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With the Ernst & Young Payroll Resource Library, you stay ahead of the trends and developments that affect this complex—and ever-changing—area. By tapping into the experience and observations of Ernst & Young’s employment tax and payroll professionals across the country, the editors of this powerful, online resource help you stay fully aware of the latest events and changes.
Links within news stories display full text documents including legislation, regulations, court decisions, rulings and government reports.
The first time you click on a link you will be taken to the IntelliConnect login page, where you will need to enter your ID and password. Subsequent links will take you directly to the desired document.
The IRS is conducting 6,000 comprehensive, random employment tax audits as the centerpiece of its National Employment Tax Research Program (NRP), which will help it focus its resources on the industries and practices that contribute most to this portion of the tax gap. The American Payroll Association offers these tips if your company is selected for an employment tax audit under the NRP or under the IRS's general audit program, or if your company is selected for a comprehensive tax audit.
First steps
An organization may be informed by letter or by phone that it has been selected for an audit. The letter, often referred to as the "confirmation letter," may contain a request for the information the IRS wants to peruse, or this request may come at a later date. In either case, the next step for the IRS is to have the agents who will be conducting the fieldwork meet with the organization.
Before this meeting takes place, the organization should establish an internal team that will coordinate its participation during the examination. This may include representation from payroll, accounts payable, accounting, human resources, internal auditing, general counsel, and outside tax professionals.
A properly functioning internal team should appoint an audit controller to manage the examination and supervise input from employees. This individual should assemble and regulate the flow of information between the IRS and the organization. The audit controller should review all information before it is turned over to the IRS and be present during tours and interviews of employees.
The objective is not to restrict or hide information. Rather, the objective is to make sure the information released to the IRS is organized, complete, and focused.
Requests for information by IRS should be made through the audit controller in writing by use of Form 4564, the Information Document Request. The organization is required to provide the IRS with all the information it is legally allowed to request. However, the organization should also note that it needs to provide no more than the information specifically requested by the IRS.
Appeals
It is perfectly acceptable to have unresolved audit issues with the auditors. If at any time the organization does not feel an agent is conducting himself/herself professionally, the audit should be stopped, and the organization should ask to discuss the matter with the auditor's supervisor to resolve differences.
Audit issues that cannot be resolved during the examination and which are not part of a closing agreement may be appealed to an IRS Appeals Office. Open audit issues that cannot be resolved with this Office may be litigated through a formal trial. Because of the time and expense involved with litigation of unreconciled tax disputes, this option should be chosen only as a last resort. ( SSA/IRS Reporter, Spring 2010.)
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Philadelphia Mayor Michael Nutter has signed an ordinance that was passed by the city council in December 2009 providing a tax amnesty period that will occur over 45 days in May and June 2010 and overlap with the state amnesty program, which was reported previously (see CCH PAYROLL MANAGEMENT GUIDE Report Letter, Issue No. 2117, dated October 20, 2009.) The amnesty measure applies to 17 different taxes administered by the city and applies to debts originally due and payable from February 1986 through June 2009.
Taxpayers that are either under criminal investigation or have been named in a criminal complaint related to the delinquency or who have participated in any prior tax amnesty program are ineligible to participate in the program.
Under the terms of the amnesty bill, 100% of accrued penalties and 50% of accrued interest due on delinquencies are waived after the taxpayer makes all required payments. (Bill No. 090686, City of Philadelphia, signed by Mayor Nutter on January 27, 2010.)
Additional coverage of Pennsylvania payroll issues can be found in Aspen Publishers' Pennsylvania Payroll Guide. For more information, call 866-745-9911 or visit www.aspenpublishers.com.
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The Social Security Administration (SSA) welcomes new customers to enroll in its Consent-Based Social Security Number Verification service (CBSV). CBSV went live in 2008 and more than 100 companies have enrolled to use this service. CBSV permits private businesses, government agencies or tax preparers to verify whether a name and Social Security Number (SSN) combination match the data in its Master File of SSNs. It provides instant, automated SSN verification and it easily handles large volume requests.
Using CBSV, participating companies can verify the SSNs of their customers and clients. Companies using CBSV include firms providing background and pre-employment checks, tax preparation and financial services. Users have a choice of three possible modes of access to CBSV: web service, internet, or batch. CBSV requires participating companies to pay a fee and obtain the written consent of the SSN holder. This consent authorizes the SSA to disclose the SSN verification to the requesting party. CBSV results may only be used for the reason the number holder specifies on the consent form. An Employer Identification Number (EIN) is required to enroll and become a CBSV user.
