Under the Obama Administration, the IRS is accelerating audits of pass-through entities: limited liability companies, partnerships and Subchapter S corporations. These are called TEFRA audits, an acronym for the Tax Equity and Fiscal Responsibility Act of 1982. The focus of the TEFRA audits is to find unreported income arising from pass-through entities but not making it onto the returns of the taxpayers.
The auditors, according to sources we have interviewed, have become very aggressive under the Obama administration. Therefore, the audits go beyond just the audited entities. The auditors are looking at the tax returns of members of the limited liability companies, partners of partnerships and shareholders of Subchapter S entities. These audits can be very expensive and time consuming and hit mainly small businesses and family organizations.
It is more important than ever that you have your tax house in order. Before filing your returns for 2014, consult with a competent tax advisor. He or she can indicate to you where you are taking high-risk positions and where the safe harbors exist.
If you and your accountant need assistance in considering and implementing tax strategies that will assist you, please call us.
And remember, your estate plan and strategies that assist you in preserving your assets go hand in hand with many legitimate tax strategies. We are pleased to visit with you about available options in these areas.
Please call us today.
If you have questions about tax law, please call our office at 480-733-6800 and ask to speak with Charlie Davis. Charlie brings 38 years of experience in business, transactional and tax law. He possesses a unique combination of compassion, patience, intelligence, listening ability and commitment to ensure his clients’ needs are heard.