► Compliance Risk Assessments► Development of Policies & Procedures► Curing of Errors
Even some of the best-managed companies can find themselves liable for millions of dollars in Penalties and Backup Withholding costs. Ever changing Federal and State Regulations regarding withholding and reporting regulations consistently exposes your company to penalties, interest and withholding liabilities for failure to comply. New regulations apply to specific segments of the business community and government agencies with complex and burdensome requirements.Now is the time to examine your risks for past non compliance, cure those risks and prepare your company to comply with current and new regulations. IRS Compliance can assist with a comprehensive Risk Assessment, curing failures and implementing compliant policies and procedures to ensure ongoing compliance.
Why would my company be audited?
The IRS and States routinely check for non-compliance with tax reporting. It is projected that a majority to 100% of companies in the United States will undergo either an audit or compliance review within the next 3 years.The IRS has announced that audits will now include 1099 and 1042-S review for compliance with Payee TIN Certification, the implementation of backup withholding when required, filing correctly and timely and proper identification of payees as U.S. or foreign.
Has your company had the following?
If you answered yes to any of these questions, you may have significant tax risk exposure.
Effective January 1, 2011, returns filed will be subject to new legislation that increased the penalty range to $100 per document to a max of $1,500,000.
How do I protect my company?
You can protect your company by being proactive. Waiting for the IRS or a state to raise the issue could be extremely costly.
Our goal at IRS Compliance is to help you avoid an audit, or at least be in a position to control the audit if selected.
► REVIEW OF COMPANY OPERATIONS
► VOLUNTARY COMPLIANCE
► POLICY & PROCEDURES
► AUDIT DEFENSE & MANAGEMENT
► COMPLIANCE REPORTING & PROCESSING
The IRS has stepped up the number of audits currently being conducting and their effort to audit 100% of all organizations issuing payments to U.S. and foreign payees. With the onset of the new FATCA (Foreign Account Tax Compliance Act) regulations, on boarding payees properly(both U.S. and foreign), determining the correct federal and tax withholding and filing information returns has become more complex, which can lead to greater financial risk for non-compliance.
An IRS audit can lead to an examination of all payment practices including:
In the course of ensuring that U.S. payers comply with regulatory law and with the current economic conditions, the U.S. Treasury, IRS and Congress are challenged to enforce the current regulations; impose liabilities for failure to withhold tax, and all penalties and interest associated with failure to comply with the tax regulations that apply when issuing payments to U.S and foreign payees. Additionally, Congress continues to cope with the need for new or changes in regulatory requirements, which result in ever changing requirements.
Under an IRS audit, & even some state audits, the auditor will ask to review your corporate and departmental policies and procedures when issuing payments for; documenting payees, withholdings, deposits, reporting and controls.
For Reportable Payees & Payments
Your Policies & Procedures
Corporate policies and procedures are required to establish the company’s position on compliance with the regulations and internal enforcement. Departmental policies and procedures address the steps and functions that will ensure that anytime an account is opened or a payment made, that procedures are adhered to for obtaining payee TIN/EIN information, federal and state withholding is applied (if required), and that original and corrected returns have been properly filed.
As part of an information reporting audit or a compliance check, the IRS may ask to examine corporate and departmental policies and take a close look at the procedures that are followed in the process of establishing a payee/vendor account, issuing payment, withholding, reporting and ongoing tracking of payee withholding status. The IRS may examine the software or methods utilized by your company for regulatory processes and can request historical data on any of the payees and payments, payee documentation and withholding deposit history.
Establishing and enforcing up-to-date policies and procedures for any area in your company that may issue payments is critical to avoid costly penalties and liability! As part of an IRS audit, policies and procedures will be reviewed for compliance and enforcement.
IRS Compliance can assist in developing the necessary policies and procedures for both the corporate and business areas and assist in their implementation.
How is your company’s compliance with the regulations as they pertain to properly documenting payees as U.S. or foreign? Validating the documentation Form W-8’s and Form W-9’s that you receive? Applying the correct amount of treaty/non treaty withholding on foreign payments? Chapter 3 or Chapter 4 withholding on payments issued to Foreign Payees? Backup withholding? State withholding? Filing federal and state information returns? B-Notices and TIN Penalty Letters?
Also crucial, how do your payment systems measure up in collecting all of the right information on the payee and payment so that you can comply with federal and state regulations?
Now is the time to examine your current processes and determine what procedures or changes your company needs to ensure that all business areas adhere to compliant guidelines when opening accounts and issuing payments. Improve your procedures and reduce your risks during an audit.
IRS Compliance assists organizations striving to identify and “cure” errors and / or omissions in past processing and filing of information returns to the IRS & the states.
If your business has become aware that certain payments were not reported properly or not reported at all, payees were not certified correctly or the information reported previously was not correct – we can assist in attempting to resolve these past or present issues by identifying the risk area and taking steps to remedy the error – prior to that IRS or state(s) issues a penalty or an audit.
Errors may have been discovered by your own organization, by IRS Compliance via a Risk Assessment or even a request for information issued by the IRS or state. In order to reduce or eliminate that possible liability – we can attempt to clearly identify the failure and remedy it if at all possible.