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The current likelihood that your business will become involved in an employment tax audit or an employment-related income tax audit has increased: the IRS is aggressively attempting to reduce the "tax gap" of uncollected revenues in a time of increasing budget austerity. Employment tax noncompliance is estimated by the IRS to account for approximately $54 billion of the tax gap. Under-reporting of FICA makes up $14 billion; under-reporting of self-employment tax accounts for $39 billion; and under-reporting of unemployment tax accounts for $1 billion in lost revenue. Add to that total amount over $50 billion in estimated employment-associated income tax lost that are the result of missteps in withholding obligations, tip reporting, and proper fringe benefit classification . . . and employers are forewarned. The IRS is stepping up its auditing in these areas and has been conducting studies to maximize the best use of its agents' time to do so.

Tax reform, frequently discussed in Washington, got a boost from two recent proposals, one from the chair of the House tax writing committee and another from the White House. Rep. Dave Camp, R-Mich., chair of the House Ways and Means Committee, released a massive tax reform bill in late February. In early March, President Obama released his fiscal year (FY) 2015 budget proposals, detailing over 160 tax proposals. Both proposals share some similarities but also key differences.

In January, the U.S. Tax Court threw a curve ball in many retirement planning strategies. The court held that a taxpayer could make only one nontaxable rollover contribution within each one-year period regardless of how many IRAs the taxpayer has. The court found that the one-year limitation under Code Sec. 408(d)(3)(B) is not specific to any single IRA owned by an individual but instead applies to all IRAs owned by a taxpayer. The court's decision was a departure from a long-time understanding of IRS rules and publications and, for several weeks after, it was unclear what approach the IRS would take. Now, the IRS has announced that it will follow the court's decision and revise its rules and publications. Everyone contemplating an IRA rollover needs to be aware of this important development.

One of the most complex, if not the most complex, provisions of the Patient Protection and Affordable Care Act is the employer shared responsibility requirement (the so-called "employer mandate") and related reporting of health insurance coverage. Since passage of the Affordable Care Act in 2010, the Obama administration has twice delayed the employer mandate and reporting. The employer mandate and reporting will generally apply to applicable large employers (ALE) starting in 2015 and to mid-size employers starting in 2016. Employers with fewer than 50 employees, have never been required, and continue to be exempt, from the employer mandate and reporting.

When an IRS is conducting a detailed audit of a taxpayer, it may want to see documents and records retained by the taxpayer. The examiner will ask the taxpayer what type of documents are maintained, and will request that the taxpayer produce particular documents for inspection.

As an individual or business, it is your responsibility to be aware of and to meet your tax filing/reporting deadlines. This calendar summarizes important federal tax reporting and filing data for individuals, businesses and other taxpayers for the month of April 2014.


Welcome

At Gibbons & Kawash, A.C. our focus is responding to your needs and exceeding your expectations. We combine broad technical knowledge developed from years of experience with an entrepreneurial approach to problem-solving to help our clients meet all the challenges before them. An extensive library of accounting, auditing, and tax planning materials and the latest in state-of-the-art technology are valuable tools in our development of innovative solutions. But perhaps the most important element in our approach is the personalized service that enables us to develop and maintain an in-depth knowledge of your business. Our professionals take the time to listen and acquire a thorough understanding of your business needs.

Firm News

Winter 1Much Ado About Nothing? - New Financial Reporting Framework Draws Mixed Reaction

Last year, the AICPA released a new type of special purpose financial reporting framework. The organization's intent was to ease reporting for smaller, privately held, owner-managed companies that aren't required to follow Generally Accepted Accounting Principles (GAAP). But some observers have expressed reservations.     

 

Winter 2Succession Planning: Key Questions to Ask

Every business owner needs to consider how he or she can gracefully, efficiently and amicably exit his or her company. This article offers some key questions an owner might ask before creating and implementing a succession plan.

A History Of Service

In 1992, our firm was founded on a commitment to provide clients with the highest quality services and professional guidance. That commitment remains paramount, and is deeply rooted in every aspect of our practice. It is the reason Gibbons & Kawash has become one of the area's leading accounting and consulting firms.

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