Yesterday I was picking up a couple of gift certificates for a Not-for-Profit. They had a new credit card machine and were having difficulties with the machine and processing my payment. While this was happening I was stating that this could have a devastating affect on their business. They agreed that they were now seeing more credit cards then before, and seemed saddened by this. It seems that they were happier with a higher cash business.
I mentioned that having the bulk of the income processed by credit cards made it easier to keep records and was easier for tax tracking. They took a strong stance that they weren’t afraid of the IRS and nobody ever should be, that they knew people that got off scot-free from the IRS with an Offer in Compromise.
I am shocked, I know that several businesses fall within ratios. Just talk to a business banker, they are aware of this. I also know that the IRS is aware of this as well. But then these people were predicting that the IRS would crumble and fall within the next couple of years based upon poor leadership. I am not going to touch that but, I do know that the IRS is not going away anytime soon.
There are decisions that can be made throughout the year that will impact the profitability/tax ability that are completely honest. I personally do not believe that the risk is worth the reward. Report all income and take the deductions to lower the income.