The simplest mistakes pertaining to your business taxes can have severe implications that can leave you hit with enormous fines. These penalties can threaten you and your business with financial ruin. As stressful as that may sound, you shouldn’t let your fear paralyze you into inaction. Instead, you need to be proactive in working with the IRS to resolve the issue at hand, taking legal action as needed.
The importance of worker identification numbers
Under federal law, businesses are required to gather and produce worker taxpayer identification numbers on all IRS-related documents. Failure to do so can result in a $50 fine for each instance where the number isn’t included. That might not sound like much, but if your business deals with a lot of employees and a lot of paperwork, this minimal fine can quickly balloon. Although federal law caps these fines at $100,000 in a calendar year, if you’ve been audited and found to have made this mistake over the course of several years, or you’re facing other tax problems, then you could be facing even larger tax liabilities.
The IRS will likely aggressively pursue what it’s owed
The IRS might be quick to take action on these matters, implementing aggressive collection. One tactic that the IRS uses is placing a federal lien on your property. This can significantly disrupt your business operations, especially if you need to obtain new lines of credit. The IRS might also seize your business’s bank accounts and, if you’re found to be personally liable for the tax debt, your personal property and even your retirement accounts.
Have an advocate on your side to help you deal with the IRS
As stressful and overwhelming as this may sound, you should take some comfort knowing that you can be proactive in avoiding the maximum penalties imposed by the IRS. One way to do this is to negotiate an offer in compromise.
If you’re going to go this route, then you need to know what you’re doing so that you can get the best outcome possible under the circumstances. If you’d like to know more about this strategy and others that may be available to you, consider consulting with a tax law professional who will know how to zealously advocate for you and your business.