CPAs and Advisors with Your Growth in Mind

Employee or Contractor: Did you do the Research?

By: Anne Yancey , Director, State Credits & Incentives There is no single test for determining whether a worker is an employee or an independent contractor and for employers, the lines are often blurred in making the distinction. In the eyes of the Internal Revenue Service (“IRS”), proper worker classification is mainly determined by the degree of control a company has over the employee. In contrast, the Department of Labor utilizes an economic reality test. Given the changing dynamic of today’s workforce, employers must singly carefully consider the facts of each situation in making the determination. An incorrect determination could have severe. Read More.

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IRS Drops Proposal Asking for Donors’ Social Security Numbers

The Internal Revenue Service (“IRS”) recently scrapped a proposal that would have allowed tax-exempt groups to provide the Social Security Numbers of donors who make a contribution of at least $250. Encouraged by the National Council of Nonprofits, charities submitted comments expressing their objection to the proposal. Sam Roberts (R-Kan.), the Senator who introduced legislation in December to block the proposal, was pleased by the decision. Details on the IRS’ decision are available on the Accounting Today Web site. Registration is required.

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IRS to Review Tax-Exempt Meals at Companies

Listed as an administrative priority for the Treasury Department’s fiscal year, the Internal Revenue Service (“IRS”) is evaluating its rules surrounding company tax exemptions for free meals. Currently, companies qualify for the exemption if, as stated by the IRS, their workers cannot “otherwise eat proper meals within a reasonable period of time” and provide food “for the convenience of the employer.” If the IRS begins taxing such meals, company-provided breakfasts and dinners could be affected the most. While the effort is in its initial stages, a spokeswoman for the Treasury Department noted that the goal is essentially to offer additional. Read More.

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Senate Democrats Say Audit Excluded Analysis of Democrat-Backed Groups

After an audit by the Treasury Inspector General for Tax Administration last year discovered the Internal Revenue Service (“IRS”) was unfair in its scrutiny of Republican-backed Tea Party groups, a recent report by the Democratic arm of the Senate Permanent Subcommittee on Investigations (“the Subcommittee”) stated that Democrat-supported groups were given similar attention, but went ignored by the inspector general. Released last week, the report says the IRS mismanaged groups’ applications for nonprofit status, and last year’s audit did not mention the agency’s use of terms like “progressive” to label groups that leaned Democrat. While declining to participate in the. Read More.

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New Form 1023-EZ Issued by the IRS

Providing a new streamlined process for smaller organizations, the Internal Revenue Service (“IRS”) Exempt Organizations Division has released a shorter, easy-to-use tax-exempt application form. The application, Form 1023-EZ, Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, reduces the IRS’ workload by focusing on information essential to determining an organization’s exempt status and lowering application backlog. Due to the simplified form, it is anticipated that up to 70 percent of applicants will qualify for the tax exemption. For the full story on Form 1023-EZ , check out the American Institute of Certified Public Accountants’ blog. To learn about Cherry Bekaert’s. Read More.

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IRS Updates Form 5472 Regulations to Eliminate Anachronistic “Duplicate Filing” Requirement

Back in 2011, the Internal Revenue Service (“IRS”) proposed regulations to eliminate the need for duplicate filing of Form 5472 regardless if the filer submits a paper or an electronic income tax return. As a result, the regulations’ only remaining provision for filing Form 5472 separately from the filer’s income tax return applies to cases in which the filer’s return is not timely filed. The 2011 regulations are now finalized without substantive change. The IRS and U.S. Department of Treasury are also proposing the removal of §1.6038A-2(e), which provides for a filer to timely file Form 5472 separately from the. Read More.

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