The Augusta Rule (IRS Section 280A[g]) is one of the most powerful tax strategies available, yet most business owners don’t use it. Why?
It’s not because it triggers audits. In fact, John hasn’t seen evidence that properly using the Augusta Rule puts you at audit risk. What does raise red flags with the IRS is obvious overreach, like writing off $60K of meals on a $100K business.
The real reason most people skip it:
Accountants are overwhelmed and short on time to research strategies like this.
Some have been turned off by shallow social media clips that misstate the rule.
Entrepreneurs don’t like paperwork, even when the payoff is huge.
That’s where we come in. We built a Done-for-You software-backed service that takes the admin off your plate, keeps everything compliant, and makes sure you actually capture the savings you’re entitled to.
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Transcript:
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using the Augusta rule. It it I’ve never
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seen any evidence at all that it would
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get you audited,
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right? There are some things that will.
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Most of it involves, for example, my
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business made 100 grand. It’s not a
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business that relates to food and I
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wrote off 60 grand of meals. You know,
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absurd stuff of okay, that kind of
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smells funny.
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Overreach,
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right?
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Yeah.
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Right. It’s that sort of thing that
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tends to get attention.
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Blades cheating or lying.
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Yeah. Um, again, in an audit, what tends
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to fly? If you’ve got your paperwork in
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order, that’s what we’re talking about.
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Why do people not use the Augusta rule?
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Because of the strings attached, because
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of the rules, because of the paperwork.
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Accountants are so busy just trying to
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comply. It’s gotten so much harder
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and there are fewer of them. They’re
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retiring. They’re downsizing. They’re
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down timing. They’re getting rid of
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staff. A lot like doctors, actually,
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that that they’re declining as an
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industry. They don’t like the
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bureaucracy. They don’t like the stress
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and they’ve decided, you know what, I
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can work 20 hours and not have employees
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and make plenty of money and I’m fine. I
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don’t want to deal with the nonsense of
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a large practice, working for a
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hospital, etc., etc., etc. Same thing’s
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happening with accountants, and I use
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the term generically, tax return
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preparers is probably a more accurate
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term. One of the issues they have
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because they’re so overwhelmed with
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compliance is they don’t have the time
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to research. It’s not that they don’t
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want to, they’re curious, they want to
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know.
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Yeah.
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I’ve talked to so many of them. and you
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talk to them and you you actually show
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them the law like this. They’re like
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they’re Missouri. They’re the show me
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state.
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You show the accountants, they’re very
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responsive, but they have less and less
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time to do the research on their own and
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need more and more
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education on what’s doable not. So, I
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would say what are the reasons people
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don’t use the Augusta rule? The
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accountants aren’t aware of it because
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they’re so overwhelmed.
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If they are aware of it, they’ve seen
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one too many videos on TikTok and are a
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little cynical. So the poison, the well
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is poisoned.
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And finally, even if they do educate the
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client, entrepreneurs being
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entrepreneurs, do not like admin, do not
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like paperwork. And even though the bang
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for the buck is good, you’ve shown this.
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Yeah.
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The way that you put together a system
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and delegate it, the net present value
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of the annual savings you’re getting,
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I mean, it’s got to be at least a
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million.
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It has to be.
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And so it’s worth doing if somebody lays
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out how to do it and makes it easier.
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Yeah.
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And I think that’s where we come in.
