The Internal Revenue Service (IRS) has announced plans to increase audits of small businesses and their investors by 50% in 2021. Recently, the IRS also issued two warnings to businesses and their owners filing taxes this year.
First, the IRS warns businesses that they should not claim the Domestic Production Activities Deduction. This deduction has not been available since tax-year 2017, but many businesses are still incorrectly claiming this deduction.
Second, the IRS urges businesses to properly familiarize themselves with IRS Form 8300, the Report of Cash Payments Over $10,000. Businesses are required to report cash payments over $10,000 within 15 days of the transaction to demonstrate it was legitimate. The IRS allows this form to be electronically filed for free and offers video instructions on how to properly complete the form on its website here: https://www.irsvideos.gov/Business/BankSecrecyAct/HowToCompleteForm8300-partI https://www.irsvideos.gov/Business/BankSecrecyAct/HowToCompleteForm8300-partII
Virtus Law, PLLC continues to monitor changes in this area and will continue to post relevant updates to this website.