IRS Gives Out Badges & Trust Us, You Don’t Want One
How does the IRS determine who gets flagged for potential tax fraud activity? The agency judges taxpayer actions against a list of over 60 “badges” or indications of fraud ranging from misrepresenting expenses and deductions to lying, bribery and concealment. Of course, badges are usually given out for a job well done. Receiving an IRS […]
What Is Reasonable Compensation?
Business owners and shareholders have some leeway on their compensation structures, to a point. The IRS has long held a standard called “reasonable compensation” that it uses to determine if, like Goldilocks, you got it just right. The trick to acing reasonable compensation, however, involves the same inherent challenge as many other IRS rules: it’s […]
Crypto Tax Investigations Ramp Up
The IRS claims its Criminal Investigation (CI) division can trace any crypto transaction and has used those capabilities to double crypto seizures. Among those cases, about half are tax related. Things started to heat up in 2022 when the IRS announced it was building “hundreds” of cases. For the first time, the IRS began using […]
Refuting Criminal Intent in Business Fraud Cases
Criminal intent can make or break a business fraud case. Yes, intent can be hard to prove, but it’s also difficult to refute when every arrow seems to point to one person, often the business owner. The case surrounding Theranos Founder Elizabeth Holmes is an example. “Holmes was found guilty on some charges but not […]
IRS Can Peek at Certain Bank Accounts Without Notice
The U.S. Supreme Court has unanimously ruled that the IRS can, without notice, review the bank accounts of third parties associated with delinquent taxpayers. The decision was part of Polselli v. Internal Revenue Service, a case involving an underpayment of more than $2 million in federal taxes over several years. After failed attempts to receive […]
Alternative Cost Method Updated with Easier Tax Advantages
The IRS recently updated the optional rules for real estate developers to determine when common improvement costs may be included in the cost of individual units held for sale. It’s known as the Alternative Cost Method (ACM), and it was modified with Revenue Procedure 2023-9, effective for taxable years beginning after December 31, 2022. The […]
Petitioning the IRS, Beyoncé Style
You have the right to disagree with the IRS, and superstar performer and business mogul Beyoncé Knowles-Carter is serving up some high-profile proof. Knowles-Carter is contesting nearly $2.7 million in IRS taxes and penalties that were recently accessed by the IRS. The Notice of Deficiency claims she still owes $805,850.00 for 2018 and $1,442,747.00 for […]
Inflation and Your Small Business
The U.S. Chamber of Commerce reports that one in three small business owners consider inflation their top concern right now. Inflation worries have driven small business optimism about the future to record lows, adds the National Federation of Independent Business. In response, 67% have raised prices, 41% have decreased staff, and 39% have taken out […]
Business Structure Myths Vs. Facts
Whether you’re new to entrepreneurship or you’ve been in business for years with a full staff and profitable company behind you, the need to evaluate (or re-evaluate) your business structure regularly will never disappear. The two main reasons: taxes and liabilities (sometimes the two go hand-in-hand). Many businesses start as sole proprietorships because the structure […]
Uncle Sam Just Scored a Mysterious $7B Tax Gift
LinkedIn: Only a handful of known billionaires could be responsible, but there are no obvious suspects. Was it tax planning at its worst or its most brilliant? In one single day this past February, the U.S. Treasury recorded a deposit of $7 billion in the category of estate and gift taxes, the highest collection of […]