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Our client has a proposed assessment for $76,140.
We did as you suggested and the project was time and data intensive.
Employer had 500+ employees, most part time, but about 10% of the workforce was full time, and lots of turnover. Payroll was every two weeks, so most pay periods spanned two months and of course there was also overtime and neither January 01 or December 31 ended or began with a pay period, so the W-3 didn’t match and none of the 1095s matched.
I was going a little nuts with my spreadsheets trying to normalize the data when I decided to scrap the W-3 and 1095s altogether and focus on the data set. I created Jan-Dec in columns with a space between each column. If a pay period touched a month I counted it, and then above each month I had a row for BEFORE and AFTER and I’d count how many days in the pay period were either before or after the month being tallied. Then it became a matter of averaging the hours in the pay periods occurring before and after, calculating the after in the column before and after each month, and then doing math under each month to arrive at the total hours per employee in each month.
Knowing how to do VLOOKUP and SUMIF formulas will make your life easier and make certain you use employee SSN or employee numbers as a unique lookup variable, we tried using last 4 of SSN and got some screwey totals because there were duplicate last 4 SSNs.
When finished we calculated the penalty figure to be $20,400, so we saved the client $55,740.
Our fee for the work was $8,050 and I have about 25 hours in this work and my hourly rate is $350, so next project like I’ll probably bump up my fee to $9,000 and will consider factoring in $20 per employee or 15% of the penalty amount.
Things I learned from doing this project:
1. IRS will give you a 60 days extension 1 time just for asking.
2. The IRS people in the 4980H response unit were very helpful, polite and cooperative, this experience was nothing like dealing with collections.
3. I doubt very much IRS is going to want the data set. Meaning, I think IRS will take your word for it. Based upon my discussion with the IRS, i go the impression the department is way behind, and backlogged with work, and they are just happy to have Taxpayer’s who actually respond.
4. Give yourself a solid week to wade through the data and to make sense of it.
5. If you don’t know your way around excel with intermediate skills, you may not want to take this on.
6. Allow enough time before the deadline to get the balance of your fee. We took a $4,000 retainer, and the balance $4,050 due when the work is finished. We ran out of time and submitted the work to IRS before the check arrived, now I’m waiting on the post office to see if my client really mailed the check on Tuesday. The good news is that this project is not done, IRS still has to approve our work and resend the penalty notice which the client has to agree to, so the Client will still need our help to wrap this up.
I don’t see a way to post a copy of the package I submitted, but if Eric is interested, I can send him a redacted copy of the package I submitted to IRS to post for the group.