What Business Owners Can Do To Prepare For Biden’s 2021 $80 billion plan to beef up IRS audits
- President Joe Biden wants to boost IRS funding by $80 billion over the next decade to fight tax evasion from wealthy Americans and corporations.
- The measure would beef up IRS staffing and improve technology, bringing in an estimated $700 billion in revenue over 10 years.
- There may be an uptick in small business tax audits, and financial experts offer tips to avoid trouble.
With the IRS planning to hire more specialized auditors to begin strengthening its enforcement efforts by February 2021, SRG Advisors offers the following tips to safeguard your business interests and help avoid an audit:
- Keep clear records: Accurately and honestly reporting all income, deductions, credits, expenses, and other figures can help keep an audit at bay. Making sure you have adequate documentation to support the figures reported on your business’ information return will make your individual tax return less likely to have errors or be audited.
- Mind your deductions: Unusual itemized deductions raise red flags for auditors, especially now that most taxpayers only claim the standard deduction. If your small business is driving you to seek unique deductions or report business losses, enlist the help of a certified public accountant (CPA) to guide you, because reporting losses for three years or more could increase your risk of an examination into whether you’re actually in business.
- Make your estimated tax payments: If you anticipate owing more than $500 in taxes for your business entity throughout the year, you should be making quarterly estimated tax payments. Failing to make these payments raises your risk of an audit and/or penalties.
- Go digital: Today’s bookkeeping software utilizes tools to keep your records accurate and secure, which helps your CPA electronically prepare and file your tax returns—the best method for preventing the filing of erroneous returns that might trigger an audit.
- Read up on the rules: Since many small businesses are formed as partnerships, it’s important to determine if yours is subject to the Centralized Partnership Audit Regime introduced by the Bipartisan Budget Act of 2015, which dramatically changed IRS partnership audit procedures.
Given the complexities of recent tax law and audit procedure changes, enlisting the help of an expert might be your best business decision this year. A CPA is strategically positioned to help small business owners prepare for what’s ahead.
If the thought of speaking with an IRS auditor makes you feel uneasy, seek the advice of a CPA.
While hiring an accountant will cost money, it will free you of the burden of dealing with all of the paperwork requests. Furthermore, specialists are familiar with tax legislation and auditors.
We are here to help at SRG Advisors. CPAs Jay Guttmann, Leon Schenker, and Milton Rosenblatt are experienced professionals who strive to help businesses operate more efficiently and confidently. Our firm, SRG Advisors, LLC, provides accounting and tax services to many businesses in Hackensack, Teaneck, Fort Lee, Paramus, and the surrounding communities.
Schedule a call with us at 201-525-1222 or email us at
There are many significant and complex tax deductions and credits for businesses in all industries. However, many businesses and their accountants are unaware of these savings and the tax returns are never given appropriate attention or a second look. Contact SRG Advisors today to have a highly trained and dedicated member of our team review your returns!!!