By Rieva Lesonsky
Has your business ever been audited by the IRS? Just hearing those words can send a shiver of fear down any entrepreneur’s spine. Unfortunately, small business owners have more reason than usual to be nervous about opening their mail for the next few years thanks to the IRS’s Employment Tax National Research Project (NRP).
The NRP is a comprehensive audit that will hit 2,000 small companies each year at random in 2010, 2011 and 2012. The goal is to see how well businesses are complying with employment tax regulations. The last NRP was conducted 25 years ago, and with the federal government seeking all possible sources of revenue it can, the IRS is looking to make sure it’s getting all the money it’s owed by small business taxpayers.
An article in CFO Zone reports that the NRP is honing in on four areas:
- Worker Classification: Classification of workers as employees or independent contractors
- Executive compensation: Salary and non-salary compensation, such as loans, deferred compensation and stock
- Fringe benefits: This includes both executive and employee perks
- Payroll taxes: Forms 941 and Form 1099/W-2 will be examined regarding withholding and next-day deposit requirements.
The IRS has stated these audits will be “comprehensive” and if you are hit with one, be ready to open all your records. However, you don’t have to get audited to be affected by the NRP: The results of the completed study will be used to adjust tax regulations and tighten up compliance in these four areas above.
Don’t wait to get audited—make sure your company is in compliance. Have your accountant take a look at your finances and ensure any problems are corrected sooner, not later.
Image by Flickr user Lisa Percival (Creative Commons)
DISCLAIMER: The information posted in this blog is provided for informational purposes. Legal information is not the same as legal advice — the application of law to an individual’s specific circumstances. The information presented here is not to be construed as legal or tax advice. Network Solutions recommends that you consult an attorney or tax consultant if you want professional assurance that the information posted, and your interpretation of it, is appropriate to your particular business.Google+