Receiving an audit notice from the Internal Revenue Service (IRS) is stressful. Though the percentage of overall audits is low, the actual number of returns audited by the IRS has increased in recent years. To close the $450 billion tax gap, for 2013 the IRS is increasing its scrutiny of several types of taxpayers, including small businesses, partnerships, and pass-through entities.
Small businesses: According to the IRS, small businesses are responsible for over 80% of the $450 billion tax gap. Small businesses that take a tax deduction for employee perks, especially the personal use of company vehicles, will receive higher scrutiny. The IRS will also closely check the a business’ eligibility requirements for the small business health insurance credit.
Partnerships: Partnerships that claim large losses will catch the eye of the IRS. Potential limits on partnership losses include at-risk limitations and the passive activity limitations.
S Corporations: Like a partnership, the S Corporation is a pass-through entity. One area the IRS is targeting is S Corporation distributions. The IRS is also looking for companies who use the S Corporation structure to not pay Social Security taxes.
Givner & Kaye focuses on sophisticated income tax planning and compliance, tax litigation and procedure, estate planning, and asset protection plans for individuals and businesses in Beverly Hills, Calabasas, West Los Angeles, Hollywood, and other areas of Los Angeles, Orange, Ventura, San Bernardino, Riverside and Santa Barbara Counties. Call Los Angeles Estate Planning and Asset Protection Plan Attorneys Givner & Kaye at (310) 207-8008 today.