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Kelly Spors
American Express OPEN Forum|openforum.com

If your business operates as a partnership, such as an S corporation or LLC, your odds of being audited appear to be rising.

The Internal Revenue Service plans to shift its business auditing focus away from corporations and concentrate more on “pass-through” entities in coming years, Faris Fink, head of the IRS’s Small Business/Self-Employed Division, recently told conference attendees. The reason: Partnerships are becoming more complex, and the IRS sees them as a type of business ripe for tax-fraud potential.

“The Service has for a long time focused its energy on corporations,” Fink said at the American Institute of CPAs’ National Tax Conference, according to Bloomberg. “Frankly, we’re a little bit behind the curve in getting around to developing a partnership strategy.” read more »

 

Last week, the Securities and Exchange Commission voted to propose rules that will allow companies to offer securities through online crowdfunding. Under the law created by last year’s JOBS Act, small companies can raise up to $1 million a year through accredited investors. The public has 90 days to comment on the SEC proposed rules.

The new crowdfunding laws — along with the overall success of sites like Kickstarter and Indiegogo — are leading more startups and existing companies to roll out their own crowdfunding platforms for small businesses and startups. Though it may take the SEC more than six months to put out final rules, many sites are already helping businesses connect with and vet prospective investors and donors. read more »

 

This past May, the federal government got serious about the issue of federal Internet sales tax legislation. That’s when the Senate passed the Marketplace Fairness Act of 2013, a law that would require businesses with more than $1 million in revenue to collect sales taxes from customers in all U.S. states and from any localities that charge sales tax.

The legislation has now moved to the House, which plans to completely redo it, to the relief of many online retailers. The Senate’s legislation “is very badly written … and it would very badly impact all the small and medium-sized online retailers and all the other American businesses that would be buried in paperwork trying to comply with the sales tax rules in 45 states, and Puerto Rico and various Indian Tribes,” says Kevin Hickey, owner of OnlineStores.com, a New Stanton, Pennsylvania-based company that owns a variety of online retail businesses. read more »

 
New study from the D.C.-based Tax Foundation offers a surprising answer

The top individual tax rates for U.S. taxpayers making more than $250,000 went up this year, and some high earners are now paying nearly half of their income in taxes. Could this be hurting U.S. job growth and the overall economy?

It may be, according to a new study.

The Tax Foundation, a nonpartisan group based in Washington D.C., found that much of the income earned by taxpayers with adjusted gross income above $1 million comes from business ownership. In fact, the organization says, nearly 30 percent of the $932 billion in total individual business income reported in 2010 came from people with an AGI above $1 million. Another 30 percent of business income was made by taxpayers with AGIs of $200,000 to $1 million. read more »

 
A new analysis of data indicates that in the economic recovery, the profit gap may be widening between corporations and small businesses.

The economy is sending mixed signals about whether small businesses are truly recovering from the downturn of recent years. Here’s another reason for pause: The Bureau of Economic Analysis recently released its quarterly snapshot of corporate profits as a percentage of U.S. gross domestic product (GDP). Ed Dolan, an economist and writer of Ed Dolan’s Econ Blog, analyzed the numbers and compared it with other data sources. He discovered that while corporate profits have jumped nicely in recent years, the income of proprietors-unincorporated business owners that have legal forms of proprietorship, partnerships and tax-hasn’t kept pace.

According to his analysis, corporate profits reached an all-time high of 12.74 percent of GDP in the fourth quarter of 2011 and have remained pretty elevated ever since. read more »

 
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