Bobby Hunt of the Small Business/Self–Employed Division of the IRS, a position he has held for the past three years. The SB/SE Division serves approximately 46 million taxpayers. Mr. Hunt has been with the IRS for more than 25 years. The following is based on an interview with Mr. Hunt.
Getting answers
About 80% of small businesses rely on tax practitioners to complete their returns. But questions arise throughout the year on how to handle various situations. Owners can turn to their tax experts and pay their fees or may find the answers they seek from the IRS for free. Small–business owners can find quick answers to common questions through the IRS Web site created for the SB/SE Division (see www.irs.gov/businesses/small/index.html). For example, information for starting, operating and closing a business, as well as obtaining an employer identification number is a click away (in 2003 it was reported that 37.5% of all EINs were already being obtained online).
For information not provided on the Web site, owners can call the IRS at 800–829–4933.
Filing returns and paying taxes
Filing returns electronically can save business owners time and money, ensure accuracy and provide peace of mind. Now all business income tax returns can be filed electronically.
Employment tax returns (Forms 940 and 941) can also be filed electronically. Paying taxes online can be a help; you can schedule payments in advance and verify that they have been credited to your account. Go to www.eftps.gov.
Note: EFTPS Express Enrollment is open to all new businesses when applying for employer identification numbers. These businesses will automatically receive by mail their EFTPS Personal Identification Number (PIN) and instructions for activating EFTPS enrollment.
Staying compliant
A key goal of the Director of Taxpayer Education and Communication is helping taxpayers to comply with their tax obligations. Toward this end, the IRS has launched a number of projects:
- Virtual workshops, where small–business owners can take any or all of 40 modules, on such topics as setting up a business, payroll and estimated taxes, at their convenience. These online modules can be accessed 24/7 (at the SB/SE Web site, go to "online classroom").
- Small Business Resource Guide, a CD–ROM from the IRS, SBA and other federal agencies that provides a wealth of accessible information.
- Local workshops conducted in conjunction with local chambers of commerce, CPA societies and the National Federation of Independent Business (NFIB).
Looking ahead
Expect to see a continuing growth in e–services that can benefit small businesses.
The IRS is also working at burden reduction to cut the time it takes to complete and file returns. For example, it has already provided a standard meal allowance for child care providers to simplify their recordkeeping. Instead of tracking every meal and snack given to children in their care, providers can use a fixed write–off for meals and snacks. And businesses with up to four vehicles are now permitted to use the IRS standard mileage rate when deducting car expenses — a simplification benefiting up to 800,000 small businesses.
Look for possible timesavers for small business in the future, such as:
- Annual employment tax reporting on Form 941 for small employers, which is currently a quarterly obligation.
- Standard deduction for self–employed individuals — instead of itemizing each expense (and maintaining receipts and other proof of substantiation), claim a fixed deduction similar to the personal standard deduction. Alternatively, specific standard deduction amounts may be provided, such as a fixed write–off for a home office.
