austin3515

Well clearly you set the bar very high for mere "adequacy." I only hope your clients are able to live up to such high expectations.

"You know, businesses have to retain documents for ALL kinds of purposes. If they don't/can't, well, frankly, maybe they shouldn't be in business.... " Are you referring to Fortune 500 companies? Businesses with 1,000 employees? Perhaps that's why it seems like we're on two different planets. I don't think it is even remotely fair to tell a very successful CPA (with 5 or 6 employees) that he should not be in business because he cannot find 20 pieces of paper stapled together that is over a decade old. [i should confess I was exaggerating about my tax returns; I have them all for quite a few years, most certainly the one I filed 3 months ago, and I have taken to scanning everything in and saving pdfs, which I have for the last 3 years].

Do you seriously think that more than half of plan sponsors could produce a document more than 10 years old? I don't know where I put my 1040 from 2013!! Does this not smack of "looking for trouble where you know you'll find it just for the sake of causing trouble (and yes "profits")? Picking the low hanging fruit, or fishing in a goldfish bowl with a friggin net?

$5,000 and $10,000 for not having a GUST document that was 12 years old??? The humanity!

IF he has to cough up $3,000 (plus attorneys fees) for not finding a document that is 12 years old, I will be advising that he calls his senator!!

yes, but what will happen? Will they cuff the client and drag him away? Send him a letter saying he was a bad boy but do better in the future? Fine him $25,000?? I'm willing to concede that he should have kept the documents

My real question is that now they are asking for it, we don't have it, so what will happen? I have heard of them digging for this stuff before for no apparent reason. About 10 years ago some asked me for a TRA 86 amendment. Believe me, the audit was squeaky clean. Nothing at all came up. This was an afterthought.

What's done is done, and I can't say I blame them for purging it. And we're talking about a small medical practice here... It was a PT document, and the plan has been restate a few times including for EGTRRA. But we did not apply for a Determination letter (which apparently the IRS thinks is ok since they banned the practice).

They just asked for it out of the blue. Audit went fine and then on review the "manager" said "wait a minute, this has been to easy for this law abiding tax paying citizen - we need to make them fear the big bad IRS." That's my theory anyway, I don't have any proof...

We don't have it (it was 3 providers ago and they purge data after 7 years, and this has been 10!!). What do you think they will do? Anyone been in this situation before?

You did not provide enough information. We need to know at the individual level what the "other owners" own of each entity. It would not take much for a CG considering Joe's substantial ownership in both. And then of course beware of the Affiliated Service Group rules.

I thought of that too, but then thought "the people who benefitted from the immediate eligibility would be kicked out" but now that you mention it, as long as they have $5,000 of comp in their first year they would be ok. And then I guess you would say the next year go to 2 years and the same would apply. So it should only take 2 years in most cases, assuming people earn at least $5,000 in their first year. Do I have it right?

Is it possible to elect the "2 year eligibility" provision but waive eligibility for active employees as of the effective date? I assume no, but please confirm.

Am I all alone here? Is no one else of the opinion that the consensus is clear that a $400 a month auto allowance requiring no documentation is a taxable fringe benefit??

I see the point regarding making the document explicit. But the bigger issue is that excluding car allowances as a taxable fringe benefit is happening all across the country. So unless you agree that the standard 414s fringe exclusion covers this, your talking about putting this "special language" into every document.

I really like this logic a lot especially for such a small amount. Just make sure you code the payment as exempt from FICA because the ee already paid the FICA (as did the employer).

I suppose if you reversed the argument and indicated that a visiting nurse was going to be paid $25,000 a year and a $25,000 car allowance and then exclude taxable fringe benefits (which I think includes the allowance) then clearly that would be ridiculous. I was not referring to sham auto allowance policies, but rather the real ones. But it doesn't impact how much Uncle Sam gets - we're not suggesting that the allowance isn't taxable - it is taxable as wages, so I'm not sure how the rouse you've outlined benefits the practice? And you haven't explained why the IRM I've sited has no value?

There is the question as to whether or not that definition would be a 414s safe harbor, for starters.

I choose to look no further because my clients do NOT want to give contributions based on an auto allowance. That would after-all be a clear case of double dipping. For me, the IRM sited is quite enough. This is unequivocally an Auto Allowance. There's no need to get any fancier than that in my humble opinion.

In what way would a car allowance not be considered part of the term "other expense allowances"? See IRM 4.23.5.12 (11-03-2009). http://www.irs.gov/irm/part4/irm_04-023-005r-cont01.html It specifically lists Auto Allowances on the list of taxable fringe benefits. It's actually at the very top of the list which can only be because it is the most quintessential fringe benefit that there is! (or perhaps it is just alphabetical ) 4.23.5.12 (11-03-2009) Fringe Benefits A fringe benefit is any cash, property, or service that an employee receives in addition to regular taxable wages. IRC 61 states that, except as otherwise provided, gross income means all income from whatever source derived, including but not limited to, compensation for services including fees, commissions, fringe benefits, and similar items. Consequently, a fringe benefit provided by an employer to an employee is presumed to be income to the employee unless it is specifically excluded from gross income by another section of the Code. See Treas. Regs.1.61-21(a). Publication 15–B, Employer's Tax Guide to Fringe Benefits, may be used for quick research on the treatment of certain fringe benefits. However, the Code, regulations, revenue rulings, and court decisions are the authority for any proposed issues. The following non-exhaustive list provides examples of fringe benefits: Automobile allowances

All I'm saying is maybe there is enough wiggle room under EPCRS. If it was me, I would look.

I don't like 2 at all because you know it's wrong (which is different than a client's honest mistake). 1 is obviously a nightmare but is also to me obviously the right thing to do. Maybe 3 is to issue them 1099's for the 401k? If you wanted to be really practical you could issue a 2014 1099 and then the exposure is only that it was taxed in the wrong year. Not sure how much money or how many people but if both are small option 3 would be looking a little bit better to me... Option 4 might be to retroactively amend under EPCRS to change the effective date of the Plan to 7/1. I think you might be able to do this under SCP. You should check that out. You can definitely do this to retroactively change the entry dates on a uniform basis and this is very very close to the same thing.

I agree taxable fringe benefit/expense allowance for sure, so if you excluded those in your doc (which I believe is your reference to 414s above) then it should be excluded. FYI, the key here is that it is a car allowance under a non-accountable plan. That is $350 a month to cover all expenses without the need to submit mileage records, etc. If it was an accountable plan, and the employer is reimbursing the employee based on mileage logs (x cents per mile) then it would always be excluded because it is NOT income regardless of the definition chosen in your document.

I disagree that "everyone in their own group" is definitely determinable. It is the definition of indefinite. It is physically impossible to give one contribution to the left half of Johnny and another to his right half. Therefore, the document is essentially say there is no rhyme or reason here and we can do whatever we want. I of course agree that it needs to be clear cut and not gray. This client has assured me that everyone works 40 hours a week except for two people who work 6 hours a day. But there are no gray areas. So I defined full-time in my document (even before I read your notes ) To be anyone who works more than 35 hours a week and Part-Timers is everyone else (so I left myself a nice buffer). And if one more person (including TAG!) tells me I have to make sure I pass coverage and nondiscrimination I might scream (not that you would hear me of course ).

I cannot understand what you are basing this on. I think it is widely accepted that "definitely determinable" is a joke in the wake of the IRS's blessing of "everyone is in their own group." The definitely determinable criteria has been reduced to the Plan Administrator arbitrarily coming up with a list of who gets what. And since they have blessed these documents with absolutely no limitations, it seems hard for them to raise "definitely determinable" as an issue.