IRS to begin audit sweep on employment taxes
The article discusses a major IRS audit of thousands of businesses set to begin in mid-February. The audit will focus on employment-related taxes in an attempt to close a $20 billion annual gap in revenue from underreporting and non-payment. The undertaking will cover 6,000 randomly selected businesses over the course of three years with those found in violation potentially facing additional taxes, penalties and interest.
Mr. Packman indicated that this was the first employment-focused audit by the IRS since 1984. The agency is expected to comb through employee classification changes and take a close look at business owner compensation to ensure they are in compliance with government regulations.
"They're running every expense available through the company: vacations, cell phones, whatever they use in their daily lives," said Mr. Packman. "It comes down to reasonable compensation. A family vacation has nothing to do with business."