Federal FSLG Compliance Self-Assessment

FSLG Compliance Self-Assessment
Form 14581 (Rev. 3-2015)
Form

14581

(March 2015)

Department of the Treasury - Internal Revenue Service

FSLG Compliance Self-Assessment

Introduction
This FSLG Compliance Self-Assessment Tool is a resource designed by the IRS office of Federal, State and Local Governments
(FSLG) for voluntary use by state and local government entities to conduct a self-assessment of their level of compliance with Federal
tax requirements.
Public employers have unique legal requirements for compliance with federal tax and social security laws. These employers need to be
aware of the rules that apply to them and their workers (both employees and independent contractors), especially those related to
federal income, social security, and Medicare taxes and public retirement system obligations.
The self-assessment tool is designed to help public employers identify areas that indicate potential compliance issues. It is intended to
be completed by the persons responsible for withholding and paying employment taxes in the organization.
At the beginning of each section, there is a brief description of the basic legal requirements that apply to public employers for that
category. In most cases, a brief description of the law is provided with links to IRS publications or other material that will provide more
complete information on the topic.
Note: This self-assessment tool is intended as a general guide to the most common tax issues that public employers may encounter,
and to direct those entities to additional information as necessary. It is not intended to provide legal advice. It does not cover every
question that may be encountered. The tool is provided for general information only and should not be relied upon as legal advice or a
determination by the IRS with respect to a particular tax situation. The sources cited should be reviewed for complete information.
Common Errors
FSLG conducts two types of activities to measure compliance with tax laws; compliance checks and examinations. An examination is
the systematic inspection of the books and records of a taxpayer for the purpose of making a determination of the correct tax liability. A
compliance check is a contact with the taxpayer that involves a review of filed information and tax returns of the entity. It is less
burdensome and can generally be accomplished in one or two contacts with the taxpayer. A compliance check serves as an opportunity
to educate the taxpayer and encourage compliance with regard to employment tax law and filing requirements.
From past compliance checks and examinations of public employers conducted by FSLG, a number of common errors have been
identified. Some of these are listed below.
• Totals shown on Forms 941 or Form 944 do not reconcile with totals on Forms W-2 and W-3, or between these forms and the
accounting records.
• Forms W-9 and W-4 are not being used or are not being updated when necessary.
• Failure to backup withhold on payments to vendors when required.
• Failure to correctly complete or file Forms 1099.
• Failure to apply accountable plan rules to reimbursements and allowances.
• Incorrect or missing employment tax deposits.
• Failure to follow electronic filing requirements.
• Treatment of certain groups of workers as independent contractors, rather than as employees.
• Failure to pay and withhold Medicare-only tax on rehired annuitants.
• Failure to include taxable noncash benefits in employee wages.
• Failure to correctly apply withholding rules to election workers and public officials.
For Assistance While Completing the Form:
The following federal tax information is accessible from the FSLG website at www.irs.gov/govt/fslg.
• FSLG Toolkit
• Publication 15, Employers Tax Guide
• Publication 15-A, Employer's Supplemental Tax Guide
• Publication 15-B, Employer's Guide to Fringe Benefits
• Publication 963, Federal-State Reference Guide
• Publication 1779, Independent Contractor or Employee
• Publication 5138, Quick Reference Guide for Public Employers
• Publication 5137, Fringe Benefit Guide
• Retirement Plans for Government Employer (IRS FSLG)
• Governmental Plans Information (IRS Employee Plans)
General social security information is available at the Social Security Administration website and more specific information pertinent to
government employers and employees is available at: http://www.ssa.gov/slge/.
The National Conference of State Social Security Administrators (NCSSSA) website includes contact information for the state
Social Security Administrators, who are responsible for maintaining and administering the states’ Section 218 Agreements and
Modifications with the Social Security Administration.

