The Internal Revenue Service (IRS) says it’ll finally launch its National Research Program (NRP) in February — three months after it was originally scheduled to begin.

The NPR is an intense audit process, where examiners will go line-by-line through tax returns to gather info on the impact of employment tax noncompliance on the tax gap.

How many employers will be hit? Nearly 2,000 will be randomly selected for audits each of the next three years, according to the IRS.

Should your company be one of the unlucky ones chosen for an audit, here are some of the typical targets you’ll have to provide records for:

• fringe benefits
• company officers’ compensation
• expense reimbursements, and
• worker classification.

The IRS just announced it will launch a major employment tax audit initiative.

It’s planning 6,000 random audits in the next three years, starting this November.

3 areas to check

As for which bases you want covered, there are three specific targets the IRS has identified:

• employee fringe benefits
• executive pay, and
• independent contractor classifications.

You still have a few months before the audits begin.

Now’s the time to make sure your company is not only in compliance, but has the proper paper trail to support all decisions.

It couldn’t hurt to perform a “mock audit” of these areas to see if your company’s vulnerable.

That can save you from having to open your wallet too wide if the IRS does pay you a visit.

IRS proposes a crackdown on existing laws that classify employer-issued cellphones as a taxable benefit. The taxes may also apply to text messages on mobile devices, e-mails on company-issued laptops and wireless cards.

Legally, employers are expected to keep detailed records of calls made by employees, in order to show how much of the use is personal and how much is business related. Few companies keep such records for phone calls, and almost none have records to classify text messages or mobile e-mails. 

There is also a chance the existing rules could be eliminated rather than enforced. A Senate bill sponsored by  John Kerry (D-Mass.) and John Ensign (R-Nev.) would eliminate the requirement.

IRS has said it is trying to simplify the record-keeping requirement of the law to make it easier for employers to comply. The agency is seeking public comment until Sept. 4.  IRS has suggested three options:

•  Allowing employers to classify 75% of work cellphone use as work-related while paying taxes on the remaining 25 percent%.
•  Requiring employees to provide proof that they have a personal cellphone to use during work hours, and not taxing the work-issued cell phone.
• Letting employers use an IRS-generated statistical sampling to determine the average workers’ personal use of cellphones, and paying taxes on the average. 

Some HR managers hear the term “temp worker” and immediately think “low-ambition slacker.” Think again. Hiring temps has become cool – and rewarding for employers.

Consider: Since 1990, the number of temporary workers in the United States has doubled. And the U.S. Dept. of Labor projects that by 2012 the number will grow by another 50%.

OK, so maybe you’re saying, “Sure, maybe we can use temps to fill low-level leftover jobs that our permanent people don’t want.” Maybe, but that’s not what other employers are doing.

3 good reasons

In fact, the temp market is brimming with high-skill workers in fields like IT, and companies are scooping up those workers, for at least three good reasons:

1. Temps can transform your workforce and your business into lean, quick-reacting machine. They come in, they do the job and they leave. There’s little or no downside.

2. You can use them as try-outs for permanent positions. Some will like the way you operate, and you’ll like some of them. That gives you an instant talent pool to draw from.

3. A lot of them are Baby Boomers. Not that Boomers are better, necessarily, but many are mature, experienced workers who’ve left the daily grind and are looking to catch on as temps. Often, they don’t want a lot of fancy, expensive fringe benefits. They want to do the job well and get a paycheck. Not a bad deal for you or them.

Does your CFO hate the idea of paying the fees required to hire good temps? You might mention all the costs associated with hiring permanent employees, and the pain involved when business hits a slow spot and you’re forced to go to layoffs.

All in all, it looks like the temp trend is one no employer can afford to ignore.