Recently the Treasury Department has issued proposals to close the “tax gap” and unfortunately the small business owner and sole proprietor are going to feel the blow. The proposal would include more paperwork to be filed, and possibly more audits of small businesses and the self-employed. Specifically the proposals require:
Businesses to file Form 1099 for payments of $600 or more to corporations that provide services,
Businesses to check the Taxpayer Identification Number of their contractors with the IRS and withhold taxes if the TIN is not verifiable,
Credit card companies to report their annual payments to small businesses and sole proprietors.
Meanwhile the IRS Taxpayer Advocate feels that audits targeted at specific groups would close the tax gap. The main groups focused for audits would be the small business/self-employed that are paid in cash. Audits focused on Schedule C filers are proposed to be on the rise in the future also according to USA Today.
It is important for a small business owner and/or self employed individual to have the right controls in place to ensure that you financial records are kept in compliance with IRS regulations. Look out “Main Street” businesses; it appears we will be used as the bridge to close the tax gap.
Keeping your Business N Synergy
Brian N. Stovall