The estimated annual “Tax Gap” exceeds $440 billion. That is to say, the amount that U.S. taxpayers pay in taxes every year falls short of the amount actually owed by some $440-plus billion. The Treasury Inspector General for Tax Administration—or, for those who prefer a more wieldy acronym, TIGTA—a government tax watchdog, has been engaged in an effort to determine how the IRS can make a meaningful dent in that ever-troubling Tax Gap. The answer, in part, is more audits. But more specifically, the right kinds of audits. According to TIGTA, that means placing a particular focus on taxpayers who report “Schedule C” activity reflecting significant losses.
Schedule C Reporting
A sole proprietor engaged in a business is generally required to report the associated income and expenses on Schedule C of their Form 1040. Much the same, an individual operating through a single-member limited liability company (LLC) is often