I started my own practice in 1980. My personal accountant at the time, my friend Rick Kravitz, now the Editor in Chief of the CPA Journal, and I have been talking about recent developments and the newly passed law. He’s very concerned because there’s a shortage of CPAs.
In 1979, in preparation for opening my new practice, Rick and I discussed what business format would be best. One of the factors Rick brought up was the likelihood of being audited by the IRS with different business entities.
There were other factors such as pension and liability. But the issue of avoiding an IRS audit strongly resounded with me. You see, my father and uncle were audited in the early 70’s. It was an extremely painful experience for the entire family. It consumed all the energy and removed the peace and fun we previously had enjoyed.
The experience almost ruined my father. He left the family business and opted to become a W-2 employee. The family was never the same, nor was he.
And so, I opted to become a PC or Professional Corporation to reduce the chances of an audit and ending up like my dad.
This week I had the same queasy feeling in my gut as I did when Rick and I discussed the potential for an IRS audit.
You should worry too.
Don’t dare believe that “no one making under $400,000 need worry.” If you do, then I have a bridge to sell you!
87,000 IRS agents backed by an $80 Billion infusion (more than ½ directly targeted for “enforcement”) will not descend on the large Corporations or DSO’s who have a fleet of accountants and attorneys. They will go for the LOW HANGING FRUIT, much as they did in the 70’s, SMALL BUSINESS. In other words…YOU!
My decision to become a PC worked, until it didn’t and I was audited.
Fortunately, though Rick was no longer my CPA (he had moved on to bigger and better things and no longer had time for little ‘ol me), I had another excellent one on my ADVISORY BOARD. Marty looked at their request, made a few calls and settled for a minor amount without the drama of a full audit. I was indignant, I wanted to fight because I was right. Marty convinced me that “the juice just wasn’t worth the squeeze”. We settled for a few hundred dollars. They lost money on me, but my accounting bill was greater than the tax bill.
Yes, there are different kinds of audits. Some less painful than others. The amount of pain depends how far up they stick the colonoscope.
The point is that this new bill, whatever you choose to call it, creates a potential headache, or rather a pain in the butt for independent dentists. Here are a few tips that you can use NOW to minimize the blow later.
1. Make sure you have an excellent CPA (with audit experience) on your ADVISORY BOARD.
2. Discuss audit-reduction strategies with your CPA.
3. Tidy-up your business systems.
4. Keep meticulous records
And finally, make your voice heard. The “we will come after you” strategy of the government is unacceptable. They are public servants. WE THE PEOPLE pay them. They are here to protect us, not harass and intimidate us.
Sometimes, our elected officials need to be reminded of that. We don’t have to wait for an election to do it. We can call, write or email or representatives anytime.
Now is the time to take ACTION. Get your house in order and raise your voice. They’ve already let 70’s style inflation eat away at our standard of living. Don’t sit back as they unleash the IRS and create even more pain, fear and stress.
PROTECT YOURSELF FROM ENFORCEMENT
Did you know that your employees are incentivized to report you to the IRS? This is directly from the IRS’ website:
“An award worth between 15 and 30 percent of the total proceeds that IRS collects could be paid, if the IRS moves ahead based on the information provided. Under the law, these awards will be paid when the amount identified by the whistleblower (including taxes, penalties and interest) is more than $2 million. If the taxpayer is an individual, they must have at least $200,000 in gross income.
“Whistleblower” sounds so innocent and even benevolent. This is yet another reason to do everything by the books and re-examine your business entity. Are you a Corporation or an Individual? Get your HR house in order too. Don’t create an environment that might encourage whistleblowers.
The Spencer Study Club brings you the most up to date information possible, all aimed at helping you help others. We know that when there’s NO MONEY…there’s NO MISSION. And so, to fulfill Jamison’s mission of helping to add 100 million years of life to people, we use our vast network to help you.
That means having people like Dental CFO, Danny Richards and yes, my CPA friend Rick Kravitz on future Webinars. It means giving YOU the best of the best at our SSC live events. It means being open to new ideas, new technologies, products, strategies, and techniques.
It means giving your TEAMS the tools they need to fulfill their (and your) mission of helping as many people as possible.
On the upcoming Coffee With The Coach webinar, Friday, August 26th, we’ll be talking about your HR process. Now is the time to get YOUR HOUSE IN ORDER.
Don’t wait for that dreaded AUDIT LETTER. Be proactive, attend the SSC and CWTC webinars, review your advisory board, and call your government representatives.
To your peace of mind,