Personal Service Corporations: Issues In Identifying The Proper Taxpayer

Abstract

Personal Service Corporations (PSCs) constitute a commonly employed entity through which individuals conduct business operations. Use of a PSC can provide many potential tax benefits. As a consequence, the Service has frequently challenged the recognition of PSCs and sought to tax income allegedly earned by a PSC to its shareholder(s)-employee(s). In this article, the issues relevant to Service-taxpayer disputes over PSCs are examined and relevant reform in the law proposed.