1. How to Stay Out of Jail as an Entrepreneur
Karen Brehmer
IRS Stakeholder Liaison
February 2017

2. Objectives Recordkeeping – why, how long, what?
IRS Resources for small business owners
Sharing Economy
Payments to Independent Contractors
Secure Access Authentication

3. Recordkeeping – Why? Prepare tax returns
Support items reported on tax returns
Monitor progress of business activity
Identify receipt sources
Track deductible expenses
Prepare financial statements

4. Recordkeeping – How long?
Keep all documents verifying income, purchases, deductions and credits
Timeframes:
Minimum three years
Employment tax – four years (Pub 15)
Business property – life of the asset

7. Publication 463: Travel, Transportation, Entertainment, and Gift Expenses

8. On IRS.gov

9. Small Business and Self-Employed Tax Center on IRS.gov

10. Small Business Taxes: The Virtual Workshop

11. SHARING ECONOMY

12. Sharing Economy Tax Center
If you use one of the many online platforms available to rent a spare bedroom, provide car rides, or to connect and provide a number of other goods or services, you’re involved in what is sometimes called the sharing economy.
The IRS developed the Sharing Economy Tax Center to help you meet your tax obligations for your activity in the sharing economy

13. Issues for Individuals Performing Services
Participate in the sharing economy
Received a payment during the calendar year
Self-employed individual, an employee or a small business
May be required to file a tax return to report that income to the IRS.

14. Rules for Home Rentals Rental Income and Expenses Vacation Property
Personal use business property
Casualties, Disasters and Thefts

15. Self-Employment Taxes
Self-Employed / Independent Contractor
Social Security
Medicare Taxes
No employer matching
Estimated taxes

16. Tax Payments, Including Estimated Tax Payments
Form 1040 ES - Estimated Tax for Individuals
Direct pay
EFTPS (Electronic Federal Tax Payment System)
Form W-4 - Employee's Withholding Allowance Certificate

17. Resources IRS Web site - Sharing Economy Tax Center:
IRS Website – Key words Sharing Economy
Pub 17 - Your Federal Income Tax For Individuals
Pub 15-A – Employer’s Supplemental Tax Guide

18. Payments to Independent Contractors

19. Type of Business Relationship
Independent contractor
Employee (common-law employee)
Behavioral
Financial
Type of Relationship

20. Form SS-8
Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding

21. Form 1099 - MISC Payment to someone who is not your employee;
Payment for services in the course of your trade or business;
Payment to an individual, partnership, estate, or in some cases, a corporation; and
Payments to the payee of at least $600 during the year.

22. Form W-9
Form W-9, Request for Taxpayer Identification Number and Certification
Used to provide name and SSN/EIN to payer.
Used by payer to complete Form 1099-MISC
Type of entity matters
Sole proprietor, 1099 required
Partnership, 1099 required
“C” or “S” Corporation, no 1099 needed
some exceptions, see instructions
LLC – more info needed

23. Form W-9 LLC = Limited Liability Company Single member LLC could be:
Disregarded entity (files Schedule C), required
If LLC elects corporation status, no 1099 needed
Multiple member LLC could be:
Partnership, 1099 required
Corporation, no 1099 needed (generally)

24. New Secure Access Process for Get Transcript Online and other IRS
New Secure Access Process for Get Transcript Online and other IRS.gov Tools

25. Secure Access Process Secure Access Process
New authentication framework
More rigorous validation process
2-Factor authentication:
Password credentials
Security code sent by text
Secure Access Authentication used for: Get Transcript Online, Get an IP PIN, Online Installment Agreement

26. Process Prior to 2015 Email confirmation code Identity Proofing
Name and SSN
Date of Birth
Filing status and address on last filed return
Knowledge-Based Authentication (KBA)
Series of financial/personal questions only a taxpayer should know

27. New Authentication Steps
confirmation code
Same as before; code sent to address; taxpayer re-enters in order to continue to next step
Identity proofing
Similar as before
Two new steps:
Financial Verification
Activation code text sent to mobile phone

28. How to Successfully Authenticate
A readily available address that you can check immediately
An SSN
Account number information from either:
Credit card (last eight digits), or
Home mortgage, or
home equity mortgage or
home equity line of credit, or
Auto loan

29. How to Successfully Authenticate
A mobile phone that is
Supported by a data plan that includes texts
Associated with your name and/or address
Not a business-owned phone
Not a virtual phone, i.e. Skype, or a pay-as-you-go phone
Remove “credit freeze” if through Equifax

30. How to Successfully Authenticate
Returning Users (registered via Secure Access)
Need their username and password
Need their mobile phone to receive security code
Returning Users (registered via KBA process)
Password and user name still valid
Must provide financial verification
Must receive mobile phone text code

31. Higher Security/Lower Access
Trade offs for higher security
Fewer people able to authenticate
IRS monitoring pass rate;
Evaluate and adjust as necessary
Get Transcript by Mail option
Taxpayers always should retain copies of prior year tax returns

32. Looking Ahead – Digital Demand
Secure Access provides foundation for future self-help tools
Taxpayers demanding more digital options
Cost of IRS personal service: $40/$60 per transaction
Cost of IRS digital service: $1 per transaction
IRS remains committed to providing services needed by taxpayers

33. IRS Tax Calendars

34. IRS Tax Calendar on IRS.gov

35. IRS Tax Calendar