November 1, 2009

The Clean Way or the Dirty Way

The Clean Way

As a business owner, you will want to make sure that you do not overpay your taxes. There are ways to avoid paying more than your rightful amount of taxes as provided by the law. But as with all legislation, it comes with certain conditions. Here are some of the cost-saving strategies you can implement for your business.

Choose the Right Entity Classification

If you own a business that is classified as an LLC, C Corporation or Proprietorship, you stand to pay more taxes than if your business is an S Corporation. Hence, an option you might want to consider is to convert your business to an S Corporation for tax purposes, if you qualify. This option, although viable, is not suitable for everybody. Due diligence should be carried out to ensure that all the IRS requirements, tax laws and requirements are strictly adhered to. For further details of this course of action, do consult a tax professional such as a tax lawyer or CPA.

Avoid Payroll Withholding and Estimated Taxes Penalties

Always be prompt in paying the payroll withholding taxes of your employees and estimated tax payments to avoid unnecessary penalties. If you intend to propose an Offer in Compromise to the IRS, be sure your taxes are all paid up and your tax situation made current.

Completely File All your Returns

If you are a business owner, you would have more than one form to fill in your tax returns. For instance, you need to fill up Forms 940 and 941, the payroll tax forms and other relevant forms as well. Failure to submit certain forms or submitting these forms late will render you liable for punitive action by the IRS. Recently, Wood County in Wisconsin was fined $49,450 by the IRS for not filing their 2007 payroll forms on time.

Do Not Abuse Monies held in Trust

Withholding taxes from employees' salaries and sales taxes collected in the course of your business are monies held by you in trust. They are to be paid to the IRS and any action taken to convert these monies to be used for any other purposes, such as payment of debts constitutes theft by conversion. Rest assured the IRS will take all forms of action within the law to recover what is due to them.

The Dirty Way

If you want to save on your taxes do not go about it illegitimately. A former IRS compliance officer in Las Vegas pleaded guilty to accepting a bribe to falsify an audit report for a taxpayer.

In 2008, Fernando Cruz of Shady Grove, Ore., offered to help prepare tax returns for a couple.
US Attorney Greg Brower's office said that the couple agreed to work with investigators in having monitored calls and meetings with Cruz. At the couple's home, he told the woman in the couple that he could "fudge" their tax records so that it reflected less tax liability. In doing so, he also accepted $500 as a bribe from the woman.

Sentencing for Cruz will take place November 24th.

Significantly enough, there was no mention of the couple's liability in this case.

Darrin T. Mish is a veteran, nationally recognized tax attorney who has focused on providing IRS help to taxpayers for over a decade. He regularly travels the country training other attorneys, CPAs and enrolled agents on how to handle their toughest cases with the IRS. He is highly ranked among the top attorneys in the country, with an AV rating from Martindale-Hubbell and a perfect 10 on Avvo.com. Martindale-Hubbell has also honored him with a listing in their Bar Register of Preeminent Lawyers. He is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. With clients on every continent but Antarctica, he has what it takes to solve your IRS problems no matter where you live in the world. If you would like more information about his practice and how he can help you, please call his office at (813) 229-7100 or toll free at 1-888-GET-MISH.

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