August 22, 2013 /24-7PressRelease/
-- If the government is accusing you of wrongdoing, it is normally up to them to prove it. Yet, under a new IRS initiative targeting small businesses, many taxpayers are seemingly being asked to prove their innocence. If you are one of these taxpayers, you may stand to benefit from contacting a tax lawyer
as soon as possible.
Tax agency suspects underreporting of cash receipts by many businesses
As of early August, the IRS has sent letters to 20,000 small businesses under a new initiative, and that number is expected to grow. In the letters, the agency states that "gross receipts may have been underreported."
What is going on? Starting in 2008, a change in the law permitted the IRS to gain more access to business records concerning credit- and debit-card transactions. By pooling data, the IRS looks at the percentage of transactions that are conducted via credit- or debit-card. The IRS has not said how, exactly, figures in the range it considers "normal" are calculated. But one thing is certain: those businesses who show a particularly high ratio of debit- and credit-card transactions compared to cash transactions are the ones being targeted with the letters.
The reasoning is that those businesses who reported unusually high credit and debit sales may not have fully reported cash sales in an effort to sidestep tax liability. The letters identify this perceived discrepancy, and ask taxpayers to please explain why their cash receipts seem relatively low by providing applicable documentation. The IRS insists the letters are not an audit, calling them instead a request for additional information.
Deal with the IRS, get in compliance with the help of an experienced tax attorney
It can be very difficult to prove a negative. How does a business owner prove he or she did not make more cash sales? No one can keep records of sales that did not occur, making the recent outpouring of IRS "information requests" particularly troublesome.
If your business has been targeted with one of these IRS notices, or if you think it soon might be, getting hands-on help
from an experienced tax attorney might be a good idea. In all tax matters, you have a right to present your side of the story, but on your own you might not have the resources or the legal knowledge to bring your tax controversy to an acceptable resolution.
Explore your legal options and get in touch with a tax lawyer today. An attorney can help you deal with the IRS and ensure that your business gets into full compliance.
Article provided by Robert J. Fedor, Esq., L.L.C.
Visit us at www.fedortax.com