IRS Increases Small Business Penalties For Some Tax Errors

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If you’re a small business owner, I highly recommend you read “Small business alert: Beware of stiff penalties for failing to file information returns” by Bill Bischoff.

Don’t get hit by costly U.S. Internal Revenue Service (IRS) penalties for failing to timely file information returns or provide requisite financial statements to third parties. As explained in Bischoff’s article, this includes W-2s, 1099s, K-1s and other IRS forms.

Hiding Assets In Switzerland and Tax Evasion

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According to a former classmate of mine, the U.S. government has an office with Internal Revenue agents in Switzerland that will sip coffee in the morning while looking out the window at the entrances to major banks there. When someone looking like a tourist heads to one of the banks with a suitcase (presumably with cash in it), one of the agents will go over and strike up a conversation. Whether or not this is true, I’d personally not want to be the guy caught with a suitcase full of cash by the IRS. These days, some Swiss banks are actively cooperating with the U.S. government to identify income tax evaders.

With income tax returns due on April 15, some U.S. Internet marketers mistakenly believe that putting money offshore somehow protects them from paying taxes owed to the Internal Revenue Service (the American equivalent of the United Kingdom’s Inland Revenue).

Unfortunately, that’s not the case.

For example, a Texas man just plead guilty to filing false tax returns and faces up to 3 years in prison for it. He was apparently hiding his funds in Swiss bank UBS.

Remember, minimizing your taxes legally (tax avoidance) is okay. Not paying what you owe is illegal (tax evasion).

Alleged Tax Fraud Destroys Major Dallas Law Firm

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Jenkens & Gilchrist will close and pay a $ 76 million civil fine for promoting tax shelters that were allegedly fraudulent. According to the U.S. Internal Revenue Service (IRS), nearly 1,400 individuals received incorrect advice from the Dallas law firm. Some clients have apparently sued the business for damages incurred because of the advice.

This should be a lesson to all tax professionals that they must not aid or abet tax evasion by clients or promote potentially abusive or illegal tax shelters, or ignore their responsibilities to register or disclose tax shelters.” – IRS Commissioner Mark Everson

Here’s the moral of the story. If you’re treading a fine line between tax avoidance (legal) and tax evasion (illegal), step back and consider what will happen to you if the IRS and U.S. Department of Justice decide to make an example out of you.
Hat tip to CBS 11 TV.