Yes, it’s true. The IRS can *LEGALLY request a backup of your QuickBooks (or Peachtree) company data file if you are being audited.
BACKGROUND:
In 2010, the IRS purchased somewhere between 1,500 and 2,000 licenses for the QuickBooks 2010 Premier Accountant Edition from an ISP (Inuit Solutions Provider) and not directly from Intuit as it is made to look in announcements (SEE NOTE BELOW).
Approximately 1,100 agents were trained to utilize QuickBooks and these agents have been instructed to obtain a copy of the taxpayer’s data base for the year under examination ONLY when it is necessary. This method of examination of taxpayer records will not be used in all cases — however, it will be up to the examiner.
When requested, the electronic files should be provided on a CD, DVD, or flash/jump drives to ensure the security of the files. Email should NEVER be used to submit files.
Apparently business owners and tax professionals have been advocating that the IRS begin accepting taxpayer records in electronic format instead of continuing to use more traditional paper books and records for audit purposes. This is according to the IRS Small Business/Self-Employed Examination Division; who is responding to the wishes expressed in tax practitioner focus group interviews conducted at the 2008 Nationwide Tax Forums as well as other stakeholders.
Why on earth would anyone want the IRS to begin accepting taxpayer records in electronic format? Well, in reality it does provide advantages, such as:
- Reducing the taxpayers burden because they don’t have to print records which are stored within their accounting files.
- Provides a complete set of records, which decreases the number of items included in the original request and/or follow up requests for additional documentation.
- Results in faster audits and therefore provides faster resolutions.
Look for tomorrows article on what to do if the IRS requests your QuickBooks data file.
NOTE: Thanks to Alison Ball from Intuit for taking the time to contact me and let me know that the licenses were not purchased directly from Intuit. According to Alison, Intuit is actually prohibited from selling to the government, probably because it would be a conflict of interest because Intuit relies on the IRS to provide new tax code each year.
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*RESOURCES FOR ACCOUNTING PROFESSIONALS AND OTHER INTERESTED PARTIES:
The legal authority for requesting a taxpayer’s QuickBooks or Peachtree backup files and accounting records is based on:
- IRC Section 6001 - http://www.law.cornell.edu/uscode/html/uscode26/usc_sec_26_00006001—-000-.html
- Regulation 1.6001-1(a) and -1(e) – http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=26&PART=1&SECTION=6001-1&TYPE=PDF
- Revenue Ruling 71-20 http://www.uiowa.edu/~fusrmp/irsruling71-20.html
- Revenue Procedure 98-25 – http://www.irs.gov/businesses/article/0,,id=180708,00.html
It is also important to note, that Revenue Procedure 98-25 does not prevent or exempt a taxpayer from providing electronic records, if those records exist. If a taxpayer or authorized representative refuses to provide the database and the agent determines it is necessary for the audit, a Summons to obtain the information could be issues.
Also see, http://www.ebaea.org/cgi-bin/dada/mail.cgi/archive/Bulletin/20100623212855/ and http://www.irs.gov/businesses/small/article/0,,id=229050,00.html
Additional online discussions regarding this topic can be found at:
Tax Almanac – http://www.taxalmanac.org/index.php/Discussion:IRS_Auditors_to_be_trained_in_Quickbooks
Successful QuickBooks Consultants on LinkedIn – http://www.linkedin.com/groupItem?view=&gid=157449&type=member&item=23839279&qid=64ddee41-3223-43aa-a3b6-fc63f104925a&goback=.gmp_157449
This Friday I thought I would share a few of my own favorite “freebies” and a few paid tools with you. These are just a few of the things that I just don’t think I could live without on a daily basis while running my own business, some you may already know about – others you may not.
First, the freebies, not in any particular order:
- CutePDF Writer – turn ANY document into a .pdf. Download & install CutePDF Writer, it installs as a “printer”. From any program , yes even QuickBooks, choose CutePDF from the printer selection dropdown menu, and ta-da — your document is now a pdf file.
- Foxit Reader - a fast an inexpensive alternative to Adobe Acrobat Reader.
- Google Docs – easily upload and share files – anytime, anywhere.
- ReviewBasics – exchange ideas and gather thoughts on creative, interactive, motion, and written content in a breeze. Upload your content and invite reviewers. Their feedback is reported back to you in real time.
- youSENDit – send large files to anyone.
