Los Angeles California Tax Attorney Blog
Los Angeles has one of the nation’s highest number of self employed or small business operations. IRS is increasing its enforcement and compliance activities with respect to these taxpayers. IRS Tax Audits overall have increased every year over the last three years. IRS targets many of these businesses which its believes are involved in high cash volume business including the garment, restaurant, travel, tour and numerous other service related sectors where compliance and reporting requirements may be lacking.
In addition, IRS will continue to monitor single cash transactions involving more than $10,000.00. The Tax Reform Act of 1984 required businesses that receive large cash payments to report them to the Internal Revenue Service. The statute was designed to help the Service “identify taxpayers with large cash incomes.” In addition, the Patriots Act and other collateral legislation allows increased surveillance on transfer of funds including cash. A bank or a business who in the coarse of his trade or business is paid more than $10,000 in cash in one or more related transactions must file a return with the Service. It is common that such filings would trigger an IRS Audit or investigation.