I recently worked with a franchise owner who got himself into a pickle. It seems the franchisor has been selling some of its product to the franchisees for cash and taking the invoices back from the franchisees.
The state tax authorties became aware of this and audited the franchisor. The franchisor decided to save his own skin and gave up the goods on the franchisees who now are all being audited.
If you own a “cash” business like a dry cleaner or fast food outlet now is a good time to re-examine your business practices. As state and local governments face ever tightening budgets they will step up enforcement activity as a means of generating new revenue.
If you are a small business owner you already have a target on your back, don’t make it bigger.