Before the Internal Revenue Service leaves you "shivering ye timbers" you owe it to yourself to be prepared. RIGHT NOW, You Can Escape The Pain and Embarrassment of Not Being Prepared For An IRS Audit.
Uncle Sam's Tax Audit Assistant was designed to assist Internal Revenue Service Audit Agents in completing examinations of reforestation contractors. A contractor working in the reforestation industry may secure service contracts, (pre-commercial thinning and tree planting contracts) from a Federal agency, a State agency, from private companies, or other contractors. Keep in mind that State and Federal agencies issue several types of service contracts; examples are fire-fighting, cone collection, tree netting, tree shading, gopher baiting, etc.
At this time, it does not appear that the reforestation-station contractors bid for service contracts other than tree planting and tree thinning. However, no industry is stagnant and this may be something that contractors may expand into in the near future as they develop expertise in the reforestation industry. Since the most predominant type of service contract issued by the Federal and State agencies are pre-commercial thinning and tree planting contracts, the scope of this guide has been limited to reforestation contracts only.
WHAT SPECIFIC QUESTIONS WILLTHE IRS AUDITOR ASK?
Here is a sampling of the 40 questions we have specifically identified.
- Who makes your deposits?
- What tools do you supply for the workers?
- What is your bill payment policy?
- What accounting method is used?
- Were there any months that you did not work?
- How long have you been in the reforestation business?
- How did you get started in the business?
- How are you paid for the work that you do?
- Do you issue Forms 1099 to all subcontractors?
- Do you have a credit line? If so, are income checks deposited into this account?
- Do all your subcontractors have a Farm Labor License
- Are you a prime contractor or subcontractor?
- Are all wages included on the tax return?
