Employee Benefit Plan Audits

The category of travel expenses is one of the most common type of business deduction and also one of the most confusing.  Travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession, or job. You cannot deduct expenses that are lavish or extravagant or that are for personal purposes.

There are generally two reasons an employee/business owner may incur travel expenses.  Traveling away from home because your duties require you to be away from...

Recognizing that many employers were unaware of their responsibility to file an annual return for various types of retirement and welfare employee benefit programs, the Department of Labor (DOL) created the Delinquent Filer Voluntary Compliance Program (DFVCP) in 1995.  DFVCP allows an employer who has not filed required Form 5500s to file all required Form 5500s for a particular program at one time, and pay a reduced one-time penalty.  The penalty amount will vary depending on the number of...

There are several new accounting pronouncements as well as significant proposed changes for 2013 and beyond.  There are also some “hot topics” in the areas of auditing and reporting that you should consider.

Fair Value Disclosures

Financial Accounting Standards, issued by the FASB, now require nonpublic companies to make some additional disclosures for calendar 2012, principally in the form of a discussion of the valuation process and certain quantitative details involving Level 3 investments....

If your company has a benefit plan such as a 401(k) with 100 or more eligible participants, each year you are required to have an audit performed on that plan that is filed with the IRS and the Department of Labor (DOL). Failing to do so could mean major penalties for your business.

What often happens is that a company gets to that 100 employee mark and it is not aware of the requirement.  A few weeks before the deadline, the company that is preparing the required Form 5500 for all benefits plans...

This issue of Tax Advisory Insights includes the following articles:

• What Are Your Chances of Being Audited?
• Are You Filing All of the Form 5500s That You Need to be Filing?
• Nonprofits Face Harsh Consequences for Noncompliance
• Managing Energy Expenses

What Are Your Chances of Being Audited?

By Galina Velcheva, CPA, MT

Earlier this year the IRS issued its annual data book, which provides statistical data on its fiscal year (FY) 2011 activities. The data book provides valuable information about how many...

There are several areas of an employee benefit plan where employees or plan sponsors have the ability to commit fraud.  The following are key areas where an employer should focus when reviewing their plan.

Contributions

Contributions are one of the most susceptible areas of the employee benefit plan.  The payroll clerk or HR manager could have the ability to divert more deferrals or another employee's deferrals into their own account.  Additionally, the plan sponsor may not be remitting the...

This month's Special Delivery e-newsletter includes:

• IRS Issues New Tax Blueprint for Buildings
• Tax Angles to Vacation Home Rentals
• Should You Rush Into Crowdfunding?
• Employee Benefit Plan Audit Update

IRS Issues New Tax Blueprint for Buildings

The IRS recently issued lengthy and complex temporary regulations relating to business repairs and capital improvements. These new regulations cover expenses paid to acquire, produce or improve tangible property. They are generally effective for tax years...

Due to the new regulations under 408(b)(2), plan sponsors/fiduciaries are required to provide written disclosures with their service providers that are in line with the new regulations by July 1, 2012 for any services where fees of $1,000 or greater are charged. 

If the written disclosures are not in place than the fees paid to these service providers will be considered prohibited transactions under the plan and are required to be disclosed in the supplemental schedules of the plan’s audited...

Most medical practices are aware of the HIPAA and HITECH requirements that affect their organizations, and the fines that they face if they are not compliant in the ways they handle patient health information (PHI).

What a lot of professionals don’t know is that a recent addition to the HIPAA and HITECH regulations holds business associates, (i.e. other professionals from other companies who have access to patient health information) just as responsible for sensitive patient data privacy and...

The Internal Revenue Service (IRS) has been increasing its audit activity in the qualified plan area.  The IRS recently indicated that it had audited approximately 10,000 qualified plans in 2011 (an 18% increase from 2007, the last year for which data is available), as well as conducting 4,500 “compliance checks,” new program which includes a lower level of review than an audit.  Additionally, the IRS has created a new program (Employee Plans Team Audit) which targets plans that have in excess...

