We are comprised of tax attorneys, certified public accountants, and former IRS agents, managers and tax instructors.
We are A+ rated by the Better Business Bureau and have been in private practice right here in South Florida since 1982.
We have over 206 years of professional tax experience. We have over 60 years of working in the local, district, and regional tax offices of the Internal Revenue Service. We are tax experts for payroll tax audits
If you are undergoing a Payroll or Employment Tax Audit you better hire a professional tax firm because this is not a situation you want to lose.
Being a Former IRS Agent you should know these are dangerous tax audits.
Make sure you get tax representation for this type of tax audit.I am not telling you this to scare you but there is a huge downside to these tax audits. Not only can the business wind up owing money but the individual can wind up with a personal tax assessment as well.
Once the IRS sets up a tax deficiency for payroll or employment taxes the IRS has the right to file federal tax liens and control the amount of money you can make as a result of owing back payroll taxes. IRS will control your individual and business spending.
Do not let the IRS bully you during a payroll or employment tax audit!
Call Fresh Start Tax LLC 1-866-700-1040, home of former IRS agents.
Payroll Tax Audits
IRS does not take lightly the business owing payroll taxes because this is really not a tax but monies held on trust for the IRS and the FEDS.
The process works like this:
The IRS will pull a case from the CADE 2 computer for a tax audit and then notify the taxpayer / business of a payroll or employment tax audit.
The Agent will schedule a date for a meting usually at your place of business. It is better to have the audit at your representatives office.
The IRS can and will ask for back records generally for the past three years.
The IRS Agent when finished, will issue a tax report in which you have the right to appeal. If the IRS feels there was a criminal element involved they have the right to refer the case to criminal division.
Most cases simply end up with a tax deficiency, IRS will then send you a bill and the IRS will be expecting full payment.
WHAT IRS LOOKS FOR DURING THE TAX AUDIT.
The IRS agent will be targeting employees to see whether or not they are true employees or self employed agents.
There are common law tests to determine which classification a employee may fall under. This battery of questions you will find below will help the IRS agent determine in which category a employee may fall.
It is very important to remember there is not one factor used to make this determination but where the preponderance of evidence falls. If the IRS determines these workers are actually employees you will have problems because the IRS wants all of the back taxes plus penalties and interest.
Common law test for payroll tax audits or employment tax audits use by the IRS agent:
What was the:
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.
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.
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. There are exceptions to this.
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?
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?
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.
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?
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?
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?
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?
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.
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?
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?
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? You will find below a sample of a contract.
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.
Remember, do not take payroll tax audit lightly. It is best to hire a tax professional. Call us today for a free initial tax consultation.
 

Payroll Tax Audits – Ft.Lauderdale, Miami, Palm Beach – Affordable Former IRS Agents