Daily Tax Update - April 9, 2010

IRS RELEASES NRP EXAMINATION TRAINING MATERIALS: Thursday, April 8, 2010, the IRS released certain training materials used for the National Research Program (NRP) Employment Tax Reporting Compliance Study. The NRP audits will involve 6,000 randomly selected taxpayers in the small business, large business, and tax-exempt and government sectors, with 2000 taxpayers being selected each year for a three year period beginning in 2010. The audits are being conducted for research purposes and are intended to assess the tax gap caused by worker classification issues. 

  • The scope of the 2010 audits includes any and all identified tax issues on all four quarters of the 2008 tax year. The overall depth of the examinations is the same as is used in operational examinations.
  • Three issues are required to be addressed in every audit:
    • 1099 Filing Checks, which includes worker classification,
    • Back-up Withholding, and
    • Executive and Non-Executive Fringe Benefits.
  • The examiners are directed to expand the audit as necessary to examine all issues that impact the NRP Employment Tax year. This may include expanding the audit to executive compensation, including compliance with sections 162(m) and 409A, prior and subsequent open years, and related entities.
  • For additional information, contact Catherine Wilkinson - cwilkinson@steptoe.com, Anne Moran - amoran@steptoe.com, Don Wellington - dwellington@steptoe.com, or Ellen Kohn - ekohn@steptoe.com.
  • The NRP training guide can be accessed here.

As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein.

Steptoe & Johnson LLP has one of the largest and most diverse law firm tax practices in the country. The practice covers the entire spectrum of federal taxation, including representation of businesses before the Congress, Treasury and the national office of the IRS; transactional planning for domestic and multinational corporations; complex audit and controversy work for corporations and other business interests contesting IRS adjustments; litigation before the Tax Court, Court of Federal Claims, district courts, courts of appeals and the Supreme Court. The firm's tax practice also encompasses all aspects of employee benefits (ERISA), executive compensation, tax-exempt organizations and charitable giving. Steptoe has an extensive state and local tax practice, representing an array of business clients on complex sales and use tax, corporate income tax and property tax matters, both advising those clients and handling audits, administrative appeals, and litigation for them. Read more information on Steptoe's tax practice.