What Will the IRS Find If They Google You?

March 11, 2014 at 5:30 pm (Adult Industry, Business, Business Taxes)

The Internet is a wondrous world where people may become anyone with any lifestyle that they desire. People create alter egos for a plethora of reasons. Some do it to exercise other personalities within themselves, researchers and writers do it to learn more about a particular group or culture for their work and others do it to speak their thoughts without the fear of recourse. Of course there are also those that do it to deceive and thieve. In this great web of information, some is true and some is not. Anyone can say anything about themselves or others be it true or false.

We all know that the IRS will go to great lengths to find in depth information about taxpayers’ modes of income and lifestyle including “Googling” their websites and blogs. However, it has come to my attention that they are delving further into taxpayers’ online life than suspected. They are hunting to uncover other possible identities and lifestyle via message boards, social media and individual postings. To some that may not be much of a surprise, but it may come as a surprise that the IRS is also taking to subpoena companies to answer questions about your membership. Regardless of the intent or context, some IRS agents are willing to use taxpayers’ own words and the words of others against them in an audit, be those words true or not.

Many might think, “Well, if you aren’t doing anything wrong, then why worry?”. There is much cause to worry as many people share the same name or pseudo name in real-time and online life. Identity mix-ups happen all the time and now with ease of the Internet and ID theft, the danger of being misidentified is higher than ever. You must protect yourself and one way to do that is to be truthful when preparing your tax return or when having it prepared.

I am a tax preparer who believes that client transparency is the key to a water-tight and legal tax return while also helping to legitimize the Adult Industry. I advise those clients with non-legal income to separate it out, report it and handle it appropriately within the tax law. Know that you and you alone own your tax return and will be held responsible for any and all information on it. Be truthful and keep excellent notes for each tax year in your records.

It is good practice for any business to have a business plan. I advise that if you own a business, that you at least write a detailed description of what your business is, what it offers and doesn’t offer and how it is run. It doesn’t hurt to also have a mission statement as well. Make certain that all of your online and real-time actions clearly and closely represent this description and mission statement.  Keep a copy with your tax documents as it may be crucial to your case in the event of an audit. In this way you will have written it when you are relaxed and eloquent and not when you are under audit, scared and stressed. It is also important to “Google” yourself regularly to keep a close eye on what is out there about you.

In an IRS audit it really is a “crap shoot” whether or not you are assigned a fair agent. With that in mind, do you really want to gamble with your personal and tax information as well?

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You know you’re a corporation if:

August 22, 2013 at 4:23 pm (Business, Business Taxes)

You filed an “Articles of Incorporation”
You have to file a tax return for the biz that is separate from your personal return
You are paying payroll even though you are the only person in the company
Your IRS EIN letter states that you need to file an 1120 or 1120-S
You filed Form 2553
You hold required, formal meetings and might be the only person attending
Your state or another is demanding a yearly corporation filing fee
Your filing date is March 15th (Sept. 15 with an extension)
Your tax professional says so

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Lost or Misplaced Your EIN?

June 13, 2013 at 6:04 pm (Business, Business Taxes)

via IRS

If you previously applied for and received an EIN for your business, but have since misplaced it, try any or all of the following actions to locate the number:

  • Find the computer-generated notice that was issued by the IRS when you applied for your EIN. This notice is issued as a confirmation of your application for, and receipt of an EIN.
  • If you used your EIN to open a bank account, or apply for any type of state or local license, you should contact the bank or agency to secure your EIN.
  • Ask the IRS to search for your EIN by calling the Business & Specialty Tax Line at (800) 829-4933. The hours of operation are 7:00 a.m. – 7:00 p.m. local time, Monday through Friday. An assistor will ask you for identifying information and provide the number to you over the telephone, as long as you are a person who is  authorized to receive it. Examples of an authorized person include, but are not limited to, a sole proprietor, a partner in a partnership, a corporate officer, a trustee of a trust, or an executor of an estate.

