A saw a note in the paper that the IRS is going to conduct 5000 S-Corp audits for 2003. This is a special program to see how people are using S- Corps to avoid taxes.
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Article on audit
NFIB Calls IRS Audit Plan a Small-Business Hunt
Release Date: 07/ 26/ 2005
CONTACT: Michelle Dimarob, (202) 554-9000
WASHINGTON, D.C. — Dan Danner, executive vice president of the National Federation of Independent Business, the nation’s largest small-business advocacy group, issued the following statement in response to an announcement that the Internal Revenue Service plans to audit 5,000 U.S. small businesses for tax compliance purposes.
“The notion that the IRS is embarking on the hunt of small business merely as a way to learn more about how small businesses are adhering to tax compliance requirements, is like heading off to the zoo in search of a safari.
“Small-business owners are creating jobs, growing our economy and moving America forward all across the nation. They already have a job – running their businesses. The last thing they should have to be concerned with is the IRS putting a target on their back. The IRS’ actions are likely to reap little more than another set of hoops that small businesses must jump through in the regulatory jungle of the federal government.”
Editor’s note: According to NFIB small-business owners, federal taxes on business ranked fifth out of 75 problems facing small-business owners (2004 NFIB Problems and Priorities). About 75 percent of small-business owners file taxes as individuals, for example as S corp owners, partners or sole proprietors. -
S-Corp
You know there is something coming when they reopen the Northeast Georgia office that had been closed for several years. It is fully staffed with auditors.Comment
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S corp audits
Originally posted by Gene V
Dear Dan,
Talk about missing the point. Do you know anything about the S corp tax issue?
It has nothing to do with the jobs small businesses create. It has nothing to do with IRS wanting to learn more about S corporations. It has nothing to do with wanting to create more regulatory hurdles for small businesses to jump through.
Earth To Dan….
The IRS is going after S corporations to see if business owners are evading FICA taxes by not paying a reasonable salary to themselves on the W-2.
We tax pros have been talking about and warning our S corp clients for years this was coming. Now reality check has finally arrived. Don’t go getting in a huff over this. This is long overdue justice for the people who think they can get away with paying themselves below minimum wage to save on FICA.Comment
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All part of Treasury Dept Project 2005-30-080
The above referenced project was issued May, 2005. Mainly to show abuse of single owner S Corps on the payroll tax issue. A by product of the Department of Treas research was to show that the IRS was not capable of reviewing the S Corp returns. The number of S corps increased by about a million from 1998-2003 the number examined has decreased from around 25,000 to 10,000 in 2003. The Tres Dept wanted to make legislation sound like the only answer to the problem showing that the IRS does not have the ability to cover the issue. You have got to read it-claims billions are lost and wants to close single stockholder S corps (includes husband and wife) to be taxed for payroll taxes the same as a 1040 Schedule C..
IRS is now reacting to the poor audit coverage figures included in the report.Comment
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I also read somewhere earlier this year that the K-1's from the S-Corps are not being reported on the 1040's.
They are just now beginning the matching programs for that.You have the right to remain silent. Anything you say will be misquoted, then used against you.Comment
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Matching
Tried matching in '01 and gave up. For us with 6198's involved with S corps our shareholders got some scary notices. I thought the past tax season they were going to try again.....Comment
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