Tax Day 2022 returns its original April 15th deadline. While that seems like it’s ages away, it’s a good idea to stay on top of your finances. Falling behind on tax payments (or even worse – outright dodging the taxes you are supposed to pay) can land you in some serious hot water. The Internal Revenue Service frowns on any misconduct of all descriptions. Don’t run the risk of being punished with harsh penalties. They’ll hamstring your attempts to generate business and harm your reputation with clients and customers alike!
Late Filings and Overdue Payments
The two most frequent violations of IRS regulations are late filings and overdue payments. The punishments are different depending on the entity at fault. If you’re running a sole proprietorship or in charge of a C Corporation, the late fee seems relatively small. It’s only 5% of the total taxes owed for each month that you are in arrears. But the penalty will keep growing until it maxes out at 25%.
For S-Corporations or partnerships, the fine is much stiffer. How many partners or shareholders are involved? You can expect to pay $200 depending on the size of your corporation. The new fine is $210 as of the tax year for 2020. While it doesn’t seem like that large of an increase, it’s still something you won’t want to pay! Late payment penalties, on the other hand, are not as severe. The IRS will hit you with a .5% penalty of the amount you owe for every month you are behind on paying. The maximum limit is 25%, which can still hurt your bottom line.
Request the First-Time Abatement
One solution is to request first-time abatement relief. This option is the most basic way to seek mercy from the IRS. If you don’t have this document on your dossier with them, they will forgive the penalty. Even so, this will only work once. The government does not like repeat offenders.
Provide Reasonable Cause for Tax Issues
Suppose that you’ve already used your first-time abatement. What then? Another solution is to furnish the IRS with a good reason why you have tax issues in the first place. Rely on these specific keywords in your documentation to convey the circumstances: death or serious injury; Fire, Casualty, or Natural Disaster; Missing Records.
Trust the Professionals at the Harding Group
Unlike other accounting firms, The Harding Group, located in Annapolis, MD, will never charge you for consultations and strive for open communication with our clients.
Are you interested in business advising, tax preparation, bookkeeping and accounting, payroll services, training + support for QuickBooks, or retirement planning? We have the necessary expertise and years of proven results to help.
We gladly serve clients in Annapolis, Anne Arundel County, Baltimore, Severna Park, and Columbia. If you are ready to take the stress out of tax time, contact us online or give us a call at (410) 573-9991 for a free consultation. For more tax tips, follow us on Facebook, Twitter, YouTube, and LinkedIn.