Small Business Owner / Self Employed Tax Issues
Even though small businesses largely contribute to the strength of the economy, they face challenges from the Internal Revenue Service or Massachusetts Department of Revenue due to tax problems. If these bodies are unable to validate your tax data, they will send a letter in search of clarification, which usually states that you owe a certain amount of tax-related money. If you are facing an IRS and Massachusetts Department of Revenue audit, it is important that you first obtain audit representation from a competent and experienced tax attorney before navigating through the tricky and complicated procedures.
The purpose of these audits is to confirm that the information, income, deductions and expenses you provided in your income tax return were correctly stated. Following an audit, the IRS can levy extra taxes, penalties and interests. Worse still, an audit that seems harmless can end up in criminal prosecution. It is for this reason that small business owners and self employed people who are facing tax-related problems and audits to seek legal representation from a professional tax attorney.
Common Tax issues faced by small business owners
There are many tax issues that can result in being audited by the IRS and Massachusetts Department of Revenue. Here are just a few:
1. Failure to file taxes
You have not filed the IRS income tax return before the stipulated deadline, which makes you liable to penalties.
2. Failure to pay taxes
You failed to make your quarterly estimates if you are self employed, receive a 1099 from customers or have partnership income. Alternatively, you filed an income tax return and did not pay the balance at all or made a partial payment.
3. Failure to pay employee taxes
The law requires you to withhold local, state and federal taxes from the paychecks of all your employees, except those who are exempt from taxes. You are also required to pay the withholding monies to the relevant administrative bodies by a certain date.
4. Failure to pay sales taxes - New Internet Sales Tax
Sales tax are collected by the state department of revenue. If you own an internet business, you may need to pay sales tax to at least one state due to a recent changes in the law. You may have to pay several states which all have different tax rates and rules. Massachusetts and Florida are using the new internet sales tax law to generate revenue and will begin sales tax audits.
An experienced tax attorney can help you when facing audit threats
A tax attorney can lower the scope and risk exposure of a tax audit. You have greater chances of successfully facing audit accountants, attorneys and examiners if you have legal representation. This is because a tax attorney has good knowledge of the complexed tax laws and is skilled in advocating, researching and negotiating. With a tax attorney, you do not have to undertake the complex task of researching and studying tax case laws, regulations and codes, as your attorney will do that for you. Your attorney will also prepare you for the audit meetings to help you honestly answer the interview questions without raising any red flags.
If you need such representation don't wait, contact Attorney Laura Brown at (781) 871-3111. She has helped many hundreds of businesses and individuals in dealing with IRS and the Massachusetts Department of Revenue. She knows Massachusetts tax laws, IRS procedures and effective strategies that save you time and money. She can provide you with all the necessary help you need when facing tax issues.