if the NRP Office determines the results are valid for study purposes.
These NRP tax audits are used to set the National Standards for DIF scores.
Related Entity Examinations.
If a related entity is classified, the tax examiner usually follows the required filing checks procedures. If the related entity is not examined, the examiner will document why it was not examined and no-change the issue on RGS. If the related entity is deemed worthy of examination, the examiner needs to timely request controls on the related return and open an examination on that entity.
If the related entity is outside the group control, the examiner will follow the procedures outlined in the IRM for collateral examinations.
Depth of a NRP Tax Examination.
Tax Examiners must use their professional judgment concerning the depth of examination required for any particular item on the tax return bearing in mind the research nature of the examination.
Tax Examiners should use professional judgment regarding the depth of examination of an issue. The depth of the examination of a NRP examination is the same as is used in field audits.
NRP taxpayers must not be held to a higher standard or more in-depth audit procedures.
Issues should be perused to the depth necessary to reach a support able conclusion. Oral testimony may be accepted in appropriate situations.
Call us today for a no cost professional tax consult 1-866-700-1040.
IRS Tax Audit – Sales Tax Audit – Former Agents – Upper Montclair, Cedar Grove, West Orange, Ridgewood, Mendham, Franklin Lakes, Newark, Bernardsville – New Jersey
