What Happens If I Do Not File or Pay my Payroll Taxes?

Payroll Taxes

When it comes to unpaid taxes, the IRS is a little harsher on corporations than on individuals. Businesses owe more taxes and are more involved in tax administration than individuals. People who owe taxes are treated harshly by the IRS, who consider it a significant infraction and a serious felony. They are unconcerned with an individual’s or a business’s financial situation, whether they have declared bankruptcy or are deeply in debt; all they worry about is that you pay the taxes you owe. Payroll taxes are the most strictly enforced by the IRS of any sort of tax. They are highly concerned about unpaid payroll taxes and have hefty penalties for late payment.

A company that receives payroll taxes from its employees is obligated to pay those taxes on their behalf. If a company fails to pay its taxes, it is considered fraudulent and is dealt with accordingly.

What are Payroll Taxes?

Payroll Taxes

All businesses must submit all accurate information to the IRS, make monthly payments to the federal payroll tax department, and file informational returns. The company is obligated to provide a W-2 Form to all workers and a Form 1099 to any individual contractors so that they may identify how much they were paid and what deductions and bonuses they received. All businesses must also use the IRS-created Electronic Funds Transfer (EFT) system to deposit Medicare and Social Security taxes for their employers and employees. This deposit can be made monthly or semi-weekly and is based on forms from past years, such as Form 941. If your employer has more than $50,000 in tax withholding each year, they must deposit semi-weekly, and those with less than $50,000 in tax withholding must deposit monthly. The IRS will determine the frequency of your deposits, and you will be notified.

Businesses must also pay Federal Unemployment Tax Act (FUTA) tax each quarter if their total salaries paid for the quarter exceeded $1,500. In terms of all the forms and their functions, Form 940 is used to report your FUTA tax. Other forms include Form 941 or Form 944.  On a quarterly basis, Form 941 is used to report employee wages, employer withholdings, and Medicare and Social Security taxes. Form 944 is the same as Form 940, however, it is reserved for employers with annual tax withholding of less than $1,000 per year.

What happens when a business fails to pay or file its Payroll Taxes?

When a company fails to pay its taxes, particularly its payroll taxes, it is not a minor issue. Many firms get into financial difficulties and are forced to postpone paying their taxes. This results in a failure to submit a penalty of 5% every month, with a maximum penalty of 25%. Other steps that the IRS could take include levying or enforcing a levy or lien on the bank accounts of businesses or individuals.

How to Solve this Problem?

This is a significant situation that might be difficult to handle. The first step you could take is, of course, to pay your taxes if you can find the money, but if you can’t, here’s what you need to do. If it is completely difficult for you to pay your taxes, you can request extensions. The IRS is often able to be patient and provide you with a time period and a plan for paying these taxes. If you are unable to do so, do not wait for the IRS to come knocking on your door; instead, get assistance. Seek expert assistance from a Miami Tax Accountant who has dealt with similar issues and assisted individuals and organizations in dealing with them efficiently.

Any form of tax problem necessitates the assistance of a professional. Allow the pros to handle the process of owing payroll services, which can be difficult and intimidating. We can assist you in sorting through your options and determining the best solution and payment plan for you. Our team consists of Tax Preparers in Miami who have been dealing with issues like these for years and have solved them effectively. Be a part of our happy clients and let us take care of all your tax concerns.

All you have to do is reach out to us; you can email us at admin@sdgaccountant.com or call us: +1 (786) 706-5905.

The IRS Streamlined Filing Compliance Procedures

Streamlined Filing Compliance Procedures

Expats can be found all over the world, whether in the United States, Italy, Canada, or Mexico. They are the ones who prefer to enjoy life and go out into the world to challenge the world with their talents and appreciate the beauty that it has to offer. However, other expats are solely in the country for work reasons, which is extremely inspiring given that you have to leave your entire life behind for a simple job that could transform your life drastically. Many expats who leave the United States are unaware that the United States is one of two countries that force expatriates to pay taxes regardless of where they live as U.S. citizens. The streamlined filing compliance procedures (“streamlined procedures”) describe below in detail.

Streamlined Filing Compliance Procedures

When you move to a new country, it’s easy to lose sight of your previous responsibilities. Many expats have not submitted their tax returns in the 10 or five years since they left. It is critical to file your tax returns when travelling outside of the United States in accordance with U.S. tax rules. In 2012, the IRS introduced a new approach known as the streamlined filing compliance procedures to assist foreigners in catching up on their taxes without incurring any penalties. The streamlined procedure is ideal for expats who want to file all of their prior tax returns without stress.

What are the Streamlined Filing Compliance Procedures?

As previously stated, streamlined filing compliance procedures were designed in 2012 to assist expats in catching up on their taxes for past years. It is a method for expats to avoid penalties and fines when submitting previously unpaid taxes. Before you worry about anything else, the first and most crucial step is to catch up on your U.S. expat taxes as well as your foreign bank account reports (FBAR). The IRS streamlined filing compliance procedures and delinquent FBARS procedures can be used to do this. All of this information can be overwhelming to hear and comprehend; leave the stress to us, and our experienced Tax Preparer team will submit all of your U.S. expat taxes.

How Do I Know if I Qualify for A Streamlined Filing Procedure?

To qualify for the streamlined procedures, you must present documentation that you have been living in a separate country and were not advised that you were required to file your taxes in both the United States and the nation in which you are living. This can be accomplished by mailing a signed form known as Form 14653, which validates your status as unknown and contains other forms that will all be mailed as a package.

What Steps Should I Take to Complete the Streamlined Filing Compliance Procedures?

