As reported here this past November when the Internal Revenue Service (IRS) announced its plans, the federal tax agency has commenced the first phase of its audit of 6,000 firms of all sizes and industries to root out abuses of executive pay, fringe benefits, record-keeping, and misclassification of employees as independent contractors.
The Employment Tax National Research Project (NRP) will start by auditing 2,000 firms this year, and at the end of three years will have completed what appears to be a line-by-line audit of 2007 and 2008 tax returns for the 6,000 companies under its microscope.
The five areas to get the most attention are classification of workers (employees or independent contractors); fringe benefit arrangements; executive compensation arrangements; back-up withholding; and Form 1099 compliance.
Though not directly related to IRS requirements, Personnel Concepts’ Manual of Record-Keeping Requirements will help you stay in compliance with all other federal employment regulations.