Tax Penalties on the Rise

There has been a lot of chatter about changes in the tax rules and regulations in the past year. Regardless of personal feelings on the matter we are all in the same boat of compliance trying to keep from going over the proverbial waterfall. For business owners the navigation of these new rules is two-fold. Like the rest of us, they have to be sure that their personal filing is accurate, but they are also faced with ensuring that their business reporting is spot on. With this in mind, I thought that a little information sharing might be in order to inspire a little more diligence in us all as we prepare our taxes this year.

Did you know?

A failure to file accurate information returns now results in a penalty of $100 per return (an increase from $50)

A failure to file can now cost up to $1.5 million (increased from the $250,000 maximum)

For corrected returns filed within 30 days, the fee is now $30 per return (up from $15)

Organizations filing corrections within 30 days may be subject to a maximum of $250,000 (increased from $75,000)

Corrections filed more than 30 days after the due date, but prior to August 1^st is now $60 per return (up from $30 per return)

Organizations issuing corrections more than 30 days past the due date, but prior to August 1^st, can face penalties up to $500,000 (up from $150,000)

Have an organization (small business) with gross receipts of $5 million or less?

A failure to file penalty can result in a maximum fine of $500,000 (increased from $100,000)

Corrections issued within 30 days may be fined a maximum of $75,000 (increased from $25,000)

Corrections issued 30 days or more past the due date, but prior to August 1^st, can be fined a maximum of $200,000 (increased from $50,000)

Interested in a few more details? 

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Friendly Reminders for Tax Time

Yes, I realize there is a certain level of irony using the word "friendly" in the same header sentence as  the word "tax", but I swear this information is benevolent! Due to a variety of legislative and calendar adventures this year, the 2010 tax filing details are a little different than previous years. With all of these changes in mind, I thought it might be nice to share a few information tidbits to help you file on time and avoid unnecessary headaches.

1. Due to a calendar conflict with the Emancipation Day holiday, 2010 tax filing is due by April 18, 2011 - not the usual April 15 deadline.

2. If you prefer to file your return in a paper format, remember that the IRS is not mailing tax packets to tax payers this year. You can still obtain these packets at your local IRS Office as well as participating Libraries and Post Office locations. Forms can also be downloaded and printed from the IRS website. 

3. If your annual income was less than $49,000 for 2010 you can get your tax preparation completed for free! Check out the Volunteer Income Tax Assistance program for details. 

4. If you are 60 years of age or older you can make use of free tax counseling and basic preparation services through a program called Tax Counseling for the Elderly. 

5. If your adjusted gross income is $58,000 or less for 2010, you can e-file your taxes for free using the traditional version of the Free File software.

6. Interested in filing electronically, but don't need the software? You can also use Free File Fillable Forms to e-file your 1040, 1040 A and 1040EZ return.

7. If you are being paid to prepare a tax return for another person, be sure to obtain your PTIN. (Preparer Tax Identification Number). The 2010 filing is the first year that this is required.

8. If you maintain financial accounts in foreign countries, be aware that the IRS has taken additional steps to ensure that appropriate taxes are paid on these funds. 

9. Due to tax change legislation signed in 2010, people who include certain forms in their filing will be required to wait until mid-to-late February before they can complete and file their tax forms. The delay is designed to allow the IRS ample time to reprogram its processing systems to ensure that they can properly process filings with these changes. Who does this apply to? Anyone who: Claims itemized deductions on Schedule A; Claims the Higher Education Tuition and Fees Deduction; Claims the Educator Expense Deduction. The official date of acceptance by the IRS for tax filings including these claims is still pending, but will be announced. 

10. If you do not fall into the category of people who must wait until mid-to-late February to file their taxes, you can submit your completed forms to the IRS as early as January 14, 2011.