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Form 14581 (Rev. 3-2015)

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For Assistance and Further Information After Completing the Form:
An FSLG Specialist can help you interpret the results of the self-assessment and ensure that you know what, if any, steps you need to
take to be fully compliant with all applicable federal tax laws, rules and regulations. The names and contact information for FSLG staff
are available at local FSLG Contact Information.
The FSLG Specialist may recommend that you contact your State Social Security Administrator for clarifications and information about
a Section 218 Agreement or Modification, how to obtain Medicare-only coverage for Medicare-exempt employees or other similar
information. Each state has unique laws governing voluntary social security and Medicare coverage. Agreements for state and local
governments can be obtained through the NCSSSA. You may also contact SSA for additional information about coverage and benefits
under social security and Medicare.
FSLG offers a process by which a government employer can voluntarily disclose an identified error and solicit resolution via a walk-in
closing agreement. Employers interested in such a resolution may contact an FSLG Specialist or submit a detailed letter disclosing the
specific nature of the tax error, the employees affected and their proposed resolution. The letter should be submitted to the following
address:
Internal Revenue Service
T:GE:FSLG:CPM
1111 Constitution Avenue NW
Washington, DC 20224
ATTN: Closing Agreement Coordinator
Compliance Categories:
The self-assessment tool consists of the following seven categories.
1) Social Security (Section 218 Agreement and Mandatory Social Security)
2) Medicare
3) Retirement Plan Coverage
4) Worker Classification: Employee versus Independent Contractor
5) Fringe Benefits
6) International Issues
7) Other Tax Issues: Information Returns, Independent Contractor Vendors, Payments, Back-up Withholding, and Timely Filing of
Returns

Catalog Number 66247V

www.irs.gov

Form 14581 (Rev. 3-2015)

Form

14581

(March 2015)

Department of the Treasury - Internal Revenue Service

FSLG Compliance Self-Assessment

We suggest marking the boxes, as follows:
• OK – for items that either do not apply, or that apply but you believe that you are in compliance.
• Flag – the item applies but you are uncertain whether you are in compliance.
Ok

Flag Item Social Security
1.

Does the entity have a voluntary social security coverage agreement, often referred to as a
Section 218 Agreement or Modification to the State’s Section 218 Agreement?

Yes

No

If not, SKIP to question 4 in this section.
Note: If an entity is uncertain whether it is covered by a Section 218 Agreement or to obtain a copy of its Section
218 Agreement and any related modifications, contact the State Social Security Administrator at
http://www.ncsssa.org/statessadminmenu.html.
2.

Have there been any Modifications to the 218 Agreement or the original Modification that
provided Section 218 coverage for the entity?

Yes

No

It may be necessary to contact the State Social Security Administrator to answer this question. If “yes”, list all
Modification numbers, dates and a description of changes to the Section 218 Agreement made by each
Modification. If there have been no modifications, skip to Question 3.
List the Modifications:

Note: The State Social Security Administrators prepare Section 218 modifications to the states’ agreements to
include additional coverage groups, to correct errors in other modifications, to identify additional political
subdivisions joining a covered retirement system or to obtain Medicare coverage for public employees whose
employment relationship with a public employer has been continuous since March 31, 1986.
To learn more, contact the State Social Security Administrator for the state.
3.

If the entity has a Section 218 Agreement, are services performed by any employees
excluded from social security and Medicare coverage?

Yes

No

Note: Federal law requires the exclusion of the following services from voluntary (Section 218) coverage under the
Social Security Act (Section 218(c)(6)):
• Services performed by individuals hired to be relieved from unemployment.
• Services performed in a hospital, home or other institution by a patient or inmate thereof as an employee of a
state or local government.
• Services performed by an employee hired on a temporary basis in case of fire, storm, snow, earthquake, flood or
similar emergency.
• Services performed by a nonresident alien temporarily residing in the U.S., holding an F-1, J-1, M-1 or Q-1 visa,
when the services are performed to carry out the purpose for which the alien was admitted to the U.S.
• Covered transportation service as defined in SSA 210(k)
Note: Federal law allows for the optional exclusion of the following services from voluntary (Section 218) coverage
under the Social Security Act:
• Services in positions compensated solely by fees received directly from the public are subject to SECA (SelfEmployment Contributions Act) taxes.
• Services performed by a student enrolled and regularly attending classes at the school, college or university for
which they are working.
• Services performed by election officials or election workers paid less than the calendar year threshold amount
mandated by law.
• Services that would be excluded if performed for a private employer because they are not work defined as
employment under Section 210(a) of the Social Security Act.
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Form 14581 (Rev. 3-2015)

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Ok

Flag Item Social Security
Note: The categories of employees excluded from the Section 218 Agreement may still be subject to social security
and Medicare withholding under the Mandatory Social Security provisions if they do not participate in a retirement
plan that replaces social security.
List the categories of workers excluded from coverage under the Section 218 Agreement:

See IRS Publication 963, Federal-State Reference Guide, for more specific information on exclusions from Section
218 coverage.
4.

