A suspicious backpack was found at an IRS office Ocala, Florida yesterday that resulted in the 100 employees being evacuated from the building and also business in the surrounding area. In this day and age of misplaced IRS hating, authorities always approach these situations with caution and swiftly destroyed the pack after viewing the X-rays noting notebooks and “an electronic device with wires.” The contents turned out to be nothing more than someone’s psychology textbook, notebooks and a tape recorder, among other school-y items. This will be the best excuse that psych prof will ever hear. [Ocala]
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The IRS, Not Too Hung Up on Priorities, Demands Delinquent Taxes of Four Cents
In this morning’s roundup we gave a couple of examples of why you should consider giving the IRS a break and remember that they’re civil servants just doing their jobs. All the violence, jokes and resentment are a little self-serving so maybe we should all just back off.
And then we heard about a couple of jackbooted agents (armed to the teeth, presumably) heading over to Herv’s Metro Car Wash in Sacramento to demand some delinquent taxes from the owner Aaron Zeff.
“They were deadly serious, very aggressive, very condescending,” says Harv’s owner, Aaron Zeff…
“It’s hilarious,” he says, “that two people hopped in a car and came down here for just 4 cents. I think (the IRS) may have a problem with priorities.”
How on Earth could two agents be ‘deadly serious, very aggressive, very condescending’ over four f—ing cents? How serious are they required to take their jobs? In the job description does it explain “the collection of delinquent taxes are to be vigorously pursued, regardless of the sum”?
Plus, the letter states $202.31 of penalties and interest are supposedly due on the delinquent portion. Has the IRS gotten so desperate for funds that it has delved into loan sharking? What’s more, Zeff has a letter from October 2009 stating that he ‘has filed all required returns and addressed any balances due,’ which now makes us think that the Service is pulling names out of hat and saying “who is our delinquent taxpayer of the day?”
It’s hard to believe that with just a few days prior to the first corporate filing deadline of 2010, that these two agents didn’t have anything better to do. Someone could have sent them to a sorting facility or, God forbid, have them review some returns. Jesus, put them on loan to the Utah branch if nothing else. They need all the help they can get over there.
IRS visits Sacramento carwash in pursuit of 4 cents [Sacramento Bee via TaxProf]
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IRS’s Employment Tax National Research Project Just Getting Started
This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.
About 2,000 firms around the US have received audit letters from the IRS as part of the agency’s Employment Tax National Research Project (NRP). If your firm isn’t one of them, you can’t breathe easy just yet – the agency has indicated that it include a total of 6,000 firms over three years. What’s more, the “examinations will be comprehensive in scope,” and “employers should have all of their records available to expedite these examinations,” the IRS said he project last November.
While similar to an audit, an NRP is designed to “take a snapshot of a given taxpayer population in order to determine the compliance (with tax regulations) within that population,” according to this article by Kevin Packman of Holland & Knight. In addition, the companies studied are chosen at random.
The NRP is the first the IRS has undertaken in 25 years. During that time, the agency noted, business practices regarding employment taxes may have changed significantly, prompting the need for study. In particular, the IRS is looking for data that will allow for a better understanding of just how well corporate tax filers comply with regulations. That way, they can focus their efforts on areas of greatest non-compliance.
Equally important, the agency is looking to boost its knowledge of the “employment tax gap.” The tax gap is the difference between the amounts that taxpayers should pay, and the amounts they actually pay on a timely basis. A gap can come about in several ways: non-filing or failure to file a return; underreporting income or overstating deductions; and underpaying the amounts actually owed.
In 2006, the IRS estimated a gap of $290 billion for the year 2001. The bulk of the gap — 80 percent — was due to under-reporting income, the IRS said.
In an effort to close the gap, the National Research Project will focus on several subject areas, noted the law firm of Morgan Lewis:
Worker Classification: The question of whether a worker is an employee or an independent contractor keeps rearing its head. From the IRS’ point of view, that’s probably because they see a fair amount of misclassification of employees at contractors – which means lost tax revenue. An August 2009 GAO report on the topic referred to a DOL study in 2000 which found that between 10 and 30 percent of firms audited in nine states misclassified at least a portion of their employees. In 1984, the IRS estimated that the misclassification of employees meant a revenue loss of $1.6 billion.
Executive compensation: This includes non-salary compensation, like loans, travel, deferred comp, stock-based compensation and more.
Fringe benefits: The fun stuff some execs get, like the use of company aircraft or cars, club dues, and housing, among other perks, will be under the microscope. The audits may even include benefits like gift cards, employer cafeterias and athletic facilities, Morgan Lewis notes.
Payroll taxes: The agents will examine Forms 941, Employer’s Quarterly Federal Tax Return. As part of this, they will look at backup withholding, next-day deposit requirements and Form 1099/W-2 compliance, among other issues.
What can a firm do to prepare in case it receives notice that it will be part of the NRP? As a starting point, management should conduct an internal compliance review. That way, they’ll have a better idea of potential weak points, and to take steps to resolve issues that could prove to be sticking points during an audit, Packman says.
In addition, all CFOs need to recognize that this project “is the beginning of a long-term emphasis by the IRS on employment tax issues,” Packman writes. Once the NRP is wrapped up, the IRS will use the data it has gathered to focus on areas that were shown to have higher rates of noncompliance.