All business owners should try their best to provide accurate accounting information to the IRS. If they fail to do that, they run the risk of undergoing an investigation. When that happens, people often have to spend a lot of time and money putting things right. Also, the tax man is almost guaranteed to say you owe them more than you paid. In the worst of circumstances, you could face criminal charges. That is especially the case if you’re a sole trader rather than benefiting from the protections of a limited company. As there seems to be a lot of confusion over what can happen, we wanted to set the record straight today. You should find everything you need to know on this page.
You can make amendments for three years
Most people don’t know this, and that is why they get into so much trouble. Sometimes you’ll file a false tax return because you don’t have the right information available. Maybe your sales reports for the final quarter aren’t ready yet, and so you have to estimate. The IRS understands that can happen from time to time. That is why they allow business owners to make amendments to their returns for up to three years. So, if you got something wrong, you should never bury your head in the sand. It’s possible to put things right and avoid any fines if you deal with the issue appropriately. People who ignore their return knowing that it was incorrect are asking for trouble.
You might suffer an IRS investigation
IRS investigations can take months or even years depending on the size of your operation. In most circumstances, they will send agents to your office to assess all your financial records. They will go through everything with a fine-tooth comb, and they’re sure to find some discrepancies. At the end of the day, that is always going to happen because humans make mistakes. You shouldn’t worry too much unless it’s obvious you were trying to pull the wool over their eyes. You don’t have a choice either when it comes to these inspections. If you refuse to let the agents view your files, they will take you to court and force you to do it. So, it’s always sensible to comply.
You could face criminal charges
If the IRS discovers that you’ve used underhand techniques to hide income and profits, they could bring criminal charges. As we mentioned earlier, that’s much more likely to happen if you’re working as a sole trader. While an expert criminal defense attorney could help you to fight the case, it’s better to avoid such an instance. Court cases are made public these days, and so all your clients will hear about the mishap. It’s possible that you could go to prison for a long time if you were using an elaborate scheme to defraud the government. Bear that in mind if you ever feel inclined to lie on your return. It could be the worst move you ever make, and it could spell the end of your entrepreneurial lifestyle.
Having read that information, we hope you will all take this issue seriously. Nobody wants to see you fail because you got greedy or made mistakes. When all’s said and done, there are lots of ways to reduce your company’s tax payments to nothing. You just need to think outside of the box and use savvy techniques.