Is the entity subject to mandatory social security coverage?

Yes

No

Note: After July 1, 1991, full-time, part-time, temporary and seasonal employees who are not participating in a
qualifying retirement system made available through their employer must be covered by social security, pursuant to
§3121(b)(7)(F) of the Internal Revenue Code. The Code, however, exempts employees performing the following
services from mandatory social security and Medicare taxes.
• Services performed by individuals hired to be relieved from unemployment.
• Services performed in a hospital, home or other institution by a patient or inmate thereof as an employee of a
state or local government.
• Services performed by an employee hired on a temporary basis in case of fire, storm, snow, earthquake, flood or
similar emergency.
• Services performed by a nonresident alien temporarily residing in the U.S. holding an F-1, J-1, M-1 or Q-1 visa,
when the services are performed to carry out the purpose for which the alien was admitted to the U.S.
• Services in positions compensated solely by fees received directly from the public are subject to SECA (SelfEmployment Contributions Act), taxes, unless a Section 218 Agreement covers these services.
• Services performed by a student enrolled and regularly attending classes at the school, college or university for
which they are working, unless a section 218 Agreement covers these services. Refer to
http://www.socialsecurity.gov/slge/student_coverage_chart.htm for the student exclusions for each state.
• Services performed by election officials or election workers paid less than the calendar year threshold amount
mandated by law unless a section 218 Agreement covers election workers.
• Services that would be excluded if performed for a private employer because they are not work defined as
employment under Section 210(a) of the Social Security Act
See IRS Publication 963, Federal-State Reference Guide, for more specific information on exclusions from
mandatory social security coverage.
Notes

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Ok

Flag Item Medicare
1.

Are any employees exempt from Medicare under the Continuing Employment Exception?

Yes

No

Note: Almost all state and local government employees are covered by Medicare. All employees covered under a
section 218 Agreement are covered and employees covered by mandatory social security tax are also covered,
unless the employee meets the continuing employment exception, IRC §3121(u). The continuing employment
exception applies to an employee hired by a state or political subdivision employer before April 1, 1986, only if the
employee is a member of a public retirement system within the meaning of IRC §3121(b))7)(F) and meets ALL of
the following requirements:
• The employee was performing regular and substantial services for remuneration for the state or political
subdivision employer before April 1, 1986;
• The employee was a bona fide employee of that employer on March 31, 1986;
• The employment relationship with that employer was not entered into for purposes of avoiding the Medicare tax;
and
• The employment relationship with that employer been continuous since March 31, 1986.
The same services listed above under Social Security #4 that were excluded from mandatory social security tax are
also excluded from the Medicare tax. Contact the State Social Security Administrator with any questions pertaining
to the foregoing.
2.

Are there any employees from whom Medicare is not withheld, other than those who meet
the exceptions from employment listed above under “Social Security Tax”, Item number 3?

Yes

No

3.

Does the entity employ any rehired annuitants?

Yes

No

Note: A rehired annuitant is an individual who is rehired by his or her employer or another employer that
participates in the same retirement system as the former employer. This includes a former participant in a state
retirement system who has previously retired and who is either (1) receiving retirement benefits under the
retirement system or (2) has reached normal retirement age under the retirement system.
A. If “yes”, (the employer does have rehired annuitants), is social security tax withheld and paid
on those employees?

Yes

No

B. If “yes”, is Medicare tax withheld and paid on those employees?

Yes

No

Note: When an employee retires he or she has terminated employment for purposes of the continuing employment
exception. Thus, if that former employee is rehired, he or she will be subject to Medicare tax, even if the employee
was previously exempt on account of the continuing employment exception.
Notes

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Ok

Flag Item Retirement Plan Coverage
1.

Does the entity have a public retirement system that qualifies as a replacement for social
security coverage?

Yes

No

Note: A governmental retirement plan must meet certain minimum benefit or contribution standards to qualify as a
public retirement system, and thereby serve as a “replacement” plan exempting the participants from mandatory
Social Security coverage. These standards are based solely on meeting a minimum benefit level provided (defined
benefit plan) or a minimum amount contributed (defined contribution plan) to the participant.
Any person working for a public employer after July 1, 1991, who is not covered in a public retirement plan that
meets the requirements discussed above and, if applicable, the defined benefit system safe harbor rules of
Revenue Procedure 91-40, must be covered by social security and Medicare under the mandatory coverage
provisions of Section 210 of the Social Security Act.
For more information about public retirement systems (social security replacement plans), see Chapter 6 of the
Federal-State Reference Guide, Publication 963.
2.

