In its continuing quest to collect more taxes, the IRS is targeting small business. For the past several years, individuals instead of being audited by a live human being, are being audited by computer and unresponsive mail audits. In order to get more money, the IRS is expanding this secret surveillance to audit small businesses. By using the Robo audits, the IRS can attack more small businesses, and attempt to collect more money.
The way this works is the IRS uses many of its matching computer information documents. For example, if you are retaurant and tips are put on credit card receipts, the IRS will track those tips, determine an average percentage and apply that as additional wages to your employees. This way they can collect more taxes from the employer in the form of 941 employment taxes, and they can also go after the employee to collect more income tax.
The problem with these audits is that there is no educated human being to speak to concerning the issues. Typically the IRS proposes an absurdly large amount of tax due by disallowing many of the proper deductions taken by the business and inflating the gross receipts. It sends a bill to the taxpayer and the taxpayer has a short period of time, 90 days, to file its case in US Tax Court. If not, the taxpayer is stuck having to try to come up with this huge amount of tax and infighting and expensive battle in the US Court of Federal Claims.
Because this just appears to be a letter and not a real audit, many business people will be fooled into not retaining tax professionals, especially tax attorneys and CPAs to help them fight these audits.They will suffer.
First government has drones in the sky keeping track of us, now they have drones doing the auditing and keeping track of all business transactions. I sure feel secure!