Audits of Cash Businesses
The accurate reporting of income and expenses by cash intensive businesses has been the subject of various studies by the Service, as well as General Accounting Office (GAO). The GAO estimates that the individual income tax “gap” is in the hundreds of billions of dollars. The IRS view of the common themes of these studies is that there has been, for those taxpayers with the ability to determine their own reported income, an increasing underreporting of income. Of particular interest are businesses and individuals who receive most of their income in cash.
Cash transactions are anonymous, leaving no trail to connect the purchaser to the seller, which may lead some individuals to believe that cash receipts can be unreported and escape detection. This has become an increased area of focus by the IRS, and has put pressure on the IRS to be creative in ways of calculating the amount of income from indirect sources. This two-hour CPE webinar with Eric Green will provide an in-depth review of the current IRS focus, including which industries have seen the most activity and the techniques being employed by the IRS examiners.