NERC/NAHRO Mashantucket, CT

Transcription

1 NERC/NAHRO Mashantucket, CT Intro to FSLG Exam Procedures Payroll Issues W4 and withholdings Medicare- rehired annuitants Accounts Payable and Disbursement Issues Accountable v Non accountable Plans Fringe benefits-additional compensation Employee v Contactor Issues 1099 and Backup Withholding Issues

2 What does FSLG do? Education, Outreach, and Compliance Activities Types of issues: Fringe Benefits Worker Classification Information Report Filing Compliance for W-2 and 1099 Returns

3 TEGE Customer Account Services at (877) for government entities : affirmation letter of tax exemption, private letter ruling info, etc. IRS Resources for Govt Entities newletters;faq;etc. FSLG Fringe Benefit Guide Publication 963 questions: tege.ask.fslg@irs.gov

4 FEDERAL EMPLOYMENT TAXES ARE YOU READY FOR AN EMPLOYMENT TAX AUDIT?

5 AUDIT TECHNIQUES COMPUTERIZED PROGRAM BENEFITS THAT DO NOT MAKE IT TO THE W-2. SHOW ME

6 COMPUTERIZED APPROACH TO EMPLOYMENT TAXES W-2 REVIEW W-2 TO MISC MATCH 1099-MISC ANALYSIS

7 W-2 REVIEW IDENTIFY FEDERAL INCOME TAX WAGES IN EXCESS OF FICA/MEDICARE WAGES. IDENTIFY NO OR LESS THAN XX% FEDERAL INCOME TAX WITHHELD. IDENTIFY NO OR INCORRECT FICA/MEDICARE WITHHELD.

8 W-2 AND 1099-MISC MATCH CURRENT YEAR W-2 TO CURRENT YEAR 1099-MISC. PRIOR YEAR W-2 TO CURRENT YEAR 1099-MISC. QUICKLY IDENTIFIES CLASSES OF WORKERS THAT MAY HAVE GONE FROM EMPLOYEE TO INDEPENDENT.

9 RECONCILE BENEFITS TO W-2 REQUEST BENEFIT PACKAGE OR EMPLOYMENT CONTRACTS REQUEST SPREADSHEET OF ALL COMPENSATION PAID CONTRACTED EXECUTIVES REQUEST COPY OF FORM W-2 RECONCILE SPREADSHEET TO BENEFITS AND TO FORM W-2.

10 ACCOUNTS PAYABLE & DISBURSEMENTS PAYMENTS TO EMPLOYEES PAYMENTS TO INDIVIDUALS classification and information return? PAYMENTS TO BUSINESSES TINS RECORDED/W-9 S SECURED 1099 INDICATOR

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12 ALLOWANCES CAR ALLOWANCE UNIFORM ALLOWANCE TOOL ALLOWANCE ETC.

13 ALLOWANCES HOW ARE ALLOWANCES PAID? ACCOUNTABLE PLAN? NON-ACCOUNTABLE PLAN?

14 ALLOWANCES OR REIMBURSEMENTS ACCOUNTABLE PLAN Nontaxable if all three of the following met: 1. There must be a business connection 2. Must be adequate accounting by recipient within reasonable period of time 3. Excess must be returned within reasonable period of time

15 ALLOWANCES OR REIMBURSEMENTS Non-Accountable Plan Any program that does not meet all three requirements of accountable plan Taxable to employee when paid or constructively received

16 EMPLOYER W-2 REPORTING ACCOUNTABLE PLAN NO REPORTING REQUIRED ACTUAL EXPENSE REIMBURSEMENT: Adequate accounting and excess returned PER DIEM OR MILEAGE ALLOWANCE UP TO THE FEDERAL RATE - Adequate accounting and excess returned

17 EMPLOYER W-2 REPORTING ACCOUNTABLE PLAN REPORTING REQUIRED Actual expense reimbursement: Both adequate accounting and excess returned required but excess not returned. The excess reported as wages in Boxes 1, 3, and 5. All employment taxes withheld.

18 EMPLOYER W-2 REPORTING NON-ACCOUNTABLE PLAN REPORTING REQUIRED Either adequate accounting or return of excess or both not required, or, NO REIMBURSEMENT PLAN Entire amount reported in Boxes 1, 3, and 5 and subject to all employment taxes

19 FRINGE BENEFITS: ANY PROPERTY, SERVICE OR CASH (Other than Salary, Provided by Employer) TAXABLE UNLESS EXCLUDED SPECIFICALLY BY LAW Example: Medical Premiums IRC 106

20 EXCLUDABLE FRINGE BENEFITS IRC 117(d) QUALIFIED TUITION REDUCTIONS IRC 119 MEALS OR LODGING FOR EMPLOYER S CONVENIENCE IRC 125 CAFETERIA PLANS IRC 127 EDUCATIONAL ASSISTANCE PROGRAM IRC 129 DEPENDENT CARE ASSISTANCE PROGRAM IRC 132 CERTAIN FRINGE BENEFITS

21 TAXABLE FRINGE BENEFITS: INCLUDE in Employee s wages and on W-2 (Never on MISC) Subject to Federal Withholding, Social Security and Medicare Even if benefit is received by/for spouse or child of employee

22 AWARDS ARE TAXABLE CASH PRIZES OR AWARDS are always taxable PERFORMANCE AWARDS are always taxable NON-CASH: Use Fair Market Value

23 AUTOMOBILES EMPLOYEE AUTO USED FOR BUSINESS EMPLOYER PROVIDED AUTOMOBILE

24 Reimbursements Not reportable income if paid under an accountable plan. Any amounts not paid under an accountable plan are treated as regular wages. Per diems, stipends, point systems, special benefits not under an accountable plan are treated as regular wages.

25 Classification of Workers COMMON LAW STANDARD: Employer-employee relationship exists when the business for which the services are performed has the right to direct and control the worker who performs the services

26 Three Categories of Evidence Behavioral Control Financial Control Relationship of the Parties

27 1099-MISC ANALYSIS MULTIPLE YEAR ANALYSIS REPORT REFLECTS TIN, NAME, YEAR, AND AMOUNT PAID. QUICKLY IDENTIFIES POTENTIAL EMPLOYEE VS INDEPENDENT CONTRACTOR ISSUES

28 Forms 1099 $50 failure to file form 1099 each $50 failure to furnish form 1099 each Total of $100 for each non-filed form 1099

29 Backup withholding tax 28% of total payments Penalties can apply on top of it Applicable if you don t have W9 info (tax identification number) at time payments reach $600 Reportable on form 945

30 W9,1099,backup withholding tax INFORMATION Form W9, General Instructions Instructions for the Requester of Form W-9 Form 1099 instructions Publication 1281-Guide for backup withholding for missing and incorrect name/tins Irs.gov/govt/fslg fact sheets Information Reporting Program Customer Service or mccirp@irs.gov