First Tip to Help Avoid an Audit:

Tax Forms

The IRS continues to have several watch areas for compliance through 2013.  Small businesses are going to be a major focus this year.  This includes corporations, partnerships and sole proprietors.   While you never know when you may be selected for an IRS Tax Audit, these tips will help you understand what the IRS will be focusing on through the 2013 tax season.

Stay tuned for several areas the IRS will be focusing on.

Audit watch area number one “Fringe Benefits”:

Fringe Benefits

  • Personal use of company cars. Employers are not reporting employees’ personal use of company vehicles on Forms 1099 or W2. Most employer/owners also do not keep a detailed mileage log either. Look for the IRS to investigate the use of all company cars, especially luxury autos, in its audits. The IRS will also look at mileage reimbursement deductions.
  • Personal use of cell phones that are paid for by the employer is another hot topic this year.  Our firm recently assisted a business client with an IRS audit and the auditor inquired about this very topic.  Due to the nature of this particular business and our explanation of how the cell phones were used, the auditor ultimately passed on the item.