- senduit – this tool caters to the basic need of short to medium term file storage and transfer. Upload a file (up to 100 mb) and you are given a link that goes directly to the file you’ve uploaded. Instead of emailing the large file, you email or IM the link to the file.
- Dropbox – allows you to sync your files online anc across your computers automatically. 2GB of online storage for free, with up to 100 GB available to paying customers.
- PRLog – is an online free press release distribution and release submission service.
- i-Newswire – another online free press release distribution and release submission service.
- Zoomerang – create customer satisfaction, employee satisfaction, market research, educational, Twitter, or Facebook surveys. Limited to 12 questions and 100 responses.
- SurveyMonkey – another survey tool, this one is limited to 10 questions per survey with 100 responses.
- Jing – take a screenshot or make a short video of what you see on your screen.
- CamStudio – an open source screen recording software which creates industry standard AVI video files
- EverNote – remember EVERYTHING using your computer, the web or your phone.
- Ta-da List – make lists for yourself or share them with others.
- LastPass – password manager.
- NudgeMail – the easiest way to send your self reminders for anything, anytime, anywhere.
- WebsiteGrader – a free tool that grades the effectiveness of your website; allows you to compare your website to others.
- BlogGrader – a free tool that analyzes and grades your blog.
- Grader – a suite of tools that helps you measure and analyze your marketing efforts.
- Netviewer Support free for personal use – do you have someone, perhaps parents, who frequently need computer help? Go to http://www.netviewer.com and sign up for a free trial of Netviewer Support, login to your customer portal and download Netviewer Support for personal use. Start support sessions by clicking an icon on your desktop, click invite and send the automatically generated email. The recipient clicks a link and a small piece of javascript automatically installs on their computer and poof you are able to control their computer and help them out. The free version doesn’t allow for file transfer and it doesn’t recognize dual-monitors.
Paid tools:
- SnagIt – take screenshoots and edit them with an impressive number of tools, for Windows or Mac.
- Camtasia Studio – screen recording and video editing software, save your videos in MP4, FLV, SWF, M4V, AVI, Silverlight, MOV, RM, Animated GIF, or MP3 formats.
- NetViewer Support Business Edition – With Netviewer Support, you’ll stay closer to your customers and provide rapid online help. Anytime, no matter where you are. Expand your action radius and improve your help desk’s productivity. Netviewer is part of Citrix Online.
- Netviewer Meet – combines BOTH online meetings/webinars with up to 100 participants AND one-on-one remote support for one low convenient price of $49.90 per month or if you sign up for 1 year it’s $39.90 per month. Netviewer is part of Citrix Online.
What are your favorite free or paid tools that you use in your business?
On March 30, 2010, President Obama signed the Health Care Reconciliation Act which added a tax credit for employee health insurance expenses of small employers for taxable years beginning in 2010 through taxable years beginning in 2013.
The tax credit is available if:
(1) the employer has fewer than 25 full-time equivalent employees (FTEs)
(2) the average annual wages per FTE is less than $50,000, and
(3) the employer maintains a “qualifying arrangement”
The credit is fully available to an employer with 10 FTEs and average annual wages of $25,000. The credit phases out pro rata so that an employer with 25 FTEs with average annual wages of $50,000 is not entitled.
Number of Employees for the Taxable Year
The number of FTEs is determined by counting employees who perform services for the employer. Generally, sole proprietors, partners in a partnership, more than 2 percent shareholders of an S corporation, and more than 5 percent owners of any other business are not included in the count. In addition, seasonal workers who work fewer than 120 days in the year are not counted.
Next, determine the number of hours that each worker who is included in the count works during the taxable year, but not more than 2080 hours for any employee. Generally, you count hours for which the employee is paid for working. You can also count up to 160 hours of paid time off.
Determine the number of FTEs by dividing the total number of hours worked by each employee by 2080. A fraction is rounded down to the next whole number.
Average Annual Wages per FTE for the Taxable Year
Determine the average annual wages by dividing
(1) the total wages paid by the employer to the employees counted as FTEs by
(2) the number of FTEs for the year, and
(3) rounding the result down to the nearest $1,000.
For example, if the employer pays $224,000 in total wages and has 10 FTEs, it pays average annual wages per FTE of $22,000 ($224,000 divided by 10 equals $22,400, which is rounded down to the nearest $1,000).
