22Jun 2011 by Nancy Smyth

FREE Webinar on New 3% Contractor Withholding Requirements

Construction News, IRS Information, Webinars & Training
From the June 22, 2011 Issue of the Federal, State & Local Governments Newsletter published by the IRS. The office of Federal, State and Local Governments will hold a free, one-hour webinar on July 14, 2011, to discuss the required 3 percent income tax withholding on certain payments made by government entities, to take effect in 2013.  The webinar is recommended for any Federal, state or local government entities as well as tax professionals. Participants can get answers to these questions: What is Section 3402(t) ? The Legislative history on Section 3402(t) Who must perform Section 3402(t) withholding? What payments are subject to Section 3402(t) withholding? Exceptions to Section 3402(t) withholding? Section 3402(t) deposit and reporting mechanics? You can register for the webinar by clicking here. -------------------------------------------------------------------- Additional information from…
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09Jun 2011 by Jo Ellen Peters

Payroll Tip – The IRS May Hold You Liable For 941 Payments

From Our Guest Bloggers, IRS Information, Payroll Tips
A payroll tip about who the IRS may hold liable for 941 tax payments. Are you the bookkeeper or accountant for your company? Are you a signer on any of the company bank accounts? What about your client’s accounts? Do you sign on any of them? If so, you may be held responsible by the IRS for underpaid 941 liabilities. Sounds scary, but it can be true. How is it possible that can be true? The IRS says the federal income tax and the employee’s portion of social security and medicare taxes withheld is a trust fund. It is to be deposited according to the schedule they have determined for your company. The IRS cannot collect this tax from the employee, even if the employer does not pay the tax…
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12May 2011 by Nancy Smyth

IRS Responds to AICPA Accounting Software Examination Letter

IRS Information
More about the IRS requesting backups of QuickBooks and Peachtree company files from the Journal of Accountancy, written by Benson Goldstein, J.D. In a March 29, 2011 letter from Patricia Thompson, chair of the American Institute of CPA’s (AICPA) Tax Executive Committee, to Chris Wagner, commissioner of the IRS’ Small Business/Self-Employed Division, the AICPA communicated its concerns regarding the Service’s program to request the accounting software files of certain small business taxpayers under examination; the letter cites QuickBooks and Peachtree as examples of accounting software actively used by small businesses. This is a critical matter because the use of accounting software has become commonplace by businesses in meeting the requirement to maintain proper “books and records,” including records involving income, expenses, assets and other pertinent information. If the firm is…
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04May 2011 by Matt Clark

Why Does the IRS Want to Audit My QuickBooks File?

"Stuff" No One Ever Told Me About..., From Our Guest Bloggers, IRS Information
If you are reading this article then it is likely that you or your client has received a request to submit a QuickBooks file in conjunction with an IRS Audit or an audit by another government agency. The Internal Revenue Service started this new level of enforcement in 2010 in which their agents are now requiring the actual accounting database (be it QuickBooks or another accounting software) as a part of the audit process. Certainly, government revenue departments can use information to gather any sort of data relevant to an audit. In my role in helping clients prepare their files for submission to these governmental agencies I have noticed some patterns in what the IRS seems to be looking into and I wish to share that with you here. Improper…
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20Apr 2011 by Nancy Smyth

Another Independent Contractor Red Flag Issue Q&A

IRS Information, Payroll Tips
A nonexempt employee working a second job as an independent contractor for your organization is a red flag for the IRS, the DOL, and state agencies. So, make sure that your employee’s second job really meets the independent contractor criteria or be prepared to pay overtime. -------------------------------------------------------------- Question: We have a nonexempt employee who has offered to do landscaping work outside of his normal 40-hour week for our organization. Can we treat him as an independent contractor when he is doing this work? We would normally hire an outside company for landscaping. Answer: If the employee’s landscaping job meets the criteria for an independent contractor job, then you may classify him as such. If he does not meet the criteria, however, any additional work that he performs for your organization…
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18Mar 2011 by Nancy Smyth

