IRS tax penalties can be as costly as they may be frustrating. The good news, however, is that these penalties can be avoided with the right planning, guidance and action.
To help businesses minimize their tax liability, below, we have revealed some of the most common and costly corporate tax mistakes to avoid.
If, however, you currently need professional advice regarding how to resolve a corporate tax issue – or you need experienced representation for an IRS audit, don’t hesitate to contact a Denver business & tax lawyer at the Shaw Law Firm, LLC.
Common & Costly Tax Mistakes to Avoid
- Filing inaccurate tax returns or filing returns late – Failing to report all of the income a business has earned during a given year can result in hefty IRS fines. This type of inaccurate reporting can stem from intentional omissions, miscalculations, or even an inability to verify the validity of some deduction(s). Similarly, failing to file any returns on time (or to request an extension) can trigger serious IRS penalties, depending on the situation.
- Not paying the tax bill on time – Filing accurate tax returns is, of course, just the first step in the process; businesses also have to submit their tax payments to the IRS on time. Failing to submit tax payments in a timely manner can result in penalties of up to 1 percent (of the amount of taxes due) for every month that an outstanding payment is late.
- Missing, padding or taking inappropriate deductions – Another common and potentially costly business tax mistake can arise with the deductions a business attempts to take (or misses taking altogether). In fact, while failing to take legitimate deductions can result in unnecessary losses/payments for business owners, padding deductions – or trying to use personal deductions as business deductions – can trigger IRS audits, as well as expensive fines.
- Making donation-related mistakes – These mistakes typically involve donating to entities that do not qualify as charities, fraudulently claiming that donations were made (when they were not), or failing to get/retain receipts for legitimate charitable donations that have been made. While donation-related mistakes on business tax returns can lead to IRS audits, they may also result in pricey penalties.
- Failing to keep tax records – These records may include receipts, payroll records, donation records, deduction records, etc. And while it’s important to keep everything related to business tax filings, it’s just as crucial to keep these records organized so they can be easily retrieved if or when necessary in the future (such as during an IRS audit).
- Not retaining an attorney – This can be one of the single biggest mistakes that businesses make with their taxes, as not having the oversight and guidance of an experienced lawyer can increase corporate tax liability, opening businesses up for expensive penalties, frustrating audits, and possibly other challenges in the future.
Contact a Denver Business & Tax Lawyer at the Shaw Law Firm, LLC
For experienced help minimizing your corporate tax liability – or for exceptional representation in an IRS audit, contact a trusted Denver business & tax lawyer at the Shaw Law Firm, LLC. For nearly 30 years, our attorneys have been providing comprehensive, high quality legal services for tax compliance issues and other legal matters.
You can call our firm at (720) 924-1040 or email us via the contact form at the top of this page to schedule a free initial consultation with one of our lawyers and find out more about how we can serve you.
From offices based in Denver, we provide superior legal services to individuals and businesses throughout Denver County and the state of Colorado.