Qualifying Arrangement
The credit is available only for premiums paid by the employer under a qualifying arrangement. The health plan is a qualifying arrangement if the employer pays a uniform percentage (but not less than 50%) of the premium.
The amount of employer-paid premiums that can be used in calculating the credit is limited to the average premium for the small group market in the employer’s state. The average premium information is included in the instructions for Form 8941(used to compute the credit)
Transition Relief for 2010.
Because the credit applies to 2010, including premiums paid by the employer before the Healthcare Reform Act became law, if the employer pays at least 50 percent of the premium for single coverage, it will be deemed to satisfy the uniformity requirement.
Determining the Credit
For taxable employers, the maximum credit is 35 percent of the employer’s premium payments. For a tax exempt employer, the credit is 25 percent.
The credit phases out if the number of FTEs is greater than 10 and/or the average wage per FTE exceeds $25,000. The reduction has two parts: a reduction if the number of FTEs is greater than 10 and a reduction if the average wage is greater than $25,000. If the number of FTEs is greater than 10, the credit is reduced by a fraction, the numerator of which is the number of FTEs over 10 and the denominator of which is 15. If the average wage exceeds $25,000, the credit is reduced by a fraction, the numerator of which is the amount of wages over $25,000 and the denominator of which is $25,000. If both reductions apply, each amount is subtracted from the credit.
For example, if a taxable employer has 12 FTEs, average wages of $30,000, and an initial credit of $33,600, the reductions are determined as follows:
- reduction for FTEs over 10: 2/15 times $33,600 equals $4,480
- reduction for average wages over $25,000: 5,000/25,000 times $33,600 equals $6,720
The total reduction is $11,200 ($4,480+$6,720) and the allowable credit is $22,400.
Claiming the Credit
Form 8941 if used to figure the credit . A taxable employer treats the credit as a general business credit and offsets its tax liability for the year by the amount of the credit. The credit can be used in some cases against the employer’s alternative minimum tax liability.
We would like to invite our subscribers to write a guest blog article that we will post on our blog.? We know a lot of our subscribers are experts in their own fields and have tips and best practices that everyone could benefit from.
What to Write About?
We are looking for articles that provide valuable information to the business professionals that subscribe to our blog.? The post could pertain to business lessons you’ve learned that would be valuable for others to hear about, tips for handling certain situations more effectively, compliance issues to avoid or anything that would help business owners run their companies more efficiently.? The articles don’t have to be geared towards payroll or construction, but should relate to using QuickBooks, owning, operating or managing a business.
How long should the blog post be?
A good length for a blog post is between 300 and 500 words and include at least one graphic that relates to the subject you are writing about.
How Often Would I Have to Submit a Blog Post?
Absolutely no commitments or expectations. If you would like to only submit one guest blog post, that’s fine. If you are thinking about starting a blog of your own and want to “get your feet wet” {so to speak} this is a perfect opportunity. If you would like to submit guest posts on a regular basis – I would be happy to discuss that with you.
How Does a Guest Blogger Benefit?
By writing a guest article for our blog, you and your business will get additional exposure and the posting will be seen by all our subscribers.? In return for writing an article, you can include a brief bio and inbound links to one of the following:
- your website
- your own blog, or
- your social media profiles…
giving those sites added SEO value and increased traffic.
Why Are You Looking for Guest Bloggers?
Having guest bloggers will provide our readers with new perspectives and new topics, and to be honest, it will give me a break…..it’s sometimes difficult to come up with new content every day.
Ok, I’m Interested – How Do I Contact You?
Use the Contact Us tab at the top of our blog to get in touch with me.
Employers are required to complete an I-9 form at the time of hire for all employees that have been hired on or after November 6, 1986. The employer must complete Section 1 prior to the end of the first day of employment. For example, if an employee starts working on a Monday, Section 1 of the form must be completed by the close of business on Monday.
The employer must review the original documents and complete Section 2 within 3 business days of the first day of work. Additionally, if the employer has enrolled in E-Verify, the E-Verify inquiry must be initiated before the end of the third day of work.
The U.S. Citizenship and Immigration Services (USCIS) has released an updated 69 page version of The Handbook for Employers (also known as the M-274), which was revised on 01/05/2011, download the Handbook for Employers from the US. Citizenship & Immigration Services website.
Other Resources:
Download the current I-9 form here
E-Verify Information for Federal Contractors
E-Verify User Manual for Federal Contractors
E-Verify Supplemental Guide for Federal Contractors
