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Top 10 Payroll Mistakes Companies Make
The Internal Revenue Service is focused on closing the tax gap. One way it hopes to do so is by collecting under-withheld employment taxes. As part of the Employment Tax Research Project (ETRP) launched in 2010, the IRS is reviewing the payroll practices of 6,000 employers. Once the research project is complete, the IRS will identify areas in which compliance errors routinely occur and focus audits on those issues. Companies not selected as part of the research project should look at their payroll practices and make any necessary corrections before the IRS comes knocking. Taxand US reviews the issue of payroll mistakes and highlights common errors carried out by many companies.
The project will cover four main areas:
- Worker misclassification
- Fringe benefits
- Executive compensation
- Payroll taxes
Already the IRS appears to be paying a lot more attention to employment tax issues and pursuing penalties with a diligence not previously witnessed in this area. Because we are seeing an expanded audit scope and depth of diligence by the IRS, we've put together a list of common payroll mistakes we've seen companies make.
Taxand US discusses the Top 10 Payroll Mistakes Companies Make
While this list is not exhaustive, it provides a jumping off point for determining how well your company is doing. Companies should conduct a compliance review while they still have a chance to fix what's wrong without having to negotiate penalties and interest with an IRS auditor at the same time.
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