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Is the IRS getting more aggressive? And YES, we’ll do a little impeachment debrief!
Jan 22, 2020 @ 6:00 pm - 7:00 pm PST
Remember when Democrats warned SCOTUS justices that they needed to side with them or else? No partisanship there, right? There is no compromise with them. It’s their way or the highway.
Guest, Dan Pilla of TaxHelpOnline.com answers listener questions.
Has the IRS become more aggressive over the last few years? Face-to-face audits have dropped. But they’ve revamped audits to do exponentially MORE “mail order audits”. If you owe the IRS money, they have become systematically more aggressive. They believe businesses are hiding income and are targeting them.
Small businesses make up the backbone of the economy. They are the main target.
The IRS doesn’t have to prove you did it wrong. You have to prove you did it correctly.
How long does the IRS have to audit you? They have 3 years from the day the tax is filed to open an audit. There’s only 2 exceptions. If they can prove that you omitted at least 25% of your gross income they can reopen back to 6 years. There is no statute of limitations if they can prove civil fraud.
Dan recommends you keep your records for 6 years from the date you filed. After that, keep copies of the returns indefinitely and you can discard the backup.
#1 source of tax fraud is the Earned Income Tax Credit. A significant number of those returns are fraudulent. This is why the lower income tax returns get audited at a higher rate. EITC is a refund.
Small business mistakes: Keeping proper mileage logs is the single largest mistake that small businesses make.
New book .. Dan Pilla’s Small Business Tax Guide.