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The IRS’s Large Business and International Division has an active risk campaign on the issue of when limited partners and LLC members in professional service firms owe self-employment tax (or SECA tax) on their distributive share of the firm’s income. LLCs and limited partnerships that practice law, medicine, accounting, architecture, etc., are being eyed by IRS examiners, and audits have been ongoing for the past few years. Hundreds of professional-service companies have been selected for these SECA audits.
