First of all, let’s all just acknowledge that tax compliance is complicated. This tweet from one of Twitter’s sassiest CPAs, @andreacpa0, pretty much sums it up:
What is Tax Compliance?
For most folks, tax compliance means filing accurate taxes before April 15 every year. However, small businesses and their owners are subject to a far more complicated regimen of state, local and federal taxes. Tax compliance for small businesses and individuals who work for themselves is simply the act of maintaining proper books and documentation and filing annually on time.
Who Needs Tax Compliance?
Businesses of all kinds should practice sound tax compliance. Corporations, partnerships and sole proprietors will have different considerations when it comes to tax compliance, but all of them should maintain clean books and proper documentation. Many entities choose to hire a third-party tax specialist to prepare their taxes and consult on best practices (more on that later). While the minimum income for filing taxes in the U.S. depends on your age and how you file, just about every entity earning money in the U.S. is responsible for paying taxes on that income.
How Will I Know If I’m Out of Compliance?
The fastest way to fall out of compliance is by missing your filing deadline and not filing an extension. If it’s been a few years since you filed your taxes, it’s safe to say the IRS is tracking you down as we speak.
Even ff you did file on time, there’s a chance you may not have filed correctly, especially if you were filing for your own small business. President Jimmy Carter once referred to the U.S. tax code as “a disgrace to the human race.” With a tax code this complicated, it’s not difficult to make a significant error and not know it until the IRS comes knocking.
If you’ve fallen out of compliance, the IRS will contact you with a written letter. The IRS will never email, text or contact you via social media. Communications of this nature are most likely scams. The IRS will occasionally call you. If you are unsure whether IRS correspondence is legitimate, you can ask the representative to provide their credentials. According to the IRS, “IRS representatives can always provide two forms of official credentials: a pocket commission and a Personal Identity Verification Credential (PIV).”
What Happens If I’m Out of Compliance?
Once the IRS has contacted you, they will provide a list of the ways in which you are out of compliance accompanied by a list of how to address them. If you simply owe more money, you can often set up a payment plan with the IRS in order to pay what you owe.
The IRS is coming after non-filers. With expanded technology, the IRS will have access to increasingly stronger algorithms to find people who are not in compliance.
Our Tax Compliance Services
Olympia Tax Services processes and files tax returns for individuals and businesses in and around Olympia and Thurston County. As a tax professional since 2013 and an Enrolled Agent (EA) authorized to represent you before the IRS, Jim Gerner EA has a comprehensive knowledge of local, state and federal tax codes that he’ll use to legally reduce your tax burden.
Olympia Tax Services is ready to help with:
- Personal Returns
- Small Business Returns
- Quarterly Tax Preparation
- Audit Support
- Outsourced Bookkeeping
- Payroll
- Supercharge Your Tax Compliance with Tax Planning
Let’s be clear: The goal here is to comply. You don’t want to over-comply. Nobody needs to be giving the government more money than necessary. You can comply with the laws and still pay the lowest amount possible. Hire us for tax planning and you’re sure to find savings in places you never even knew to look.
Cutting edge tax planning with Olympia Tax Service paired with our easy-as-pie tax preparation will save you and your small business money AND erase your tax anxiety.
Click here to start saving with a customized tax plan from Olympia Tax Service!