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Ability to e-file may depend on the length of your name

May 16, 2013 at 1:39 pm (Business, Business Taxes, General Tax Information)

The Modernized E-file System (MeF) that the IRS, states and all tax software use has a required limit of 35 characters for a name, title or description (some states limit to fewer). The main problem is e-filing an application where your name or the name of your business/nonprofit will be set in stone based on what you put in that box, as with an Employer Identification Number (EIN). The IRS, however, only looks at the first 4 characters of the name when an actual return is e-filed. In many cases if your name is too long, you can paper file your application. However, in the case of an Exempt Org. postcard, you have no choice but to e-file.

Therefore, before registering or incorporating your business or nonprofit, you will want to keep the character limit in mind. It is a good idea to also ask the state where you may need to apply for certain tax status or numbers their character limitation as well. If you want to keep a long name, then create a shortened version of it as a DBA to use on your applications and returns.

When you apply for a number with your legal name, you may want to adjust it to fit the character limit as well so that your name, once altered, is as accurate as possible.

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The “Appearance & Image” Issue Demystified

March 4, 2013 at 11:16 am (Adult Industry, Business, Uncategorized)

Since I announced the IRS’ new, specific wording last Summer about “Appearance & Image”, I have been inundated with questions and pleas about the issue. I understand your frustration and anger as I know how much those of you in both the Vanilla and Adult entertainment invest in your businesses. Even though we both know that these are, in IRS terms, “ordinary and necessary” business expenses, the IRS has put specific limits in specific wording on what can be taken as a deduction.

Firstly, please let me say that we tax professionals can only interpret the tax laws and follow them as we interpret them. However, when wording is specific, there is no magic power that we hold that can change it. We are not trying to be mean, but instead taking our clients’ best interest into consideration. Knowingly taking non-allowed deductions is considered fraud, therefore a tax professional who cares for their client at all will not lead them into these shark-infested waters.

I am going to share with you a few exerpts (below) from the IRS MSSP (Market Segment Specialization Program) – 1040 Tax Issues – Entertainment.

This guide is what the IRS auditors are given to assess the entertainers who they are auditing. The guide is “designed to provide assistance in auditing individuals in various aspects of the entertainment industry.”

Make-up for performances is usually provided by the studio. Stage make-up that the
taxpayer buys for an audition or a live theatrical performance may be deductible, if it is
not a general over-the-counter product.

To deduct clothes as a business expense, two requirements must be met. First, the
clothes must be required by the employer. Second, clothes must not be adaptable to
street or general use.

Expenses for costumes and “period” clothing are generally deductible. However, most
union contracts provide for compensation to be given performers who require special
wear. The taxpayer must prove that his or her contract did not include such
reimbursement for the expense to be allowable.

Physical Fitness
Deductions for general physical fitness are not allowable. Usually, if physical fitness is
required of a specific job, the studio will provide the cost. If the taxpayer was
employed in a capacity that required physical conditioning, allow expenses for the
duration of employment if no reimbursement or compensation was available.

What are solutions to this dilemma you can take right now? Well, buy stage makeup from a theatrical supply store and make certain that your costumes are indeed clothing that would not be worn in public, regardless if you would personally wear them or not.

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Congratulations, you’re in business!

January 27, 2011 at 11:25 pm (Business, Business Taxes)

Are you among the self-employed? Well, if you are in business for yourself, work as an independent contractor or a combination of the two, then yes, you are definitely self-employed. You are still self-employed for the income you receive from your business even if you are employed as an employee at another job from which you receive a W-2 statement at the end of the year.

Operating a business comes with a plethora of responsibilities of which many people overlook. It is important to remember to acquire all the necessary licenses and permits, acquire the appropriate tax identification number for which you qualify, keep good and accurate records throughout the year, file the appropriate tax forms and pay the necessary taxes for your business in a timely manner. These responsibilities do not stop at the federal level. It is vitally important to find out what is required of business owners in your particular state, and in some cases, those of your city as well. Disorganized records, taxes filed late and paid late or not at will cost you dearly in fees and fines.

Taking care of the necessary research and creating an organized, well-maintained business, no matter what kind of business, will reward you far beyond the financial profits you will accrue. Take pride in the fact that you are the captain of your own financial ship, navigating that ship through the Sea of Success!

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