Many small U.S. businesses elect to organize as S corporations for tax purposes. Owners of qualified businesses must first submit a completed Form 2553 (“Election by a Small Business Corporation”) to the IRS. One taxpayer filed his tax return, including a loss from his business that he considered an S corp. The IRS disallowed the loss, stating the business wasn’t an S corp because no Form 2553 had been received. The owner argued that he’d completed the form the year before and instructed an employee to mail it. Without evidence of mailing and no form received by the IRS until 2015, the U.S. Tax Court agreed with the IRS and disallowed S corp status for 2012.
An IRS software project to safeguard data is making mixed progress, said a recent Treasury Inspector General for Tax Administration (TIGTA) audit. TIGTA examined the effectiveness of the IRS Data Loss Prevention software solution in preventing “Personally Identifiable Information” from exiting the IRS network. Testing showed that the Data-in-Motion component of the project actively identified and blocked this information from “exfiltration.” But delays associated with other components “are preventing realization of the full benefits of the Data Loss Prevention solution.” The delays, said TIGTA, involve technical, administrative and management issues. The report is at https://bit.ly/30IhKUJ.
Are you starting a new business? That can be both rewarding and overwhelming. The IRS has issued some tax tips to help you get off to a solid start. A primary decision you’ll need to make is which business structure to use, including sole proprietorship, partnership, corporation, S corporation, or Limited Liability Company. You’ll need to apply to the IRS for an employer identification number. If you have employees, you’ll need to verify their work eligibility and have them fill out employment tax forms. And of course, you’ll have to pay business taxes. To learn more about what’s involved in starting and operating a business, visit https://bit.ly/345XM8D.