IRS Intensifies Oversight on Employee Stock Ownership Plan Compliance
The Internal Revenue Service (IRS) is intensifying its focus on compliance issues related to Employee Stock Ownership Plans (ESOPs). These retirement plans allow employees to own a share of their company’s stock. Amidst rising concerns, the IRS revealed it discovered various compliance problems with ESOPs, some of which can be considered prohibited transactions. Key concerns include the inappropriate valuation of employee stock, prohibited allocation to disqualified individuals, and a failure to abide by tax rules for ESOP loans.
The IRS has taken this step to ensure that firms sponsoring ESOPs adhere to tax regulations. IRS Commissioner, Danny Werfel, emphasized the IRS’s commitment to address complex or dubious transactions involving ESOPs. They particularly highlighted schemes where companies establish a “management” S corporation, fully owned by an ESOP, primarily to divert taxable income, which the IRS deems potentially abusive.
Over the next year, the IRS plans to utilize various compliance tools, including heightened audits, to tackle these issues. The public is also urged to report any inappropriate tax schemes or dubious return preparations.
In a recent policy change, the IRS declared it will cease most unexpected agent visits to taxpayers’ homes, aiming to reduce potential dangers to both taxpayers and agents. Instead, the IRS will contact taxpayers to schedule meetings. The agency also warned of a new tax scam involving misleading mailings that falsely promise unclaimed tax refunds.
Furthermore, the IRS releases an annual list, the “Dirty Dozen,” highlighting prevalent tax scams targeting individuals and tax professionals. They advise taxpayers to be vigilant and verify the authenticity of any communications they receive, emphasizing that the IRS predominantly communicates through regular mail.
theepochtimes.com
IRS Launches Tax Crackdown Targeting Employee Stock Option Plans
The Internal Revenue Service (IRS) said is taking "swift and aggressive action" targeting compliance issues related to Employee ...
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Chips Great, just what we needed: more IRS audits…
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