Watch Your Step
Think the IRS is bluffing when it says it will crack down on small-business tax abuses? Think again.
If you're tempted to keep the IRS in the dark about income you've received from your business, think again. As part of its new auditing effort, the tax agency promises to crack down on small-business owners who flout the law. Focusing on certain areas of noncompliance, the IRS will take a closer look at abusive tax shelters, offshore credit card abuse, high-income nonfilers, and high-income taxpayers engaged in partnerships, trusts or S corporations. In addition, under the new National Research Program (NRP), the IRS will randomly select about 50,000 returns from 2001 for review.
To help with this effort, the Bush administration wants Congress to boost the agency's 2004 budget. Under President Bush's proposal, the IRS would receive an extra $133 million for this new program and other law enforcement work. With the extra funds, the agency says it can increase by one-third or more the number of audits of taxpayers who may be hiding income received from a business, partnership, investments or offshore accounts.
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