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STRATEGIC
ISSUES...ONLINE
For week
of April 25, 2005, Issue
#209
Featured Articles:
1. Are You Complying
with Payroll
Recordkeeping
Requirements?
2. Focus on Fraud:
Lapping
3. Tech Tip Weekly:
Opening Windows in
Different Sheets
1. Are You Complying
with Payroll
Recordkeeping
Requirements?
Employers can minimize
their compliance and
audit risks by meeting
the recordkeeping
requirements of the
Internal Revenue Code
(IRC). The IRC requires
all employers that
withhold and pay federal
income, social security,
and Medicare taxes to
maintain certain records
for each employee.
Failing to meet these
recordkeeping
requirements can mean
big penalties, not to
mention large settlement
awards, should you be
unable to provide the
required information
when requested by IRS or
in an employment-related
lawsuit.
Income, Social
Security, and Medicare
Taxes
These are the records
that employers must keep
for at least four years
after the due date of
the employee's personal
income tax return
(generally, April 15)
for the year in which
the payment was made:
-The Employer
Identification Number (EIN).
-Employee name, address,
occupation, and social
security number.
-Total amount and date
of each payment of
compensation and any
amount withheld for
taxes or otherwise.
This should include
reported tips and the
fair market value of
non-cash payments.
-Amount of compensation
subject to withholding
for federal income,
social security, and
Medicare taxes, and the
amount withheld for each
tax.
-Pay period covered by
each payment of
compensation.
-The reason(s) why the
total compensation and
the taxable amount for
each tax are different,
if that is the case.
-Employee's Form W-4,
Employee's
Withholding Allowance
Certificate.
-Beginning and ending
dates of the employee's
employment.
-Statements provided by
the employee reporting
tips received.
-Information regarding
wage continuation
payments made to the
employee by an employer
or third party under an
accident or health plan,
including the beginning
and ending dates of the
period of absence from
work and the amount and
weekly rate of each
payment (including
payments made by third
parties), as well as
copies of the employee's
Form W-4S, Request
for Federal Income Tax
Withholding From Sick
Pay.
-Fringe benefits
provided to the employee
and any required
substantiation.
-Requests from an
employee to use the
cumulative method of
wage withholding.
-Adjustments or
settlements of taxes.
-Copies of returns filed
(on paper or by magnetic
medical), including
forms 941, 943, W-3,
6559, Copy A of Form
W-2, and any Forms W-2
sent to employees but
returned as
undeliverable.
-Amounts and dates of
tax deposits.
Unemployment Tax
Employers subject to the
Federal Unemployment Tax
Act (FUTA) must also
keep records to
substantiate the
following for at least
four years after the due
date of Form 940 (or
940-EZ) or the date the
required FUTA tax was
paid, whichever is
later:
-The total amount of
employee compensation
paid during the calendar
year.
-The amount of
compensation subject to
FUTA tax.
-State unemployment
contributions made, with
separate totals for
amounts paid by the
employer and amounts
withheld from employees'
wages (currently,
Alaska, New Jersey, and
Pennsylvania require
employee contributions).
-All information shown
on Form 940.
-The reason why total
compensation and the
taxable amounts are
different, if that is
the case.
2. Focus on Fraud:
Lapping
One common way to
conceal the skimming of
receivables is by
lapping incoming
payments. For example,
an employee steals
Customer As payment, and
then applies Customer Bs
payment to as account to
cover the loss. When
Customer C makes a
payment, it is applied
to Bs account, and so
on.
There are many
relatively easy ways for
a business
owner/management to
detect lapping schemes
such as by enforcing
mandatory vacations or
rotating job
assignments.
Contact us for a fraud
risk assessment for your
business.
3. Tech Tip
Weekly: Opening Windows
in Different Sheets
In MS Excel, the biggest
problem with keeping
your spreadsheet data on
different worksheets
rather than keeping it
all together on the same
sheet is being able to
compare the information
on the different sheets.
When you use a single
worksheet, you can split
the workbook window into
horizontal or vertical
panes and then scroll
different sections on
the sheet into view.
The only way to do this
when the spreadsheet
data are located on
different worksheets is
to open a second window
on a second worksheet
and then arrange the
windows with the
different worksheets so
that data from desired
regions are both
displayed on the
screen. The easiest way
to do this is to use MS
Excel's new Compare Side
by Side command to tile
the windows one above
the other and
automatically
synchronize the
scrolling between them.
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