Maybe you should.
An IRS audit is a major fear for many small business owners, including ECPs — and for pretty good reason.
Some experts say small businesses are too often chosen for audits that they have to spend precious time and money addressing. Forbes contributor Dean Zerbe points out that a recent U.S. House of Representatives Small Business Committee hearing on the issue was called “IRS Puts Small Businesses Through Audit Wringer.”
Audits tend to arise from IRS algorithms that estimate how likely a given taxpayer is to have income that’s not being reported, says Donald T. Williamson, a professor of taxation at the Kogod School of Business at American University. He submitted testimony to the House committee, and his comments were quoted by Small Business Trends.
“Employing this calculus, the IRS has concluded that small businesses are less likely to be paying their fair share of taxes relative to much larger enterprises, a surprising conclusion in light of frequent press reports of multi-national corporations allocating billions of dollars of profits to no or low tax jurisdictions to avoid U.S. income taxation,” Williamson continues.
Getting their taxes right, and dealing with the IRS when problems come up, takes a toll on small businesses. Williamson says U.S. small business owners spend $16 billion a year on accountants, attorneys and other professionals to deal with their taxes.
He is calling for the government to make its audit process for small businesses less complex, Small Business Trends reports.