Is the public retirement plan offered to all employees?

Yes

No

If not, specify categories of employees that are NOT covered. (specify all that apply)

Note: Employees in these categories must be covered for social security either under mandatory coverage or under
a Section 218 Agreement.
3.

Are the contributions to retirement plans subject to the applicable employment taxes?
A. 3121(b)(7)(F) Retirement Systems

Yes

No

Yes

No

• Employee deferrals are exempt from federal income tax withholding but are subject to social security and
Medicare taxes.
• Employer contributions are exempt from federal income tax withholding, social security, and Medicare taxes.
However, if the retirement system is not an “exempt governmental deferred compensation plan,” employer
contributions are subject to social security and Medicare withholding as of the later of when the services are
performed, or when there is no substantial risk of forfeiture.
Yes

B. 401(a) and 403(b) Plans

No

• Employee deferrals are exempt from federal Income tax withholding but are subject to social security and
Medicare taxes.
• Employer contributions are exempt from federal Income tax withholding, social security and Medicare taxes.
Yes

C. 457(b) Plans

No

• Employee deferrals are exempt from federal income tax withholding but are subject to social security and
Medicare taxes.
• Employer contributions are exempt from federal income tax withholding but are subject to social security and
Medicare taxes when no longer subject to substantial risk of forfeiture.
Notes

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Form 14581 (Rev. 3-2015)

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Ok

Flag Item Worker Classification
1.

Yes

Are all workers properly classified as either employees or as independent contractors?

No

Note: Under the common-law standards applied by the IRS, there are three categories of evidence (Behavioral
Control, Financial Control and Relationship of the parties) that should be considered to determine whether the
worker is an employee or independent contractor.
See Publication 963, Chapter 4, for information about worker classification.
Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax
Withholding, can be submitted to the IRS to obtain a determination on whether a particular worker is an
independent contractor or employee of the entity.
2.

Does the entity have any of the following categories of workers?

Yes

No

Yes

No

If yes, are they classified as employees?

A. Elected officials

Note: A public official has authority to exercise the power of the government and does so as an agent and
employee of the government. For this reason, the Supreme Court has held that public officials are employees. A
public official performs a governmental duty exercised pursuant to a public law. A public office is a position created
by law, holding a delegation of a portion of the sovereign powers of government to be exercised for the benefit of
the public.
Elected officials are subject to a degree of control that typically makes them employees under the common law.
Elected officials are responsible to the public, which has the power not to reelect them. Elected officials may also be
subject to recall by the public or a superior official. In any event, elected officials are employees for income tax
withholding purposes under Internal Revenue Code §3401(c). Examples of public officials include, but are not
limited to; governor, mayor, county commissioner, judge, justice of the peace, sheriff, constable, registrar of deeds,
building and plumbing inspectors.
Yes

B. Appointed officials

No

Note: Generally, few appointed officials have sufficient independence such that they will not be considered
common-law employees. See Publication 963.
Yes

C. Fee-based positions

No

Note: In general, if an individual performs services as an official of a governmental entity and the remuneration
received is paid from governmental funds, the official is an employee and the wages are subject to Federal
employment taxes.
3.

Do any employees also receive Form 1099-MISC, Miscellaneous Income, for services that
are substantially similar to the services reported as wages on Form W-2, Wage and Tax
Statement?

Yes

No

If yes, the amounts reported on Forms 1099-MISC should be reported as Form W-2 wages subject to applicable
employment taxes and not reported on Form 1099-MISC.
Notes

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Form 14581 (Rev. 3-2015)

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Ok

Flag Item Fringe Benefits – See Publication 15-B and Publication 5137, Fringe Benefit Guide
1.

Does the entity have an “accountable plan” for reimbursement of business expenses incurred
by employees?

Yes

No

Note: In general, reimbursements or advances for expenses paid by the employer on behalf of the employee are
taxable unless they are working condition fringe benefits and are ordinary and necessary employee business
expenses that would otherwise qualify for a deduction by the employee, and the reimbursements or advances are
made under an accountable plan. For payments to be considered to be made under an accountable plan, the
employee must:
a) Incur the expenses in the performance of work,
b) Substantiate the expenses within a reasonable period of time, and
c) Return any amounts in excess of expenses within a reasonable period of time.
If accountable plan rules are met, no tax reporting is necessary. If the rules are not met, the reimbursements or
advances are included in wages on Form W-2 and subject to the withholding and payment of employment taxes.
The employee may deduct expenses as miscellaneous itemized deductions on his or her Form 1040.
2.

