This is topic no one really wants to discuss because most people dislike paying the IRS on a quarterly basis. Who wants to take money from their earnings to pay Uncle Sam? To date, we have not found anyone that enjoys this process. But it is a necessary evil. Failing to pay estimates can lead to large tax bill at the end of the year including a significant amount of penalties. This blog reviews the basic rules for paying estimated taxes. Continue reading…
IRS Tax Audit Penalties
In a typical non-criminal IRS tax audit case, the IRS may assess accuracy related penalties or civil fraud penalties for tax adjustments not in your favor. The penalties can be significant causing you more pain with the whole audit process. What are these two penalties? Continue reading…
First-Time Abatement Relief, IRS Failure
According to a report by the Treasury Inspector General for Tax Administration (TIGTA), 1.45 million taxpayers were not informed that they qualified for penalty relief under the First-Time Abatement Relief program. TIGTA estimated that the amount of penalties left unabated totaled more than $181 million. Continue reading…
IRS Audit Risk – Reclassifying S Corporation Distributions as Wages
In our previous blog, we discussed the issues with paying no officer wages. Your S Corporation is properly paying officer wages. Is the amount reasonable? The IRS is hitting small businesses for paying unreasonably low officer wages. Continue reading…
IRS Audit Risk – Reporting No Wages to S Corporation Officer
An S Corporation is a popular entity structure for small businesses. Many tax practitioners help small business set up S Corporations to reduce self-employment tax. This strategy can back fire if the corporation reports unreasonably low or no compensation to the officers/owners. This is an audit risk as the IRS is cracking down on business for not reporting officer wages.
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Payroll Failure to File, Failure to Pay, and Deposit Penalties
In a previous blog, we discussed the penalties for late individual annual tax returns. This blog reviews the penalties for late payroll tax returns. The failure to file and failure to pay penalties for payroll returns are the same compared to individual tax returns. However, there is also a failure to deposit penalty for payroll returns.
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IRS S Corporation Late Filing Tax Penalty
If the S-Corporation tax return is filed late, the IRS will add a tax penalty.
S-Corporation tax returns are generally due on March 15. If an extension is filed, the S-Corporation tax return is due on September 15. When the tax return is filed late the IRS will add a tax penalty based on the number of months late. The tax penalty can be removed under certain circumstances. Learn More on how to remove tax penalty or penalty abatement. Continue reading…
Tax Return Failure to File and Failure to Pay Penalties
We have prepared delinquent returns for many clients. When the client gets the tax bill, the client is astonished on the amount of penalties and interest charged. We usually tell clients that if you owe taxes from four years ago, you can double it to estimate how much is owed today.
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Trust Fund Penalty – Rules for DBA and Single Member LLC
Generally, the IRS has to assess trust fund penalties to make individuals in a corporation personally liable for unpaid payroll taxes. The word “corporation” has meaning in tax law. If the business is not considered a corporation, then the owner is automatically personally liable for unpaid payroll taxes. Read this blog for more information on the trust fund recovery rules for DBAs and Single Member LLCs. Continue reading…
Trust Fund Penalty – How long to assess?
The IRS has limited time to assess trust fund recovery penalties. Generally, the IRS has three years from the filing date of the employment tax returns to assess the trust fund recovery penalty. This seems simple but it does require further explanation.
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