‘News Flash’ – USA:IRS To Audit 6,000 Companies Beginning 2010
‘Misclassification Of Independent Contractors, Payroll Taxes, Fringe Benefits, Executive Compensation’
The Internal Revenue Service (”IRS”) has determined to perform its most expansive and widespread audit initiative in recent history. Beginning in early 2010, the IRS will audit the federal tax returns of 6,000 companies to assess compliance with tax and labor regulations.
This new audit initiative will be conducted in three phases, with the IRS studying the tax returns of 2,000 companies in each of 2010, 2011 and 2012. This determination was likely prompted, at least in part, by the United States Government Accountability Office advising that the IRS and the United States Department of Labor should step up efforts to reduce company misclassification of independent contractors, and to curb abuses in the areas of payroll taxes, fringe benefits and executive compensation.
While there has been little disclosure concerning the method and precise focus of these audits, it is clear that the IRS intends to target a wide spectrum of industries to assemble statistical data for future auditing purposes and develop “red flags” for future audits.
Companies in industries such as transportation, financial services, and health care have historically been subject to inquiries concerning the misclassification of workers as independent contractors. However, all companies, large and small, as well as for-profit and not-for-profit, are within the potential scope of the IRS’ new initiative.
It is strongly recommended that every company take certain proactive measures immediately to minimize any potential exposure that may arise if the company becomes a target of an IRS audit.
The complete article can be found on Mondaq at:
http://www.mondaq.com/unitedstates/article.asp?articleid=89782&login=true
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