June 19, 2012. San Francisco, CA. Safe Harbor CPAs, a leading San Francisco CPA firm, announces a new emphasis in assisting business facing worker or employment classification tax audits by the IRS or California authorities. As a result of the Questionable Employment Tax Practice (QETP) initiative, in 2007 the IRS entered into agreements with workforce agencies in 29 states to share the results of employment tax examinations. These agreements provide a centralized, uniform means for the IRS and state employment officials to encourage compliance with federal and state employment tax requirements.
“Complying with employment tax regulations can be complicated,” explained Chun Wong, CPA, managing partner at Safe Harbor. “Most businesses do not fully understand who is an employee vs. who is an independent contractor, not to mention the arcane tax regulations that determine each category of employment. Yet the IRS and California tax authorities are more and more aggressive about identifying non-compliance in terms of employee or worker treatment. It is imperative that businesses seek expert tax advice when facing a worker classification audit.”
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IRS Worker or Employee Classification Audits – The Big Picture
Currently, the likelihood of a business being involved in a worker classification or employment tax audit is increased because the IRS is aggressively attempting to reduce the “tax gap,” which is the annual shortfall between taxes owed and taxes paid. Employment tax noncompliance is estimated by the IRS to account for approximately $54 billion of the tax gap. As a result of the Questionable Employment Tax Practice (QETP) initiative, in 2007 the IRS entered into agreements with workforce agencies in 29 states to share the results of employment tax examinations. These agreements provide a centralized, uniform means for the IRS and state employment officials to encourage compliance with federal and state employment tax requirements.
Because the existing worker classification rules are complex and ambiguous, much uncertainty surrounds their interpretation and application. The lack of a single, definitive test for classifying workers as either employees or independent contractors contributes significantly to the worker classification problem. Safe Harbor CPAs can provide specialized assistance to a business facing a worker or employee classification audit or dispute with the IRS or a state agency.
Tax laws are complex, and Safe Harbor CPAs sees its function as assistance businesses in fully complying with tax regulations yet minimizing any negative tax liabilities to the full extent of the law. If a business is employing workers or independent contractors, Safe Harbor CPAs can help conduct a pre-review of the situation to determine exposure to IRS audits and negative penalities. If a business or corporation is already being audited, Safe Harbor CPAs can assist in the defense of the audit process.
About Safe Harbor CPAs – a Professional CPA Firm in San Francisco
Safe Harbor CPAs specializes in accounting and tax services for individuals and businesses throughout the San Francisco Bay Area and greater California. Safe Harbor CPAs helps both individuals and businesses with tax preparation, IRS audit defense, and audited financial statements. The firm prides itself on friendly yet professional service and utilizes state-of-the-art Internet technology to provide quality customer service.
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