Industries and Professions That Tend to Get Audited for Tax Evasion
The Internal Revenue Service (IRS) expects every company that operates in the U.S. to voluntarily file and pay its tax bill each year. If your business skips out on this process, it could be subjected to an audit for tax evasion.
Do not risk potential civil and criminal penalties when our tax fraud and evasion attorneys may be able to help you resolve your outstanding tax issues. Stick with us to learn which industries and professions tend to get audited for tax evasion.
Cash-Intensive Industries Tend to Get Audited for Tax Evasion
Cash intensive industries are some of the most frequently audited businesses due to the potential for tax evasion. Businesses that handle large volumes of cash are prime targets because cash is harder to trace than electronic payments, making it very tempting to under-report this income. Cash intensive industries include restaurants, bars, beauty salons, barber shops, car washes, laundry mats, car dealerships, convenience stores, taxi drivers, ride-sharers, retail stores, and lawn care services, among others.
Self Employed Professions Are Also Routinely Audited by the IRS
Individuals who are self-employed are audited at a higher rate than typical wage earners. Sole proprietors report their income and expenses on a Schedule C and many taxpayers in this industry under-report income while inflating deductions. Gig workers, freelancers, consultants, childcare providers, and trades people, like plumbers and electricians, fall under our list of routinely audited professions.
High Income and Complex Professions May Also Be Targeted for Audits
Individuals with complex financial structures, such as members of large partnerships and limited liability companies (LLC), those that operate with cryptocurrency, and those with foreign accounts are IRS enforcement priorities due to the vast number of financial non-compliance instances that are involved with these operations. High income earners, like doctors, lawyers, accountants, real estate professionals, and investors would also fall under this category.
The IRS Targets Industries with Specific Tax Complexities
Certain industries attract IRS scrutiny due to specific and complex tax rules that are prone to misinterpretation or abuse. The construction industry is one such target, due to worker misclassification to 1099 contractors and seemingly convoluted depreciation and expense rules. Marijuana businesses, for example, are not permitted to claim traditional business deductions under federal law, while companies that receive substantial credits beyond industry norms could flag an audit for tax evasion, as well.
Contact Our Firm When Your Company Gets Audited for Tax Evasion
There are a long list of industries and professions that tend to get audited for tax evasion and if yours is one of them, you need a knowledgeable tax controversy lawyer to identify your next steps. With over 100 years of combined experience, you could expect unparalleled strategies from the attorneys at Dayes Law Firm. We take tax cases across the country out of our Phoenix-based office, so do not hesitate to get your case started today.
