Beware Professional Service LLCs & LPs. The IRS Is Looking at You to Pay More Self-Employment Tax.

If you are a doctor, lawyer, accountant, consultant, or any professional, the IRS has begun auditing how much Self-Employed Contribution Act ("SECA") tax you should pay. Recently, the Tax Court held that lawyers in an LLC who also were member managers that actively participated in an LLC's operations were subject to SECA tax on their distribution, which normally escapes tax. Similarly, the IRS audited a limited partnership hedge fund that is currently challenging the IRS in Tax Court, but we have to wait and see how the court rules.