Election season or not, you can always depend on politicians to talk about how important small businesses are to the economy. Ironically, it's these same politicians who often pass legislation that makes it harder and more costly to do business. In New York, for example, businesses are scrambling to comply with the Wage Theft Prevention Act (for more on this insane burden on businesses see this recent article). But what I am about to tell you is despicable because it is hurting small businesses without passing a single law. And it isn't getting media attention either.
Over the past four months, several CPAs have told me (without mentioning names) about their clients going through tax audits. Now tax audits are nothing new and they should have the legitimate purpose of finding omissions, mistakes or fraud by taxpayers; however, these CPAs have told me auditors are not just looking for fraud and mistakes. They are looking for revenue. That revenue will come in the form of fees paid by honest taxpayers who have already paid all taxes that are due.
I am a former CPA and had the experience of assisting some of my clients through the audit process in the early-to-mid-90s. Sure, I saw plenty of auditors that made our lives miserable because they didn't know accounting or tax laws (which resulted in more professional fees for my client while we educated the auditor). I remember only one instance when an auditor hinted that they were looking for a particular dollar amount in the form of taxes, interest and penalties to make the case go away. Auditors know that the process of being audited costs the taxpayers fees from accountants and sometimes attorneys. And they know that ultimately, a taxpayer has to make a decision by weighing a tax assessment against the cost of professional fees, time and aggravation.
The CPAs I spoke with tell me that this is now the norm and it is much worse than it was several years ago. And, I am told, this is not just an IRS issue. The state tax auditors (with New York mentioned in particular), I am told, are equally as abusive.
What does this surge in incidents really mean? These are not just rogue auditors on a power trip. They are being told to shake down taxpayers to generate revenue. My feeling is they are being told to do so by the same people who are always citing the virtues of small business. Big businesses have internal "tax controversies" specialists who can fight unjustified assessments. Small businesses often have no choice but to pay as the cost of fighting, together with the uncertainty of the outcome, is prohibitive. To government, small businesses are an easy target for revenue because of the cost of fighting back.
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It is nearly impossible for an individual to fight against corrupt and powerful forces. But don't be fooled into too much bipartisanship and divided opposition among the many hot topic headliners of today. We may not agree which political candidate to choose, nor agree which measures are best -- this is really what is dividing our numbers today -- our strength in numbers are diminishing quickly.
To the power elite, they say, divide and conquer, and let the spoils go to the victor. So, the middle class become the slaves to corporate America, and the less fortunate, as Ronmey put it, the poor have safety nets in place to take care of them...(implying) until they die in the streets, homeless, from starvation.
Under the U.S. Department of State, under small businesses, "99 percent of all independent enterprises in the country employ fewer than 500 people..."
Small Business in the United States Retrieve February 8, 2012 From
http://economics.about.com/od/smallbigbusiness/a/us_business.htm
Always go after the weakest segments of any society, the ones that can't fight back.
That's why the 1% are getting stronger, and the rest of us are paying for it.
"Too Big to Fail" is a lie.
"Too much power (money, and corruption) to regulate", would be far closer to the truth.
by the way, people stay in NYC because it is the best, most interesting, motivating, challenging, beautiful, awesomest city in the world!!! if they leave, New Yorkers usually return, and judging from our growing population of transplants, i'd say the rest of the world understands that NYC is the best city in the world as well.
Unless your poor and black, Then you get frisked every time u leave your apartment.
And these states are wondering why everyone is leaving. I'm wondering why anyone who is not a welfare recipient is staying.
We all know what an audit is about. Some here scoof at the idea that an audit is a problem. It is and in some cases if the business tripled their tax payment it would not amount to enough to pay the salary of the auditor.
So, who exactly is unable to grasp reality? Let us look at what you said to see if it is "truthful". What is the sales tax rate in California? According to you, he left with a check for sales tax of a few hundred dollars, on $2000.00 in sales? At todays Calif. sales tax rate, the check would not of been for a "few hundred dollars", but for $150.00. When you exaggerate in one area, it tends to put in question everything you said. I share my experience with an audit, which for me was positive, I am unable to grasp reality; but you make up some exaggerated number but are firmly entrenched in reality.
The tax code is sufficiently complex that individuals and businesses with intricate filings often resort to professional assistance to do so. That gap in understanding can be easily exploited by a money-hungry beauracratic structure that expends notable funds pursuing POTENTIAL innacuracies.
Like you said, you were audited and got additional money. That audit process still cost the IRS. Somewhere in the cubicle hive of the IRS hierarchy there is a slow-but-business-savvy management member (more likely several) that puts results-driven criteria on the auditors that can result in pressuring some auditors to go "rogue" to pad their personal performance to levels that avoid corrective action from their superiors.
Said superiors never intended auditors to do these things (at least not officially), but giving them in essence a sales-goal-like number to achieve results in cutting corners. These unintended consequences happen all over the business world when pressure from the top is applied to exhort greater productivity.
That is the main reason to have tax audits: to discourage people from hiding revenues!
And if you overpaid, like I did, you get a refeund.
This persistant paranoia seems to be designed to create a lot of confusion and doubt. Who benefits from confusion and doubt? People and organizations who don't want to or can't afford to operate out of the shadows. Now that is healthy paranoia!
That is the main reason to have tax audits! If the business person has overpaid then they get a refund as happened to me.
This rampant paranoia seems to be designed to create a lot of confusion. Who benefits from confusion? People and organizations who truly want to operate in the shadows. Now that is healthy paranoia.
If you cannot raise Taxes then collect Fines, Penalties and Late Charges.
Government has planted the seeds of a meltdown in income and tax revenue ?