IRS AUDIT RECAPChris Street, CPA
Chief Business Officer
Summary
• 2017 audit covering the 2014 tax year
• Years 2015, 2016, and 2017 will not be open if issues are corrected as of 1/1/18
• Total payment of $70,000 for 2014 errors
Pick-up Trucks
• Issue:• Personal use of pick-up trucks is subject to FICA and income tax withholding
• Resolution:• Odometer photo submitted quarterly to payroll and daily commute mileage reported
• Taxable fringe amount equals $3 multiplied by number of days worked
Split-Dollar Life Insurance
• Issue:• Imputed income benefit must be reported each year on W-2• Cash value at retirement should be reported on W-2• Guidance on policy changed in early 2000’s
• Resolution:• Policy changed to death benefit only policy which does not require yearly reporting of
imputed benefit• Upon retirement, cash value is reported as taxable benefit on W-2• 2014 W-2’s reissued
Independent Contractor vs. Employee Status
• Issue:• Should not issue an employee a W-2 and 1099 in same year.
• Some workers receiving 1099s should have received W-2s instead.• Assessment/testing, homebound, extra-curricular workers, safety officers/attendance
liaisons, Title 1 interventionists, physical therapists, speech therapists, etc.
• Resolution:• Control is key component. Most workers will be issued a W-2.
• Payroll department processes most payments now.
W-9s and 1099s
• Issue:• All payees should submit Form W-9 with records kept for at least 3 years
• Resolution• W-9s are requested for all payees, even corporations, and stored electronically
• 1099s are checked against IRS database before issuance
Retirement Incentives
• Issue:• If plan allows retire to elect cash benefit rather than insurance benefit, both options are
taxable
• Resolution:• Educational Support Staff handbook will remove language allowing cash benefit
Thank you. Questions?
Top Related