New Target for IRS Audits

The IRS is gearing up for the next onslaught of audit attacks. This time they’re after Sole Proprietorships aka Schedule C filers. Remember if you have a Single Member LLC and have NOT elected how to be taxed for your business, you’re going to default right into the Sole Proprietorship category.

Based on the number of auditors moved over to this task force, you can figure that about 1 in 3 Sole Proprietorships is going to get tagged for audit. If you have a Sole Proprietorship now or an LLC that is taxed as one, change it!

3 Responses to “New Target for IRS Audits”

Information on avoiding an IRS Audit | Information Center says:

January 20, 2009 at 10:16 am

[...] all of your records for seven years though so you have proof of your claims on your tax returns. New Target for IRS Audits The IRS is gearing up for the next onslaught of audit attacks. This time they’re after Sole [...]
April Best says:

March 16, 2011 at 4:27 am

I am in the process of opening an LLC to be an independent contractor RN with the intentions of only hiring IC, if at all. I realy plan on only working myself, just at a higher rate then if I actually worked for the company. How do I “not elected how to be taxed for your business” as the article states. I am in the middle of filing for the name and have not gotten the EIN yet. I want to avoid what it is you are referring to and not get caught up in the IC drama.
Diane Kennedy says:

July 7, 2011 at 10:50 pm

April, sorry that I didn’t catch this comment until now. If you don’t make an election for your LLC, you are a Sole Proprietorship and that’s where the issue is. You can instead elect for your LLC to be taxed as an S Corporation (most likely the best choice for you) or as a C Corporation. If you bring on another partner, you’re automatically a partnership unless you elect to go the corp route.