IRS Hot Button!!
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Billions of dollars in lost Social Security taxes
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Issue: In many cases, the Shareholder Compensation is not reasonable and customary for the job performed resulting in lower total social security taxes collected leading to:
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Resulting in readjusting compensation for years audited and increasing SS tax amounts plus penalties and interest, affecting the individual’s tax return.
Compensation Must be Reasonable and Customary
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Includes base salary and bonus
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What is the job of the officer?
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How are like positions compensated in the same market area?
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What percentage of an average workweek does the officer work in that capacity?
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Written documentation is needed as back up to support how the compensation dollar amount was derived.
Call Malvern Tax & Ledger, Inc. to assist you with this issue.