Targeting executives who pay themselves too little in order to shield some of the money they make from taxes, the IRS is focusing its sunshine-concentrating magnifying glass on potential offenders.
The Wall Street Journal reports the IRS successfully sued an Iowa CPA who classified his business as a “Sub-S” corporation, meaning he was the sole owner and shareholder in the company. The CPA reported that in years his Sub-S was part of a firm that made six-figure profits, his annual salary was only $24,000. The low salary saved the accountant $20,000 in payroll taxes, triggering the IRS to cry fowl. District court ruled the CPA had to pay back taxes plus interest and penalties.
The story says there are 4 million Sub-S corporations in the country. And any of those owned by people whom the IRS may deem paid themselves too little will take a collective gulp right about now.