SAF Wednesday E-Brief - 12/13/2006 (Plain Text Version)
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IRS Increases Number of Small-Business Audits
It's not your imagination: The Internal Revenue Service (IRS) is paying more attention to small-business owners, according to Commissioner Mark Everson, as reported by the Chicago Tribune. In a telephone news conference in late November, Everson explained that the IRS has increased audits of so-called S corporations by about a third, to almost 14,000. S corporations, generally, are small businesses in which profits "pass through" to the owners, who report them on their personal tax returns. The trend means that florists need to be even more aware of their financial processes, says Kevin Murray, CPA, a frequent contributor to Floral Management magazine. "They (the IRS) really in the last couple of years have increased the number of audits of S corporations substantially, because those are the ones who have the potential to take money out of the business in an undocumented manner," he says. Taxpayers who make more than $1 million also are being audited slightly more frequently, according to the story. Audits of those people rose from 12,835 to 17,015; however, since the number of millionaires is growing the change reflects only an increase from 6.1 percent to 6.3 percent. About 1 percent of all taxpayers face audits. Read about one florist who got audited -- and survived. --Mary Westbrook
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