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Watch Your Step Think the IRS is bluffing when it says it will crack down on small-business tax abuses? Think again.

By Joan Szabo

Opinions expressed by Entrepreneur contributors are their own.

If you're tempted to keep the IRS in the dark about incomeyou've received from your business, think again. As part of itsnew auditing effort, the tax agency promises to crack down onsmall-business owners who flout the law. Focusing on certain areasof noncompliance, the IRS will take a closer look at abusive taxshelters, offshore credit card abuse, high-income nonfilers, andhigh-income taxpayers engaged in partnerships, trusts or Scorporations. In addition, under the new National Research Program(NRP), the IRS will randomly select about 50,000 returns from 2001for review.

To help with this effort, the Bush administration wants Congressto boost the agency's 2004 budget. Under President Bush'sproposal, the IRS would receive an extra $133 million for this newprogram and other law enforcement work. With the extra funds, theagency says it can increase by one-third or more the number ofaudits of taxpayers who may be hiding income received from abusiness, partnership, investments or offshore accounts.

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