No one wants to be audited. That’s why we’ve decided to let all of you out there learn whom or what the IRS has declared “targets” of their audit ‘sting”. We wrote about in our last two posts, how the IRS continually analyzes compliance levels for businesses and individuals. This is actually in part by conducting compliance audits of taxpayers.. Leading up to the start of the government’s fiscal year on Oct. 1, the IRS has announced emerging or significant areas that it will prioritize for the coming year.
Third target area for IRS tax audits:
Form 1099-K matching. The IRS announced that it will start Form 1099-K matching in late 2013. The 1099-K reports income for payments processed through merchant accounts (credit cards). Now the IRS knows about this income, and if the taxpayer doesn’t file an income tax return for that year, the agency will look for that return, and trouble can ensue.
The IRS provided a reprieve from merchant card reporting on business returns for 2011 Schedule C and Forms 1065, 1120S and 1120; however, the IRS plans to change its approach after 2012 returns are filed.
The IRS has indicated that it plans to pilot a business-matching program that can address a large amount of small business noncompliance.
Look out for our next five posts for the remaining audit areas!!