Text Summary Of This Email
Potato chips for accountants, hair salon tips, and cave exploration in Cali.
This week, we talk hair salon tips, crunching potato chips, and cave exploring in California.
Did you know you're entered to win a free CPE course each week just by receiving this newsletter? Scroll to the end to see if you're this week's winner.
Welcome to Dear Western, where you ask the Western Experts questions regarding your firm, tough clients, or general (non-tax) things. All submissions are anonymous. To submit questions, send an email to .
I just had an initial meeting with an IRS auditor on behalf of my hair salon client. The client is under examination for payroll tips. The initial IDR only outlined preliminary questions - name of the POS system, payroll system, brief synopsis of how employees get paid and how tips are handled.
The stylists at the salon are all W-2 employees with a commission compensation. Tips are all received via cash. The salon does not allow even a tip line on a debit/credit card receipt. Every two weeks, employees submit their Form 4070, it's entered into payroll as cash tips to calculate and pay FICA/withholding.
My issue is that the audit keeps insisting the business should be filing a Form 8027 annually. But the instructions for this form clearly state that it is for food and beverage companies. When asked if he could show me where in the instructions my client would fall under this requirement, he basically told me that the instructions are outdated and we need to be filing it anyway.
The auditor is putting together an additional IDR for sales reports, but I don't really know what to expect here.
Response:
I would use your tax research engine to identify the most current information for the cosmetology industry. I identified the following publication that may be useful:
Pub. 4902. This publication lists all the tax forms that the business may be required to file. Form 8027 is not listed in that publication.
Form 8027: I researchedthe form instructions and related Pub. 1239, and both only refer to 1) "large Food and Beverage establishments" AND 2) employs 10 or more employees on any given day in the tax year - see the Form 8027 Worksheet to calculate number of employees.
I would print all related instructions and publications for use as support for not filing Form 8027 and present this information to the auditor as evidence of why the form is not required.
If the auditor continues to disregard the information provided, an appeal may be necessary.
- Mitch Abernethy, CPA
New Courses
New courses added this week:
Deep Dive into Revenue Recognition & Leasing by Kelen Camehl, CPA, MBA
Virginia Ethics for CPAs in Business 2024 by Joseph Helstrom, CPA
Accounting for Ship Owners by Steven M. Bragg, CPA
Via @thewesterncpe
Free Live Webinar:
On Wednesday, May 29 join us forReal Estate: Financial Freedom and the American Dream, a lively discussion about the tax
danger zones and opportunities associated with real estate investing. We'll be joined byYouTube starJJ the CPA, specialty tax incentive expert Brady Brayn and the team at BRAYN Consulting, and Amanda Jenson, a veteran realtor. Tune in and get 1 CPE credit for free.
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Wellness Corner
In moments of stress, practice mindfulness meditation to reduce stress and improve overall mental health. Studies show it can enhance cognitive function and emotional regulation.
Doctors are saying that incorporating yoga into your routine greatly improves your wellness. Yoga can improve flexibility,
strength, and mental well-being.
Research shows that we should engage in creative activities like painting, writing, or playing music to boost our
wellness. Creative expression can enhance emotional well-being and reduce stress, while also helping you develop a new skill to show off.
Via @ExcelHumor.xlsx
Western Course of the Week
This week, we are highlighting Audit Documentation Creating Workpapers That Pass Review taught by Jennifer Louis, CPA.
Proper documentation is the cornerstone of a high-quality audit. Enhance your audit practice by ensuring your documentation meets the highest standards, paving the way for more efficient audits.
Purchase this course by midnight on May 24th and receive 25% off by using coupon code WHYIAUDIT.
Conference Highlight: San Diego, CA
Get your CPE in paradise. Our San Diego conference is on Nov. 18th - 22nd, where you can soak up the sun year-round. This year features 14 courses, as well as three
specialized learning tracks, so you've got more variety than ever.
Some featured highlights:
Our conference is at the iconic San Diego Mission Bay Resort.
Visit the world-famous San Diego Zoo for a day of animal spotting and exploration.
Take a short drive to the beach town of La Jolla and check out Sunny Jim's Sea Cave.
Experience art and history at the numerous museums in historic Balboa Park.
If youre interested in attending this conference, make sure to reserve your room now, because this hotel is filling up quickly.
Western Newsroom Recap
This week, we learned that:
The IRS has added to their new site to include a plain language explanation on claiming the employer-provided childcare credit.
To read more about tax and accounting news from our Western CPE experts, check out our blog.
Coupon Clippings:
Early Bird pricing for our CPE conferences offers up to a 35% discount.
Western Giveaway:
This weeks free CPE course winner is: Steve Keen. Steve, to claim your free course, please respond to this email, and our Customer Experience team will make sure its added to your account.
Want to win a free 1 CPE credit course? Theres only one thing you need to do: read The Memo each week. Every Friday, well announce the winner here.This weeks free course is: The 15% Global Min Tax and US Tax Credits by Alex Parker. Check back next week to find out if youre a winner.
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