IRS Form 14653

This is what you need to do next if you qualify for a streamlined procedure:

  1. The first step is to file your income tax return for the most recent three tax years. This necessitates the preparation of your documents.
  2. The second stage is to file the most recent six years of FBAR forms. If you were reporting for a single year, you would generally only file FBAR if the total of your non-US bank accounts amounted to more than $10,000 at any point throughout the year. However, because you are filing for six years under the streamlined procedure, you must file FBAR regardless of whether you meet the $10,000 requirement. The FBAR forms are only intended to be submitted online.
  3. The third and most crucial step is to submit your signed Form 14653, which certifies that you are an expat living outside of the country, that you are a U.S. citizen, and that you were unaware that you were required to file taxes while living outside of the country.

How to Prepare for the Streamlined Procedure?

To prepare for the streamlined procedure, we recommend that you hire an experienced Expat Tax Accountant in the United States to help you file all of your FBARs and other program-required forms. All they would need are your tax returns for the previous years and your foreign financial accounts for the last six years.

What if I Do Not Qualify for the Streamlined Procedures?

If you were notified that you are obligated to file your taxes as a U.S. citizen while living outside of the United States, you do not qualify for the streamlined procedures.

To remedy this, the IRS provides another service that can assist you in catching up. The IRS Criminal Investigation Voluntary Disclosure Program, for example, or the Delinquent FBAR Submission Procedures. Contacting a U.S. Expat Tax Accountant who can assist you identify the right program for your case is your best option.

Contact SDG Accountants, which offers U.S. Expat Tax Services and has numerous professional tax accountants all around the world. Make an appointment for a consultation today using the link below!

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Being Audited by the IRS

IRS

IRS audits are uncommon, but they can be extremely harmful if not handled properly with appropriate representation and proof. Many taxpayers become terrified when they hear the words “audit,” particularly “IRS audits,” since it takes their breath away. However, many people are unaware that IRS audits are not as awful as they believe. You must ensure that you specify the sort of audit requested, and you will be able to make sense of all the misunderstandings.

Types of IRS Audits:

The IRS can conduct a variety of audits, many of which do not need a visit to your home. To begin, let us define an IRS audit. An IRS audit is essentially an assessment of an individual’s or an organization’s financial statements and all financial information to ensure that all income and tax forms are appropriately recorded. Its primary purpose is to ensure that you are reporting the correct amount on your tax forms to be taxed. The IRS can conduct three sorts of audits to verify your tax information: correspondence audits, field audits, and office audits. Let’s take a good look at those audits and see what you can do to deal with them effectively.

Correspondence Audits:

IRS Audit

Correspondence audits are audits that are conducted exclusively through the mail. They are the simplest type of audit to deal with because they do not focus on large areas of your financial records, but rather on minor problems on your tax return and tax forms.

The IRS can send you two sorts of letters in the mail to finish the audit. The first is a simple letter informing you that you owe money to the government. A simple letter can be sent if there is an error on your tax return; for example, the IRS will notice if you declare the wrong income by mistake. For example, if you only record $3,500 of your $4,000 income, you will be required to pay taxes on the remaining $500.

If you receive a letter like this from the IRS, the first thing to do is not panic. Accepting that you made a mistake and paying the amount owed, whether it is taxes, interest, or penalties, is a straightforward answer. However, if you do not believe you made an error and wish to dispute, you may do so by asking for further examination, which can be done over the phone or by mail. To ensure that you follow the proper measures while dealing with the IRS, consult with a tax accountant who can assist you assess the issue and professionally represent you to the IRS. Schedule a consultation right away with our Miami Tax Accountant!

An audit letter, which requests specific paperwork and proof to validate the deductions made on your tax return, is another sort of letter that the IRS may send. The IRS requires actual proof that demonstrates your deductions are genuine, such as a cancelled check for a deductible expense. All you have to do to address this problem is provide the appropriate paperwork to the IRS, making sure to send a copy rather than the original. If you are unsure about which documents to send, it is usually better to call a tax accountant, such as SDG Accountants, and ask their assistance in resolving this situation.

If you do not have the paperwork and hence cannot provide confirmation of the deduction, you can simply pay a fee to have your audit cancelled. However, if certain taxpayers wish to further argue and pursue the issue, they may do so via mail. Remember that if you hired a tax accounting firm to complete your return, they can serve as your perfect representative to the IRS and resolve the issue for you on an hourly basis.

Field Audit:

A field audit is a physical visit by the IRS to your home, place of business, or the office of your accountant. This is a significant audit because an IRS agent will come to your door and demand an answer in person. Many of these audits are more likely to occur if you operate a business than if you are an individual. In instances like this, you must consult a tax accountant who can represent you before the IRS. It is difficult to deal with the IRS on your own; you require the assistance of a professional who can counsel you wisely and negotiate with the IRS on your behalf.

Office Audit:

IRS Audit

The IRS may want to question you in person during an office audit. This form of audit is severe because it forces you to deal with the IRS in a professional setting face to face. You will receive a letter in which you will be asked to appear at a specified location on a specific date and at a specific time. If you are unable to attend the appointment, you can reschedule it by contacting the IRS.

It is critical in instances like this to bring a tax preparer or a tax professional with you who can represent you to the IRS. A regular taxpayer does not have the same level of expertise as a tax preparer or tax attorney; the IRS is very sophisticated and talking with them is difficult. You might become nervous and say things that should be kept confidential, which is why you need the assistance of a Tax Preparer.

How to Respond to IRS Audits?

SDG Accountants comprises tax professionals who are experts in dealing with the IRS; we can assist you in navigating the audit and communicating with the IRS on your behalf. All you have to do is use our consultation calendar to schedule an appointment with us and explain your position to our accountants and tax professionals. From that point on, it is not only your problem but also ours, to address the problem efficiently. Now is the time to schedule a consultation!