This month's Not-for-Profit Update includes:

• Predicting the Impact of Changing Tax Treatment of Charitable Contributions
• Payroll Audit Updates                
• The Age of Nonprofit Mergers is Upon Us
• The Case of Exempt Organizations in the Tax Reform Debate
• New District of Columbia Nonprofit Corporation Act
• Executive Compensation: Did We Do All The Right Things?
• The IRS Issues Guidance on Tax Treatment of Cell Phones and Provides Recordkeeping Belief 
• More Changes and Debate Over the FASB's Proposed...

This month's Special Delivery e-newsletter includes:

• Payroll Tax Cut Extension
• IRS Reverses 1099-K Reporting Rule
• New Strategic Marketing Website and E-Book Available
• Take Tax Credit When They Are Due
• Locking in Deductions for Mortgage Interest
• How to Reduce Employee Turnover
• Ohio Construction Reform is here
• IRS Issues Guidance on Work Credit for Hiring Veterans
• Join the 123 College Facebook

Payroll Tax Cut Extension
 
Although not signed into legislation just yet, the Senate and the House have both...

In the past week I’ve received three articles from colleagues related to benefit plan sponsors receiving fines.  The majority of these articles seem focused on fiduciaries not taking responsibility over plan operations or the lack of documentation of fiduciaries’ consideration when making decisions that affect the plan.  So, I thought I’d take a moment to summarize some of the requirements shown on the Department of Labor (DOL) website in relation to fiduciary responsibility.  Please remember,...

Captive insurance companies are often owned by a large sophisticated financial entity, because there are minimum net worth and other regulatory requirements.  In many cases, the regulatory authority will accept a letter of credit in lieu of an actual cash investment for the initial capital requirements of the captive.  This results in “GAAP exception” financial reporting but is perfectly acceptable to the regulator.

Normally, single sponsor captives are wholly-owned subsidiaries and are included...

If you have been working a long time, you may be looking forward to retirement in the not-so-distant future. Hopefully, you will be in good health at that time and able to pursue your favorite activities.

But the “golden years” may be tarnished if you are not careful. Here are five common mistakes that can hinder your ability to retire comfortably and securely.

1. You are overburdened with debt. Owing money is not necessarily fatal to a happy retirement. But credit card debt with high interest...

Increased transparency is the trend in the world of financial reporting, and this trend is clearly reflected in the new Accounting Standards Update (ASU) for companies that participate in multiemployer defined benefit pension plans. The Financial Accounting Standards Board (FASB) recently completed redeliberations on the standard that becomes effective for public companies later this year. The FASB’s September 2010 Exposure Draft on multiemployer defined benefit pension plans generated...

What a year it has been. In 2011 we have witnessed devastation caused by a wide variety of natural disasters, ranging from tornadoes to floods to wildfires. Although it is a small consolation if your home or other property is damaged as a result, at least you may be able to deduct a casualty loss on your tax return.

Basic rules: You may qualify for a casualty loss deduction if damage is caused by an event that is “sudden, unexpected or unusual.” This not only includes natural disasters already...

Have you put together your 2012 marketing plan? There is still time.

The Coming Year

Moody’s, Goldman Sachs, the Economist and other sources point to 2012 as another year of stagnate growth for the U.S. economy. Most of these sources point to less than 2% growth in GDP. As you know, anything can happen but it appears to be another tough year to grow your business. You need to plan for more of the same and hope for better. 

Part of this planning should include developing your marketing programs and...

The issue of whether a worker should be treated as an employee or an independent contractor has been an area of significant IRS interest for decades. The IRS has the ability to assess significant employer penalties for failure to withhold employment and income taxes on a worker who should have been treated as an employee.

If an employer is faced with this issue upon an IRS examination, the IRS will typically offer to settle the penalties at a discounted rate under Internal Revenue Code (IRC)...