As a job-creating small business, what can you expect from the IRS?

A love letter, that inquires if your business is underreporting cash.  This initiative is aimed at boosting federal receipts and ensuring compliance. The IRS sees underreporting of cash as a “wide spread problem” with small businesses. In 2008, new laws gave the IRS broader access to merchant credit/debit card transactions. The IRS compares the merchant…

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Other than Right Wing Tea Party groups, who else is the IRS targeting for examination?

The usual suspects, including the wealthy, the self-employed, those with offshore accounts, those with complex investment and business transactions, and those with anomalous returns. Still, few audits are random. The primary method for selection is the IRS’ “Discriminant Information Function” (DIF). The DIF scores tax returns and the higher the score the more likely an…

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The IRS recently initiated an employment tax audit of my business. My accounting department informed me that some of my workers may have been improperly classified as independent contractors. What can I do to limit my exposure?

Consider the Classification Settlement Program (CSP), under which the Internal Revenue Service must offer your company a settlement that includes a significantly reduced liability if your company meets the established criteria, including the consistent issuance of Forms 1099 each year to the class or classes of workers at issue. If there was a reasonable basis for treating the workers at…

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