Freebie Friday – Your QuickBooks file, the IRS & YOU eBook

Be A Better Bookkeeper, Free & Fee-Based QuickBooks eBooks, IRS Information
Oh sweet Friday - sometimes you come way to fast and other times not fast enough! Yup, it's time for "Friday eBook" here on the QuickBooks for Contractors blog. This week, I confess, I took a shortcut and turned our popular series "Your QuickBooks file, the IRS & You" and turned it into an eBook and called it good!  Friday's come too fast for me, in terms of getting things done (I do just about all of my blogging at night, early in the morning, or on the weekend otherwise I would never get any real work done during the day) - so I hope you will excuse this shortcut on my part. One of the reasons that I decided to turn it into an eBook is so that you…
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17Mar 2011 by Nancy Smyth

12 Tips for Ensuring Fair Labor Standards Act Compliance

IRS Information, Payroll Tips
Fair Labor Standards Act audits are on the rise, according to Secretary of Labor Hilda Solis. Most of these audits will reveal that common everyday business practices often result in unpaid “work” hours that 70% of employers have no idea are unlawful, but do in fact, violate the Fair Labor Standards Act (FLSA). Below are 12 tips that you should implement in your business to ensure that you are in compliance, while this is not an all inclusive list these items will help you move in the right direction. Require your hourly employees to accurately record their work hours and to submit a timesheet that they certify as being accurate to a manager or supervisor; in a timely manner. Make it mandatory for supervisors and/or managers to review timesheets submitted…
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16Mar 2011 by Nancy Smyth

Are You Unknowingly Violating the Fair Labor Standards Act?

IRS Information, Payroll Tips
Common everyday business practices result in unpaid "work" hours that 70% of employers have no idea are unlawful, but do in fact, violate the Fair Labor Standards Act (FLSA). Below are 5 example of what is considered to be a violation of the Fair Labor Standards Act: Punching in early (or punching out late) - for example an employee punches in 15 minutes before starting time. If you are audited, you would have to prove that employee who punched in early was not working.  The Department of Labor assumes that an employee who has punched in is working. Downtime - for example an employee's normal workday starts at 9, but they have a long drive and have to drop children off in two different places, so they end up getting…
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14Mar 2011 by Nancy Smyth

Company Short on Cash? This is the bill to pay FIRST!

Be A Better Bookkeeper, IRS Information, Payroll Tips
Is your company short on cash and wondering which bill to pay first?   That bill should be your payroll taxes! At one point or another, every business is going to be short on cash and will be faced with the challenge of figuring out which bill they should pay first.  The first bill that you absolutely have to pay first is your is your payroll tax bill - otherwise it is going to cost you dearly in the long run! Below is a real example, taken from the March edition of The General Ledger, a monthly newsletter from the American Institute of Professional Bookkeepers. To deal with its financial problems T Corporation decided to pay several creditors, putting off for two quarters paying employment (payroll) taxes and filing related returns. …
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02Mar 2011 by Nancy Smyth

Create a QuickBooks External Accountant User For An IRS Audit

Be A Better Bookkeeper, General QuickBooks News, IRS Information
Giving your QuickBooks company data to an IRS Auditor is almost like inviting a stranger into your home - you don't know what they will do, and at this point in time, I haven't found any information on exactly what an Auditor will look for or what they will do once they do get their hands on your data file. To be honest, I don't even know if they are required to return your QuickBooks (or Peachtree) data file to you once they are done.  I do have to assume that they are required to do so, but you never know........... Hopefully, you will follow the suggestions outlined in An IRS Audit and They Want Your QuickBooks File - Best Practices article and provide a data file that ONLY contains…
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28Feb 2011 by Nancy Smyth

Your QuickBooks Company Data File, the IRS and You

Be A Better Bookkeeper, General QuickBooks News, IRS Information, QuickBooks Setup & Cleanup
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…
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24Feb 2011 by Denise Duplinski

Credit for Small Employer Health Insurance Premiums

From Our Guest Bloggers, IRS Information
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…
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22Feb 2011 by Nancy Smyth

Employer Responsibilities for Completing an I-9 Form

IRS Information, Payroll Tips
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…
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