How to enroll
To use CBSV, a company must sign an agreement with Social Security, pay a non-refundable enrollment fee of $5,000 and then pay a transaction fee per SSN verification request. The transaction fee is presently $0.56 and must be paid in advance. Periodically, Social Security will recalculate the costs it incurs in providing the CBSV service and, as needed, will adjust the transaction fee it charges. Subscribers will be notified in writing of any change in the transaction fee. The SSA may close enrollment to CBSV at its discretion. It is important to note that CBSV is different from the SSA's other SSN verification service, Social Security Number Verification Service (SSNVS).
SSNVS is solely for employers verifying the information of their employees or former employees before preparing and submitting Forms W-2; and it cannot be used as part of the pre-hiring process. Since SSNVS supports the SSA's program administration, there are no fees for using SSNVS and the signed consent of the number holder is not needed.
CBSV, on the other hand, is available to any interested party with an EIN. It is important to note that CBSV is available to tax preparers and also may be used for pre-employment checks. CBSV will verify a name and SSN combination as matching or not matching SSA records for any party registered to use the service, but fees are charged and the number holder's written consent is required. (CBSV Enrollment and Detailed Information at www.socialsecurity.gov/cbsv; SSA/IRS Reporter, Spring 2010.)
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Social Security Administration has finalized amendments that will clarify that combat-related pay will not be treated as income with respect to the means testing provisions of Title XVI of the Social Security Act. This impacts five separate means testing provisions under existing regulations:
The amendments more closely align the regulations to the law with respect to certain types of military pay. They also add certain types of military pay to the list of payment types that are excluded from consideration when taking into account the income and assets of a soldier's family when determining the family's SSI eligibility.
Background
In general, income from a member of the uniformed services is deemed to his or her spouse or child when determining the spouse's or child's eligibility for SSI benefits. This situation occurs because the Social Security Act (Act) provides that a spouse or parent who is absent from the household solely because of a duty assignment as a member of the Armed Forces generally will be treated as if he or she were living in the household. See Act §1614(f)(4) [42 U.S.C. §1382c(f)(4)]. Certain pay that members of the military may receive, however, is excluded, including "special pay" (Act §1612(b)(20)). Special pay is pay that members of the uniformed services receive when they are subject to hostile fire or certain other dangerous conditions specified in 37 U.S.C. §310. Under current regulations that implement Act §1612(b)(20), what is excluded from income and from deeming is "hostile fire pay."
"Hostile fire pay" changed to "special pay"
In order to clarify that the SSA excludes from income and deeming all special pay that a member of the uniformed services receives, the agency is revising Regs. §416.1124(c)(19) and §416.1161(a)(23) to replace the term "hostile fire pay" with the term "special pay."
Combat-related pay also to be excluded
The Social Security Act allows the SSA to waive the deeming of income and resources to a spouse or child when it determines that deeming would be inequitable. See Act §1614(f). Although special instructions that have been effective since October 1, 2002, exclude from a spouse's or child's income any additional pay that members of the uniformed services receive because they were deployed to or served in a combat zone, the amendment incorporates this exclusion into the regulations (Reg. §416.1161(a)(28)) and adds a definition of "combat zone" as well (Reg. §416.1160(d)).
The special instructions also exclude from the resource deeming rules for nine months following their receipt, retroactive payments of special pay and family separation allowances that a member of the uniformed services receives as a result of deployment to or service in a combat zone. Also excluded are family separation allowances received because the wage-earner is being deployed to service in a combat zone. The revision incorporates these exclusions into the SSI regulations at Reg. §416.1202(a) and (b)(1).
The full text of the SSA's notice of final rulemaking, as published in the February 22, 2010, Federal Register (75 Fed. Reg. 7552) appears in this week's Report (¶14,488C).
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Unemployment Insurance Reporter with Social Security provides in-depth coverage of federal and state laws and regulations, including Unemployment Insurance, Social Security, Supplemental Security Income, and Disability. With all the facts and data about taxes and benefits under major subject categories, and expert “plain English” explanations, analyses and indexes, there is no other product that offers the same scope of coverage.
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