Does the entity include the taxable amount of the following fringe benefits as wages when
applicable?
A. Personal use of a government-owned vehicle

Yes

No

Yes

No

Note: Unless it is excludable as a qualified non-personal use vehicle, the personal use of a government-owned
vehicle is a taxable fringe benefit. Personal use includes the value of commuting to and from work in a governmentowned vehicle, even if the vehicle is taken home for the convenience of the employer. The fair market value of the
fringe benefit must be included in wages and is subject to income and employment taxes. However, employee use
of a qualified non-personal use vehicle qualifies as a working condition fringe. You can exclude the value of that use
from employee income. A qualified non-personal use vehicle is any vehicle the employee is not likely to use more
than minimally for personal purposes because of its design.
The value of the use of the vehicle is determined using one of these methods.
1) General valuation rule: the fair market value of a fringe benefit is defined as the price a willing buyer would pay
to a willing seller in an arm’s-length transaction.
2) Alternate valuation rules: each of the following may be used under certain circumstances:
a. Lease value rule- Determines the benefit by determining the annual lease value of the vehicle.
b. Cents-per-mile rule- Personal use may be included in wages at a mileage rate (56.5 cents per mile for 2013)
c. Commuting rule – An amount of $1.50 per one way commute is a taxable fringe benefit.
Note: A detailed discussion of the valuation rules are included in Publication 15-B.
Yes

B. Clothing provided by the employer

No

Note: Clothing and uniforms provided by the employer are excluded from income if required by work and not
suitable for non-business use.
Yes

C. Group-Term Life Insurance

No

Note: The annual cost of $50,000 of group-term life insurance may be excludable from social security, Medicare,
and income tax for each employee. The table for determining the cost of additional insurance is included in
Publication 15-B.
The cost of group-term life insurance in excess of $50,000 is subject to social security and Medicare, but not to
income tax withholding.
D. Meals

Yes

No

Yes

No

Note: Meals may be excludable from income in the following cases:
• “De minimis” meals, for example, occasional group meals.
• Meals for the convenience of the employer, provided on the business premises
E. Lodging

Note: Excludable if for employer’s convenience as a condition of employment, if on the employer’s business
premises. Lodging costs may also be excludable if paid for or reimbursed as working condition fringe.
See Publication 15-B for information on lodging as a fringe benefit.
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Form 14581 (Rev. 3-2015)

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Ok

Flag Item Fringe Benefits – See Publication 15-B and Publication 5137, Fringe Benefit Guide
F. Educational Assistance

Yes

No

Yes

No

Yes

No

Note: May be excludable if qualifies:
• under educational assistance program (up to $5,250 per year).
• as a working condition fringe benefit.
For more information, see Publication 970, Tax Benefits for Education.
G. Achievement awards or length of service awards
Note: For more information, see Publication 535, Business Expenses.
H. Membership Fees Paid

Note: Excludable if for professional and business-related organizations and reasonable business purpose.
Use of athletic or recreation facilities, on employer premises (Includes the use of employer’s on-premise facilities to
conduct summer sports camps.)
Note: May be excludable if substantially all use is by employee, spouse or dependent children. Use of third-party
owned facilities is generally taxable.
For more information, see Publication 15-B.
I. Moving Expenses

Yes

No

Yes

No

Note: Exempt (up to limits) if expenses would be deductible if the employee had paid them.
These rules are further illustrated in Publication 521, Moving Expenses.
J. Gift Certificates

Note: Gift certificates that are cash equivalent are not excludable from income as de minimis fringe benefits.
Notes

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Form 14581 (Rev. 3-2015)

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Ok

Flag Item International
1.

Yes

Did the entity make payments of any item of income to a foreign person that is subject to
withholding?

No

If not, indicate “OK” and skip the International Issues section.
Note: Employees or independent contractors who are not U.S. citizens may be required to furnish their employer
with a Form I-9, Employment Eligibility Verification, Form W-4, Employee’s Withholding Allowance Certificate, or a
W-8 series form. P.O. Boxes from a foreign country are acceptable.
The Form W-8 series includes:
• W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding;
• W-8ECI, Certificate of Foreign Person’s Claim That Income Is Effectively Connected With the Conduct of a Trade
or Business in the United States;
• W-8EXPC, Certificate of Foreign Government or Other Foreign Organization for United States Tax Withholding;
and
• W-8IMY, Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United
States Tax Withholding
2.

