The IRS puts Small Business under the microscope (again)
The concern, according to an article posted on Financial-planning.com, is widespread noncompliance with employment tax rules.
The IRS has designed a new form for filing employment taxes that should make it easier to spot inappropriate transactions and questionable payroll tax reporting.
Potential targets on the audit list include:
- Dividends are not subject to payroll taxes, so the IRS will be on the look out for low salaries and high dividend payments to owners. Keep it real by paying yourself a salary that reasonably reflects the contribution of work you do for the company
- Talk about your red flags! If you are not filing any employment taxes at all, the IRS is looking for you. There are also cases where employers withhold the tax from employee paychecks but fail to remit the payments to the IRS.
- Cash payments disguised qualified health care reimbursements is at the top of the list.
The word is out- be prepared to face new challenges from our friends at the IRS in the coming year.