Nicholas Hartney, E.A.©

Taxpayers call them audits; the Internal Revenue Service prefers the term, examinations.  But whatever word you use, there is no mistaking that it describes one of life’s most dreaded experiences-the government probing into your financial affairs to find a way to extract more taxes from you.  Congress has granted the IRS wide powers to examine your finances, even allowing them to question other people about your financial affairs to determine if you are being truthful. In recent years, due to budget cuts which has led to fewer IRS personnel, the number of audits dropped 16% in 2017, which is the sixth year in a row for fewer audits according to the  IRS . So if you are one of the unfortunate 0.84% of individual taxpayers that have been audited the past year (do not feel bad, the chances are closer to 50% that each one of us will be audited at some point in our lifetimes) you need to start building your defense as over 80% of the people who are audited end up owi...

In an effort to avoid paying workers compensation, FICA, Medicare and Unemployment taxes, many of my clients misclassify their workers as independent contractors and end up being audited and forced to pay back taxes on their employees as well as hefty penalties and interest.   This forces many small businesses out of business.  When deciding if a worker should be classifed as an employee or independent contractor the IRS looks at 20 factors, as follows (if the questions are answered in the affirmative then the worker is an employee and not an independent contractor): Whether the party for whom a worker is performing services has the right to instruct the worker concerning the details of how the work is performed. Whether the employer provides training for the worker. Whether the worker's services are integrated into the employer's operation. Whether the worker must personally render the services. Whether the employer hires, supervises, and pays any  workers w...