Yes

Did the entity employ resident aliens?

No

If yes, were withholding income, social security and Medicare taxes followed in the same way as for U.S. citizens?

3.

Did the entity employ nonresident aliens?

Yes

No

Yes

No

If no, indicate “OK” and skip the rest of “International” and continue with “Other Issues” below
Note: For information on determining who is a nonresident or resident alien, see Publication 519.
A. Did any of the nonresident aliens holding an F-1, J-1, M-1 or Q-1 Visa provide
documentation, including copies of the Visa and Form I-9 with supporting documents to
support exemption from social security and Medicare taxes?

Note: If this documentation was not provided, social security and Medicare taxes should be withheld from the
wages paid to these nonresident aliens. However, a nonresident alien student may be eligible for the student FICA
exception under IRC §3121(b)(10).
B. Did any nonresident aliens have a visa status other than F-1, J-1, M-1 or Q-1?
If yes, were social security and Medicare taxes withheld as required?

Yes

No

Yes

No

Note: Nonresident aliens holding other visas, such as an H-1 or any secondary visa are subject to social security
and Medicare withholding.
C. Is federal income tax withheld as required?

Yes

No

Note: Nonresident aliens should compete a Form W-4, using Notice 1392 and Form 8233 to claim tax treaty
benefits The employer should include procedures for completing Form W-4 and use of Form 8233, Exemption From
Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien
Individual, to claim a treaty exemption. See Publication 15 for the rules for completing Form W-4 and claiming a tax
treaty exemption on Form 8233.
D. Do any nonresident aliens claim a treaty exemption using Form 8233?

Yes

No

If yes, were federal income taxes withheld using the current treaty provisions? See Publication 901 for treaty
information.
E. For nonresident aliens who did not claim a treaty exemption, were federal income taxes
withheld using the presumption rules described in Publication 515?

Yes

No

Note: If the nonresident alien did not claim a treaty exemption, Federal withholding taxes must be computed based
on the completed Form W-4 for the nonresident alien and also by following the steps outlined in Chapter 9 of
Publication 15.
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Ok

Flag Item International
4.

Yes

Does the entity have vendors or outside contractors that are nonresident aliens?

No

Note: Generally, withholding is required at 30% (or lower treaty rate) from the gross amount paid to a nonresident
alien. Use Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding, for payments to nonresident
aliens. Form 1042-S is required to be filed for such payments even when there was no tax withheld. For exceptions,
refer to the instructions for Form 1042-S.
5.

Are all payments to nonresident aliens, that were reported on Form 1042-S, also included on
the annual Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign
Persons, even if no tax was withheld?

Yes

No

Notes

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Form 14581 (Rev. 3-2015)

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Ok

Flag Item Other Tax Issues – See Publication 15
1.

Employment Tax Filing
A. Are all Forms 941 / 944 / 945 filed as required?

Yes

No

N/A

B. Are all Forms 941 / 944 / 945 filed by the date required?

Yes

No

N/A

C. Are all Forms 941 / 944 / 945 filed complete and accurate?

Yes

No

N/A

D. Do wage and withholding amounts for income, social security and Medicare
reconcile between Forms W-3, W-2, and 941?

Yes

No

N/A

Yes

No

N/A

A. Does the entity make payments to independent contractors?

Yes

No

B. Are Forms W-9, Request for Taxpayer Identification Number and Certification, secured from
vendors / contractors prior to initial payment?

Yes

No

Do the amounts reported on these forms also reconcile to the accounting records?
2.

Independent Contractor Reporting

Note: Form W-9, or its equivalent, should be secured from all vendors / contractors before any payments are made.
Use Form W-9, Request for Taxpayer Identification Number and Certification, to secure the owner's name (if sole
proprietor), legal business name, mailing address and taxpayer identification number.

3.

C. Are Forms W-9 on file for every vendor or independent contractor?

Yes

No

D. Are all Forms W-9 properly completed?

Yes

No

E. Are Forms 1099-MISC filed for all vendors / contractors (except for some legally exempt
ones) for payments aggregating $600 or more per year?

