State and federal tax agencies around the country are aggressively seeking more revenue to deal with burgeoning budget deficits.
The IRS is planning to institute its first Employment Tax initiative since 1984. It intends to audit 6000 companies looking for:
- Misclassification of employees as independent contractors,
- Problems with reporting tips,
- Issues regarding underreporting of compensation of officers and owners in S corporations and
- Problems with reporting fringe benefits such as car allowances, club memberships, payment for equipment and tools, and personal use of company owned vacation property.
All employers should closely review their pay and benefits practices. The trend of government looking for more and more tax revenue will likely escalate.
