Is the IRS Targeting More Small Businesses Than They Used To?

It appears that the IRS are now doing anything they can to add more coin to the coffers of our current government, and the fact that 20,000 small businesses recently received threatening letters from the nice people at the ‘Inland’ Revenue Service is proof of this. To be fair to our president Obama the reality is that the IRS is almost as autonomous as the Fed in terms of actually being controlled, which is part of the problem - he literally has no control over either institution.

These letters are titled "Notification of Possible Income Underreporting" and vaguely inform the small business in question that they might have underreported their cash transactions in last year's tax return, and to please double check that they're not doing anything illegal - not reporting every single cash transaction for example.

Now on face value this demand from the IRS might seem very fair and equitable until you realize that it's a form letter and is based on nothing more than idle speculation on their part, and is also just the result of a data set that some algorithm munched through and then spat out these results for some IRS analyst. Basically the IRS computers have looked at the number of credit card and debit card transactions submitted on average by small businesses and then calculated how many cash transactions might be missing.

The reason why exact figures for underreporting haven't been provided is because the IRS has absolutely no way to monitor cash transactions, which is obviously something which sticks in their craw to the point where the can no longer bear it, and are now doing their best to smoke out any small business not disclosing all of its cash sales.

Now besides the fact that these letters are obviously going to worry tens of thousands of small business owners, there are some other more serious repercussions which the IRS obviously hasn't even considered.

1. They're punishing the businesses which currently form the beating heart of the US economy - the same businesses which have been responsible for creating in excess of 80,000 jobs.

2. Small businesses don't have the time, money or resources to double check returns every time the IRS has a doubt - CPAs and tax attorneys cost money after all!

Instead of helping small businesses thrive it appears the IRS is now intent on crushing the first shoots of economic growth to sprout anywhere in the United States since the financial meltdown of 2008.

This is a bad move for the US economy no matter what way you look at it and could result in more job losses than the US economy can afford right now - which is approximately zero. Remember the United States has a total current debt of US$16+ trillion dollars, so we're really at the tipping point here. Fiscal cliff? Bottomless fiscal pit more like!

Are the IRS selectively targeting a specific branch of American society all over again? Is this more about the political leanings of these business owners than any misreporting of cash transactions on their part?

They were guilty of doing exactly that in 2010, so who's to say this isn't another veiled attempt by IRS agents to bully people they don't "like."