Expert: John Kirk, CPA Date: 7/27/2008 Subject: s corp income reported
Question QUESTION: My ex- husband owns a snap-on tool franchise, listed as an S-corp. I've had difficulties proving the "real" income received form this business. He claims an annual salary from the business of 30k. Child support is the issue at hand. Attorneys retained were in possession of his tax information. I was advised that it would be "next to impossible" to prove what he actually receives, aside from what he reports. Now, he is in the process of selling the franchise, as he obtained other employment, with the state of NC. I've read about submitting information to the IRS to have his records audited. Does the IRS really investigate these smaller businesses, or is this a waste of my time? I know that he has been hiding income, because he did it when we were married. It is not my intention to be venegeful, my concern is for my minor daughter, who receives <400.00 monthly from him for support. I remain single since the divorce 8 years ago.
ANSWER: If you have hard evidence to show the IRS indicating that his income is understated, you should report this information to the IRS.
One of the best method the IRS has in catching under reporters is through evidence provided by ex-wives, so your assistance should be greatly appreciated.
Contact the IRS's fraud division, and if your evidence is enough for them to open an investigation you can be rewarded by a finders fee of 10% of the taxes recovered.
Good Luck
John Kirk, CPA
www.johnkirkcpa.com
---------- FOLLOW-UP ----------
QUESTION: Thanks so much! Can you provide me with examples of "hard evidence". I'd like to pursue this matter.
Answer Hard evidence would be any documentation that can show that transactions were not recorded, or non deductible expenses were recorded as deductible expenses to avoid taxes.
If you know of other bank accounts he has to which he deposits funds and does not record would be the kind of information the service would need.
Consult a forensic CPA in your area to work with you to discover any fraud.
