More baby boomers in their 50s and 60s are risking their retirement savings to launch businesses than in past generations. Now in a new twist, the Internal Revenue Service may be targeting retired entrepreneurs and seeking back taxes, BloombergBusinesssweek reports.
Some older entrepreneurs are using a strategy known as ROBS or "Rollovers for Business Start-ups." Individuals use their nest eggs to launch ventures—while avoiding taxes and penalties associated with early withdrawal of their retirement savings. More entrepreneurs are using this strategy to buy franchises.
But two recent tax court decisions show the federal government may be looking to go after back taxes, BloombergBusinessweek reports. The IRS has warned that the ROBS strategy lies in a murky area of the law.
Read the full report here.