5 Common Issues in IRS Tax Audits Targeting Boston Companies in 2024

Now that Tax Day has come and gone, businesses in Boston need to start preparing for what’s next. For many, this simply means ensuring they are prepared to make their next estimated tax payment on June 17. But, for some, this means preparing for an IRS tax audit. In this article, Boston business tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, explains what local business owners need to know about facing IRS scrutiny in 2024.

The IRS is Prioritizing Business Tax Fraud in 2024

After Tax Day, the IRS uses businesses’ tax returns to assess whether an audit is warranted. In many cases, it combines information gleaned from businesses’ (and business owners’) tax returns with information gathered from other sources in order to identify potential “red flags” for both corporate and individual tax evasion and tax fraud.

For 2024, the IRS has identified several enforcement priorities that increase businesses’ (and business owners’) risk of facing IRS audits and audit-related penalties. Here are five examples of these priorities:

1. Employee Retention Credit (ERC) Fraud

Combating ERC fraud remains a top IRS enforcement priority in 2024. All businesses that claimed the ERC—whether during the COVID-19 pandemic or after—should review their claims with their counsel to determine whether any remedial action is necessary.

2. Fraudulent Business Deductions

Fraudulent business deductions are a perennial enforcement priority for the IRS. This includes everything from fraudulent interest expense and depreciation deductions to fraudulent deductions for personal travel and home office space.

3. Underreporting Taxable Business Income

Underreporting taxable business income can expose businesses (and their owners) to either civil or criminal penalties. If it’s not too late (i.e., if the IRS has not already initiated a business tax audit), business owners who have concerns about facing criminal penalties for intentionally underreporting their businesses’ income may need to consider a voluntary disclosure.

4. Failure to Report Cryptocurrency Income

Businesses that accept cryptocurrency as payment for their products or services must report their ordinary income as well as their income from selling appreciated tokens. Cryptocurrency tax fraud has been an IRS enforcement priority in recent years, and it remains an enforcement priority in 2024.

5. Employment Tax Fraud

Evidence of apparent income tax fraud will often trigger scrutiny of businesses’ employment tax filings as well. Just like income tax violations, employment tax violations can lead to either civil or criminal enforcement depending on the circumstances involved.

Again, these are just examples. If your business is facing an IRS audit (or if you are facing an IRS audit as a business owner in Boston), it will be imperative to ensure that you have a clear—and comprehensive—understanding of the risks involved.

Request an Appointment with Boston Business Tax Lawyer Kevin E. Thorn

If you have concerns about facing scrutiny from the IRS in Boston, we invite you to get in touch. Please call 617-692-2989 or contact us online to schedule a confidential consultation with Boston business tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group.