Slower Processing Times: Expect delays in processing tax returns, especially for paper and amended returns. Refunds could take longer than the typical 21-day target for e-filed returns.

Reduced Customer Service: Reaching the IRS by phone or in person may become more difficult, with longer wait times.

Extended or Delayed Audits: Audits may take longer or be reassigned without notice due to staffing issues.

Shift in Audit Focus: Fewer overall audits, but increased focus on complex or high-value cases.

Business Delays: Businesses may experience delays obtaining IRS documentation needed for transactions.

Yes! In fact, most audits are initially conducted by computer algorythims, not by humans. Below are some specific applications:

• Risk Scoring: Uses algorithms to score returns for audit potential.

• Data Matching: Compares return data with third-party info (e.g., W-2s, 1099s).

• Predictive Analytics: Detects patterns associated with fraud or noncompliance.

• Computer Audit Specialists (CAS): Analyze automated systems during audits.

• Target Areas: Includes large partnerships, crypto, foreign assets, and employment taxes.

• EFTPS Monitoring: Early alerts for discrepancies in reported income or deductions.

• Installment Agreements: Pay over time through a monthly plan.

• Online Payment Agreement: Quick setup for payment plans online.

• Offer in Compromise (OIC): Settle your debt for less if you qualify.

• Currently Not Collectible Status: Temporarily delays collection efforts due to financial hardship.

Pass-Through Taxation

• LLC & Partnership: Income passes through to owners’ tax returns.

• S Corp: Same as above but with more formal structure.

Self-Employment Taxes

• LLC: All earnings usually subject to self-employment tax.

• Partnership: Active partners pay self-employment tax on income.

Payroll Taxes (income, FICA, etc.)

• S Corp: Salary subject to payroll tax; distributions are not. Shareholder owners must be paid a wage (i.e., w-2 payroll); medical and retirement are reported on w-2

• C Corp: Salary subject to payroll tax; fringe benefits (medical, etc.) are not taxed

QBI Deduction (20%)

• All but C Corp structures qualify.

Deducting Losses

• Partnership: Can include funds borrowed by partnership in basis, but cannot lend money to partnership.

• S Corp: Shareholders may lend money to their company; must track basis.

Flexibility and Restrictions

• LLC & Partnership: Flexible profit/loss allocation.

• S Corp: Must follow ownership percentages; capped at 100 shareholders, one stock class, and cannot include foreign shareholders

PTE (Pass-Through Entity) Tax Election

• Available to S Corps and Partnerships for deducting state taxes at the entity level

Forming a charitable organization is a multi-step process that involves four government agencies, five forms, and seven different documents. We’ve created this outline to help you understand those steps and grasp what’s involved. To learn more, give us a call or make an appointment.