Let's assume I am helping a very close friend of mine who owns a small family restaurant. She has 2 people working for her and she treats them as independent contractors. Under current conditions I am quite sure IRS would reclassify them as full time employee's and fine her (sole proprietorship). AFAIK, IRS does not know about this yet, but if they wanted to find out they easily could by expanding the audit.
I am giving her tips on what options she has and what would be pros&cons of each option.
Also I helped her to talk with IRS over phone to solve the other tax audit. IRS agent over phone wrote down my name while I represented her - I guess this is standard procedure.
Can I get into trouble for giving tax advice to a friend (e.g. there is this dreaded Trust Fund recovery Penalty)?
Things to consider:
- I am not getting paid for explaining things or giving a tip to her.
- I am not licensed and I am not lawyer.
- Her business does not make enough money to afford real legal consultation.