Tax time warning: Be careful this year
TurboTax software shown on a personal computer screen.
Paul Sakuma/AP
The "kinder and gentler" IRS that came out of the restructuring the agency over a decade ago may be about to pass. From a commentary by Robert Teuber in the Wisconsin Law Journal:
"Most veteran IRS agents, particularly in the collection division, will tell you that the 1998 Restructuring Act emasculated the IRS and was perceived to have stripped its agents of both their power and autonomy. At the time, it was said that a kinder, gentler IRS emerged.
"The trend is now a return to the type of behaviors that preceded the restructuring. Do not misunderstand me -- I am not suggesting that the IRS is acting inappropriately. But I will say that agents have overcome the fear of acting aggressively and the sense of impotence that existed in the years following the Restructuring Act."
Entrepreneurs need to vigilant when it comes to tax compliance, as the flood of new agents has business owners in their cross-hairs.
One area that is getting close attention is the status of independent contractors. Over the years the IRS has tightened up their definition of employee versus independent contractor. Now they going to do 6,000 audits over the next three years specifically looking at this issue.
There are twenty triggers that can lead the IRS to disallow independent contractor status. Here is a link to the IRS website definitions. Do not take chances with this issue. If you have any doubts, check with your CPA.
This is not the only targeted area for audits that will impact entrepreneurs. Small business owners will definitely be under the IRS microscope for several years to come.
Add/view comments on this post.
------------------------------
The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link above.