Yes

No

F. Does the entity file Form 1099-MISC for payments to individuals, partnerships, and certain
corporations?

Yes

No

G. Does the entity file Form 1099-MISC to attorney recipients (whether or not incorporated)?

Yes

No

H. Does the entity file Form 1099-MISC for medical and health care payments (including to
incorporated recipients)?

Yes

No

Yes

No

Backup Withholding
If applicable, did the entity withhold Federal income tax on miscellaneous income under
backup withholding provisions?

Note: Notice CP2100 is issued in situations where prior year information returns contained missing or incorrect
taxpayer identification numbers and name/identification number mismatches.
Backup withholding is required on reportable payments made to a U.S. person if:
1) the U.S. person has not provided its taxpayer identification number (TIN) in the manner required; or
2) The IRS notifies you that the TIN is incorrect. Generally, a TIN must be provided on Form W-9. A payer reports
backup withholding on Form 945.
For additional information on backup withholding, see Publication 1281, Backup Withholding for Missing and
Incorrect Name/TINs and Publication 15, beginning on page 9.
Notes

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Form 14581 (Rev. 3-2015)

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Ok

Flag Item Other Tax Issues – See Publication 15
4.

Does the entity have written policies in place for the following?
Yes

A. Employer-provided passenger automobiles?

No

Note: Two types of written policy statements relating to a vehicle provided by the employer qualify as sufficient
evidence corroborating the employer’s own statement, and therefore will satisfy the substantiation requirements if
initiated and kept by an employer to implement a policy of either:
1) No personal use – see the requirements of Regulation §1.274-6T(a)(2).
2) No personal use except for commuting – see the requirements of Regulation §1.274-6T(a)(3).
A written policy statement adopted by a governmental unit as to employee use of its vehicles (for example, a city
council resolution or a state law) meets these substantiation rules if the conditions in the above cited Regulations
are met.
Yes

B. Other listed property or reimbursement of travel expenses?

No

Note: It is not required that the employer have a separate written policy to meet the substantiation requirements for
these items. Adequate accounting for these items by employees means the submission to the employer of an
account book, diary, log, statement of expense, trip sheet, or similar record maintained by the employer in which the
required information as to each element of expenditure or use is recorded at or near the time of the expenditure or
use in a manner that conforms to the listed property requirements.
Yes

C. Educational assistance program?

No

Note: For benefits to be excludable, an educational assistance plan must be in writing and meet certain other tests.
See Publication 15-B.
5.

Is the entity required to file any of the following federal tax or information returns?
Note: All forms and instructions are available at http://www.irs.gov/Forms-&-Pubs.
A. Form 720, Quarterly Excise Tax Return

Yes

No

B. Form 990, Return of Organization Exempt from Income Tax

Yes

No

C. Form 990-T, Exempt Organization Business Income Tax Return

Yes

No

D. Form CT-1, Employer's Annual Railroad Retirement Tax Return

Yes

No

E. Form 1096, Annual Summary and Transmittal of U.S. Information Returns

Yes

No

F. Form 1098-E, Student Loan Interest Statement

Yes

No

G. Form 1098-T, Tuition Statement

Yes

No

H. Form 1099-G, Certain Government Payments

Yes

No

I. Form 1099-INT, Interest Income

Yes

No

J. Form 1099-MISC, Miscellaneous Income

Yes

No

K. Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans,
IRAs, Insurance Contracts, etc.

Yes

No

L. Form 8300, Cash Payments over $10,000 Received in Trade or Business

Yes

No

M. Form W-2, Wage and Tax Statement

Yes

No

N. Form W-3, Transmittal of Wage and Tax Statements

Yes

No

Notes

Catalog Number 66247V

www.irs.gov

Form 14581 (Rev. 3-2015)

Page 14
Ok

Flag Item Other Tax Issues – See Publication 15
6.

Form W-4, Employee's Withholding Allowance Certificate
A. Are Forms W-4 on file for every employee?

Yes

No

B. Are all Forms W-4 secured prior to initial payment?

Yes

No

C. Are all Forms W-4 properly completed?

Yes

No

D. Are new Forms W-4 secured each year from all individuals claiming to be exempt from
income tax withholding?

Yes

No

Notes

You have completed the FSLG Compliance Self-Assessment Tool. If you believe you have compliance issues based on your responses
above, you may wish to contact your local IRS Federal, State and Local Government (FSLG) Office for assistance.
Catalog Number 66247V

www.irs.gov

Form 14581 (Rev. 3-2015)