MLM Warning: IRS Plans Small Business Smackdown

Filed in archive MLM News on February 19, 2010

MLM or multi-level marketing business owners should consider this warning about an impending crackdown by the Internal Revenue Service.

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The Obama administration is expected to pour an estimated $8.2 billion into tax enforcement in 2011 and self-employment may be a particular focus of possible audits, says a report from CNNMoney.com.

The report says in excess of 1.4 million Americans were subjected to audits by the federal agency last year, the most in a decade.

The trend may be of particular concern to multi-level or network marketers who sometimes report high losses in their businesses.

Among the things more likely to trigger an investigation by the IRS are:

• Businesses which have not been profitable for at least three of the last five years
  


• Poorly or inaccurately kept records of income amd expenses or failure to adequately register the business
  


• Unusually high deductions for travel, entertainment or mileage relative to business income, the report says.
  

Tax preparer Tom Choisnet discourages MLM business owners from taking large losses on their tax returns to avoid problems when filing.