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Landscapers and gardeners belong to an industry targeted by the IRS for tax audit. In the IRS’s eyes, the landscaping industry has a reputation for under-reporting cash income, employing undocumented workers, and misclassifying employees as independent contractors. To make matters worse, IRS audits of landscapers can lead to criminal charges for tax evasion – just look at this landscaper sentenced for tax evasion. If your landscaping company has received written notice from the IRS of an audit or has been assessed tax liability, call the Tax Law Office of Jin Kim at (916) 299-9913.
California tax attorney Jin Kim represents landscapers and gardeners under IRS audit and in tax resolution. To learn more about your case and tax relief options call her office at (916) 299-9913 for a free consultation.
The IRS is naturally suspicious of cash-intensive businesses, so much so that the IRS has created a cash-intensive business audit technique guide. Accordingly, the IRS has targeted cash-intensive businesses such as bars and cannabis businesses for audit; and unfortunately, landscapers fall into that category. As a result, landscapers and gardeners are often audited by the IRS, but the grounds for tax liability usually boil down to the following audit issues for landscapers – all of which can be addressed with a tax resolution attorney.
Independent Contractors & Cash Payments
The IRS and California EDD care whether you classify workers as independent contractors or employees because they are concerned with collecting payroll taxes. Of course, landscapers often want to avoid the hassle of hiring workers as employees, running payroll with corresponding employment tax deductions, and remitting withheld payroll taxes to the IRS and EDD. Moreover, some landscapers follow an industry-standard of employing illegal aliens and paying those workers with cash. Unfortunately, while the IRS and EDD follow different standards for identifying employees and independent contractors, most workers in the California landscaping industry are legally classified as employees rather than independent contractors. As a result, an IRS or EDD audit of your landscaping business may result in payroll tax violations, interest, and penalties, especially if you failed to issue timely 1099’s or W2’s. Furthermore, paying workers in cash will only compound your tax issues during an audit.
Unreported Cash Income
As mentioned, the IRS is naturally suspicious of cash-intensive businesses such as the landscape industry. During a landscape company audit, the IRS examiner will attempt to align your sales with reported income in an attempt to identify under-reported income. In essence, they’re looking for unreported cash payments or check payments deposited into personal accounts. If the IRS examiner identifies unreported income the consequences will include at a minimum additional assessed tax liability, interest, and penalties, and at worst criminal prosecution. Accordingly, if your landscape company is facing an audit it’s important to secure legal representation to present evidence that aligns with your legal defense.
Tip – Visit the IRS landscape and gardener tax tip page to learn more about accounting methods, business taxes, tax forms, allowable deductions, and business use of a vehicle.
The Law Office of Jin Kim represents numerous cash-based businesses in tax controversies with the IRS and the State of California. In addition to landscapers, Sacramento tax attorney Jin Kim represents gas station owners in IRS audits, marijuana dispensaries and bars in CDTFA audits, and assisted living facilities in payroll tax audits.
If your landscaping business is under audit call the Law Office of Jin Kim at (916) 299-9913 to schedule a free consultation.