What you don't know CAN hurt you

July 13, 2017

(Image from http://www.pxleyes.com)

Recently, I've had a few clients who have received notices from the IRS or their state revenue departments informing them that they did not file quarterly payroll or sales tax in a prior year. In these cases, they had a prior accountant that was "handling" all of that for them. When I ask my clients to go through their files to find confirmations from their accountants showing the reports were filed, they came up empty. That has led to this PSA type of blog today. 


A couple things to know:


1. Your accountant (or payroll service) should be sending you a copy of any tax filing they file on your behalf when they file it. Period. If you can't put your hands on that information right now, it's time to reach out to her/him.


2. If your accountant (or payroll service) has access to your bank and makes a tax payment on your behalf, you should receive a confirmation from them when payments are made, when they happen. 


3. Even though you must keep your own records, the Internal Revenue Service Bulletin 2012-11 requires that tax preparers keep tax returns, along with supporting tax documentation, for a minimum of three years. So, if you do receive a notice, your preparer needs to provide you with that documentation. 


4. Lastly, even if you paid someone to manage your accounts, in the end you, as the business owner are always, ultimately responsible. The IRS and state revenue departments maintain that as a business owner, you are the one who should still stay on top of filings, ensure your paid preparer is doing her/his job, and that taxes are paid on time. You aren't allowed to use the excuse, "I didn't know". 


If you are unsure of filing requirements, ask your accountant to provide you with that information. Communication- and good recordkeeping- can save you a lot of money in penalties and late fees. 


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