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April 07, 2005

IRS Targeting Small Businesses

Financial-Planning.com is reporting that the IRS is targeting small businesses for noncompliance with employment tax rules. The IRS is hoping that the new simplified form for filing employment taxes (introduced in February) will make it easier to spot questionable reporting.

Specific areas that the IRS is targeting include unreasonably low salaries to a C Corp.'s employed shareholders allowing those shareholders can take advantage of the lower dividend tax rate (i.e. taking compensation in the form of dividends), nonfilers (i.e. withholding payroll taxes from employees but not remitting the money to the IRS) and fringe benefit abuses.

Posted by Nick Infusino at 01:56 PM in Small Businesses | Permalink

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