Accountant: Financial Advisors Should Beware of IRS ChangesPosted by in Blog on April 30, 2012
Tax season may be over, but for some small businesses and their financial advisors , the pain could just be beginning. OnWallStreet.com writes that the Internal Revenue Service is reportedly “beefing up” the number of tax auditors. That’s what accountant Mark Josephson told the Financial Planning Association of New York at their spring event.
“With everybody losing jobs, the biggest hire is the taxing authorities,” Josephson, who is a partner at New York accounting firm Murray & Josephson, told the attendees in a session called “Tax Planning for Individuals and Small Businesses in a Changing Environment.” He said that that the IRS is “hiring left and right, noting that this is “contrary to what you might be reading in the press.” Jacobson said that auditors he has spoken to have told him about their departments going on hiring sprees.
In addition, Josephson warned that advisors better know how to “protect yourself,” given the increasing number of small business regulations, and said that it was “crucial” to comply with the rules. He also indicated that financial advisors should not give advice on areas that may best be left to accountants. “Just because you tell them what to do and say, ‘Talk to your accountant,’ they’re not going to remember you said, ‘Talk to your accountant,’” Josephson said. “They’re going to remember what you told them off the cuff.”
Other topics Josephson discussed with the financial advisors present included new IRS rules, including how small businesses are now required to note whether or not they filled out 1099 forms to contractors. He noted that if business owners did not tell the truth there, they could potentially face not just tax penalties, but perjury charges.
In addition, Josephson told the audience that the IRS was increasing Medicare taxes next year, and also increasing the threshold of how big medical expenses had to be before you could get a tax deduction. The amount is going up from 7.5% of adjusted gross income to 10% of that amount.
Written by Lisa Swan