U.S. Tax Proposal Could Ensnare Farriers

Solid organization and recordkeeping are vital for IRS compliance

Farrier Takeaways

  • The Treasury Department is proposing a rule that would require financial institutions to report all transactions totaling more than $10,000 annually.
  • Organizing your business to properly record income and expenses is critical to ensure compliance with IRS laws.
  • A sole proprietorship is the best route for most farrier practices that do not have employees

The federal government estimates that it loses hundreds of billions of dollars in tax revenue annually from individuals who underreport their income. A Biden administration proposal aims to recoup the lost revenue by keeping closer tabs on taxpayers’ personal and business banking accounts.

In general, the Internal Revenue Service reports that John Q. Public is doing a good job. About 84% paid their fair share of taxes — and they did so on time. Another 2% needed a nudge from Uncle Sam, but eventually came through.

“The tax gap estimates dating back decades consistently show the United States enjoys a relatively high and stable voluntary tax compliance rate,” according to the IRS. “Sustaining and improving taxpayer compliance is important because small declines in compliance cost the nation billions of dollars in lost revenue and shift the tax burden away from those who don’t pay their taxes onto those who pay their fair share on time every year.”

The IRS finds that individual taxpayers are the biggest culprits of underreporting income to the tune of $314 billion — or 71% of the total tax gap. The largest demographic of individuals who underreport are business owners…

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Cota

Jeff Cota

Jeff Cota has been a writer, photographer and editor with newspapers and magazines for 30 years. A native of Maine, he is the Lead Content Editor of American Farriers Journal.

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