Over at my other blog home, Slate’s Bizbox Blog today, I wrote about Staying Up-To-Date on Your Retirement Plan. Not up-to-date in terms of your plan document as I’m doing in our EGTRRA Restatement Series, but up-to-date in terms of the timely deposit of payroll taxes and employees’ 401(k) contributions.
So an article by way of Dave Baker’s BenefitsLink provided some practical suggestions in dealing with this issue. Attorneys Kelsey N. H. Mayo and David L. Woodard of the North Carolina law firm, Poyner Spruill LLP write about Audit Risk Rising—What an Employer Can Do Before an Audit Happens.
While their article is about payroll taxes, they address the issue I mentioned in my Slate column about businesses outsourcing the payroll function. Here’s what they have to say about that:
In addition, if you are an employer that has outsourced its payroll functions to a third-party, it is important to remember that the employer remains liable to the IRS for any employment tax violations. To identify and prevent issues you should:
* Receive regular documentation from your payroll vendor that shows how payroll taxes are being determined and paid.
* Periodically reconcile statements received from your payroll vendor to ensure employment tax amounts are being calculated and submitted correctly.
They also point out that
Given these impending audits, it is also important to remember that other agencies and states, including North Carolina, routinely share information with the IRS, including information regarding tax avoidance schemes and questionable tax practices. This information sharing could lead to additional investigations from other agencies and the state.
One of those information sharing agencies, by the way, is the Department of Labor.