Learned a costly lesson from IRS

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HBMTN

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We completed our 1st full year in business this past spring and as April 15th was coming around I called my accountant to have hime file an extension for us with the IRS. This was our 1st time filing as a Chapter S Corp. He then notified me that a Corporation must file taxes by March 15th not April 15th, he said he would file a personal extension and for us to get all of our tax info to him. We thought we were ok with the personal extension filed and took another two three months getting our accountant all of the info and he then filed it for us and all is good right?

Well we got our tax money back two months ago and we now know we have to file an extension next year by March 15th. As a bend over and learn this lesson from the IRS today I get a letter stating they are fining me $175 per month per officer of the corporation and there is two ( my wife and I) for the 3 months after March until I filed and I owe them $1100 due two weeks from today. Really sucks when you are trying to get on your feet, I think being a new corporation I should have gotten a warning, I could see it if I had been in business for a few years but I did not know and thought I was ok with the personal extension filed.
 
I would also ask your accountant why he didn't notify you when you didn't notify him. I have run businesses for over 20 years, and one of the accountants jobs is to help you handle the financial side of the business. He should have recognized that you did not contact him and asked what was happening.
 
Kinda the same deal here, though totally my fault.... I thought I sent in my LLCs papers, but in August I found them sitting on my desk still. 3 LLC members x 4 months late x $195/mo = $2340 in fines. For an LLC that made less than $100 in profit last year.

I really think it should be on a sliding scale based on your profit. Those huge corporations can easily afford to pay that fine, mine.... well we're talking about closing up shop now.
 
landarc said:
I would also ask your accountant why he didn't notify you when you didn't notify him. I have run businesses for over 20 years, and one of the accountants jobs is to help you handle the financial side of the business. He should have recognized that you did not contact him and asked what was happening.
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Dam straight he should have notified you
thats his job!!!
 
Man, that sucks. I know, I went through the exact same thing when I became a LLC several years ago and simply assumed the partnership return was ok to file late and didn't file til several months later.

His accountant in the OP's case should have definitely notified him of the penalty upon filing the extension.
 
Good Grief thats out of this world! Not hard to see why the economy is in the toilet..
 
While I feel for the OP and anyone who has to pay tax penalties, I have certainly paid a few along the way, this is not why the economy in the the dumper. If you form a corporation, even an LLC, you have an obligation to learn what the law gives and takes from you. Being a corporation is not just about the protections, there are costs as well.

The responsibility here is completely the business owners and the consultants, the government did not change the law, nor is the OP being singled out. It sucks, but, the rules were there. For anyone considering a LLC, the attorney also owes you an obligation to make it clear that you are no longer an individual, and the laws change due to that. There has been a general breakdown of expertise in this case.
 
Lesson here is two fold - when you go into business - hire a lawyer and an accountant from day 1. Second: have both of them help you create a calendar of corporate events - there are also requirements to register annually with the California Secretary of State for example.
 
landarc said:
While I feel for the OP and anyone who has to pay tax penalties, I have certainly paid a few along the way, this is not why the economy in the the dumper. If you form a corporation, even an LLC, you have an obligation to learn what the law gives and takes from you. Being a corporation is not just about the protections, there are costs as well.

The responsibility here is completely the business owners and the consultants, the government did not change the law, nor is the OP being singled out. It sucks, but, the rules were there. For anyone considering a LLC, the attorney also owes you an obligation to make it clear that you are no longer an individual, and the laws change due to that. There has been a general breakdown of expertise in this case.
Click to expand...

citizens united vs. the federal election commission. corporations are people too.

;o)
 
landarc said:
I would also ask your accountant why he didn't notify you when you didn't notify him. I have run businesses for over 20 years, and one of the accountants jobs is to help you handle the financial side of the business. He should have recognized that you did not contact him and asked what was happening.
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smokinit said:
Dam straight he should have notified you
thats his job!!!
Click to expand...

deepsouth said:
time for a new accountant.
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These seem to assume that the accountant was actually aware that an S Corp had been established.

I find that my wife, a CPA, never fails to be amazed at the things clients never inform her of until it is too late!
 
timzcardz said:
These seem to assume that the accountant was actually aware that an S Corp had been established.

I find that my wife, a CPA, never fails to be amazed at the things clients never inform her of until it is too late!
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not speaking on the case of the OP, but i completely understand this and those are definitely different situations.
 
PitRow said:
Kinda the same deal here, though totally my fault.... I thought I sent in my LLCs papers, but in August I found them sitting on my desk still. 3 LLC members x 4 months late x $195/mo = $2340 in fines. For an LLC that made less than $100 in profit last year.

I really think it should be on a sliding scale based on your profit. Those huge corporations can easily afford to pay that fine, mine.... well we're talking about closing up shop now.
Click to expand...

it amazes me how in a time when people are being laid off that they would stick it to you like this... not every buisness owner can afford a lawyer or even an accountant.
 
porkingINpublic said:
it amazes me how in a time when people are being laid off that they would stick it to you like this... not every buisness owner can afford a lawyer or even an accountant.
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to me it seems it is the business owners obligation to know what is necessary required OR hire people that do--also SCORE is a great resource/--as is your banker


phatphingers like tapppytalk
 
No I don't in any way blame my accountant, while he did know I had started a business he was not fully aware of anything. It was my fault, but how is one to know the date is different? I think they IRS should make you aware of it when you file to become a corporation.
 
Call the IRS directly - should be a number on the notice. Same thing happened to us our first year. We called the IRS & they waived the penalty with the understanding we only get one free pass. We were more than a bit surprised at how reasonable they were.

My advice - call your local IRS office & explain "new S Corp - !st time filing - was not aware of officer penalties - etc." Hopefully they'll be understanding.
 
porkingINpublic said:
it amazes me how in a time when people are being laid off that they would stick it to you like this... not every buisness owner can afford a lawyer or even an accountant.
Click to expand...
I work in the income tax department of large corporation. When the economy goes south so does the revenue of the taxing jurisdictions. They become more agressive in assessing penalties to raise revenue.
 
That sucks!! all this tax talk gets me all reved up. :x

I'd like to know how people get by with not paying taxes for years and never get caught yet somebody trying to do the right thing gets screwed.
 
chachahut said:
Call the IRS directly - should be a number on the notice. Same thing happened to us our first year. We called the IRS & they waived the penalty with the understanding we only get one free pass. We were more than a bit surprised at how reasonable they were.

My advice - call your local IRS office & explain "new S Corp - !st time filing - was not aware of officer penalties - etc." Hopefully they'll be understanding.
Click to expand...


This is a good idea and your accountant should be able to help you get the penalty waived. If he (or she) is not willing to represent you before the IRS, it's time for a new accountant.
 
chachahut said:
Call the IRS directly - should be a number on the notice. Same thing happened to us our first year. We called the IRS & they waived the penalty with the understanding we only get one free pass. We were more than a bit surprised at how reasonable they were.

My advice - call your local IRS office & explain "new S Corp - !st time filing - was not aware of officer penalties - etc." Hopefully they'll be understanding.
Click to expand...


You are my HERO Chachahut, I did what you said and called the IRS and told them exactly what you said and they waived all penalties because I was a 1st time filer. I thank you very much because I did not know how I was going to be able to pay them!!!!!!!!!!!!!!
 
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