Year-End Legal Checkpoints for Business Owners
December is about a financial wrap-up of your business, but it's also the month when unnoticed IRS legal liabilities can quickly start to develop into next year's problems. For many companies, these issues originate from IRS procedures, statutory deadlines, and obligations that continue to run whether or not your business is paying attention.
As the year closes, even small compliance gaps can turn into meaningful legal exposure. If any of these points hit close to home, that's where legal guidance becomes invaluable, and where working with a tax lawyer at Kundra & Associates can help. Here's what you should know about IRS areas your business should be reviewing now and how to address them with a business tax attorney, to avoid starting the new year with preventable complications.
Checkpoint #1. Payroll and Trust Fund Liability
Payroll tax issues are the single area where business owners can become personally liable, and you may only learn this after the damage is done. Under the IRS Trust Fund Recovery Penalty (TFRP), if payroll taxes are withheld but not properly deposited, the IRS can collect the unpaid amount directly from responsible individuals (like you), not just your business entity.
This is often surprising for owners who assume their bookkeeper, payroll provider, or controller "handles it." In reality, the IRS looks at who had authority over financial decisions, and December is the month when missed deposits or late filings from earlier in the year surface in IRS records.
A payroll oversight becomes a legal exposure, not just an accounting error, when the IRS determines that someone "willfully" failed to deposit trust fund taxes. That standard is broader than you might expect and can apply even when cash-flow issues or misunderstandings were involved.
If you're unsure whether a lapse could create personal liability, that's a conversation worth having with an IRS tax lawyer before the year rolls over.
Checkpoint #2. IRS Notices and Deadlines
December is also the point when IRS notices, especially those that were set aside earlier in the year, begin to collide with upcoming statutory deadlines and can send you searching for a tax attorney near you.
If you're a business owner who's sitting on unopened IRS letters because nothing looks urgent or because the business is already overwhelmed, you could be putting yourself at legal risk. Remember, not all notices signal an audit. Some create an automatic obligation or begin a countdown that, if missed, can lead to liens, levies, or the loss of appeal rights.
Year-end and early-January deadlines often determine whether your business keeps its right to challenge a decision, request a hearing, or propose a payment arrangement. December is the last opportunity to preserve these rights before the new year, when processing accelerates. If you have an IRS letter sitting unanswered, even one that seems minor, it's wise to have it legally reviewed before January as part of your year-end planning.
This kind of review fits naturally into year-end tax planning for business owners and provides peace of mind before enforcement activity resumes.
Checkpoint #3. Owner Transactions and Agreements
Owner-level transactions are another hidden legal risk. Throughout the year, you may have used some informal arrangements, such as undocumented loans between the owner and the company, distributions labeled incorrectly, or payments that don't match what the operating agreement states.
These mismatches may seem harmless until they run into IRS scrutiny or complicate a legal defense. When they do, they can undermine legal defenses in audits, create disputes between owners, or complicate collection matters. The IRS examines whether transactions are documented, whether they follow the entity structure, and whether they match how the business actually operates.
December is the ideal time to clean up these areas:
Documenting loans
Reconciling distributions
Aligning operations with governing documents
Clarifying anything that could be construed inconsistently
These issues are often easy to fix in December, but much more expensive if they're discovered later.
Checkpoint #4. Year-End Legal Exposure Review for Prior Tax Issues
If your business has existing tax challenges, such as tax debt, unfiled returns, payment plans, or past disputes, the end of the year isn't the time to "wait and see." December is the critical window to preserve rights and prevent the IRS from escalating enforcement.
For businesses on an installment agreement, year-end is when the IRS reviews compliance. A missed payment, late payroll deposit, or unfiled return can trigger an agreement default heading into the new year. If your company has unresolved issues in any of these areas, December offers a last chance to update financials, file missing documents, or renegotiate terms through working with an IRS tax lawyer before collection activity intensifies.
The IRS often increases collection actions in January and February, including liens, levies, and enforced collection on existing tax liabilities. If you're entering the new year with unresolved IRS issues, this is exactly when legal guidance matters most.
Checkpoints Offer Valuable Legal Protection
These checkpoints aren't simply accounting tasks. They're legal protection for business owners and decision-makers like you who want to enter the new year free of preventable IRS complications. Working with a business tax attorney can help you do that.
If any of these year-end issues raise questions, the right legal guidance can bring clarity and peace of mind heading into the near year. Get in touch with us today at Kundra & Associates to get the support and tax guidance you need and deserve. We work with clients across the U.S. and internationally from our offices in Maryland and Washington, D.C., handling IRS disputes, audits, investigations, collections, and high-stakes business tax matters, so business owners like you can experience increased peace of mind.