Learned a costly lesson from IRS

HBMTN · 10-04-2011, 10:02 PM

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.

landarc · 10-04-2011, 10:34 PM

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.

PitRow · 10-05-2011, 10:00 AM

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.

smokinit · 10-05-2011, 10:00 AM

Quote:

Originally Posted by landarc

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.

Dam straight he should have notified you
thats his job!!!

Carbon · 10-05-2011, 11:01 AM

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.

deepsouth · 10-05-2011, 11:11 AM

time for a new accountant.

southernsmoker · 10-05-2011, 11:18 AM

Good Grief thats out of this world! Not hard to see why the economy is in the toilet..

landarc · 10-05-2011, 11:47 AM

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.

danbrazelton · 10-05-2011, 12:00 PM

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.

deepsouth · 10-05-2011, 12:08 PM

Quote:

Originally Posted by landarc

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.

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

;o)

timzcardz · 10-05-2011, 12:14 PM

Quote:

Originally Posted by landarc

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.

Quote:

Originally Posted by smokinit

Dam straight he should have notified you
thats his job!!!

Quote:

Originally Posted by deepsouth

time for a new accountant.

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!

deepsouth · 10-05-2011, 12:15 PM

Quote:

Originally Posted by timzcardz

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!

not speaking on the case of the OP, but i completely understand this and those are definitely different situations.

porkingINpublic · 10-05-2011, 02:07 PM

Quote:

Originally Posted by PitRow

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.

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.

2Fat · 10-05-2011, 02:19 PM

Quote:

Originally Posted by porkingINpublic

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.

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

HBMTN · 10-05-2011, 06:05 PM

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.

10-04-2011, 10:02 PM	#1
HBMTN is One Chatty Farker Join Date: 10-16-08 Location: Fairfield, Virginia Downloads: 0 Uploads: 0	Learned a costly lesson from IRS 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.

10-04-2011, 10:34 PM	#2
landarc somebody shut me the fark up. Join Date: 06-26-09 Location: San Leandro, CA Downloads: 0 Uploads: 0	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. __________________ "perhaps...but then again...maybe not..." careful there son, those ribs are boiling hot... \_\|_/ (='.'=) Here there be bunnies... (")_(")ooo Pacific Rim BBQ Bob's Brew and Que

10-05-2011, 10:00 AM	#3
PitRow Full Fledged Farker Join Date: 03-31-11 Location: Oregon Downloads: 0 Uploads: 0	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. __________________ Mike Char-Broil Bandera \| A-Maze-n smoker \| Weber 18.5" OTS My Blog: Life In Pit Row

10-05-2011, 11:01 AM	#5
Carbon is One Chatty Farker Join Date: 08-24-08 Location: Los Angeles Downloads: 0 Uploads: 0	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. __________________ UDS / Mini-WSM / Weber 22.5 OTG / Modified ECB / Lodge hibachi / 34" WFO.

10-05-2011, 11:11 AM	#6
deepsouth Quintessential Chatty Farker Join Date: 04-21-10 Location: Biloxi, MS Downloads: 0 Uploads: 0	time for a new accountant. __________________ Large BGE, Small BGE, Mini BGE, Weber 22.5 OTG, yellow thermapen

10-05-2011, 11:18 AM	#7
southernsmoker is one Smokin' Farker Join Date: 04-14-08 Location: NS, Canada Downloads: 0 Uploads: 0	Good Grief thats out of this world! Not hard to see why the economy is in the toilet.. __________________ Southern Smoker-Northern Division! Lang 84D Longneck Goin brick n mortar :crazy:

10-05-2011, 11:47 AM	#8
landarc somebody shut me the fark up. Join Date: 06-26-09 Location: San Leandro, CA Downloads: 0 Uploads: 0	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. __________________ "perhaps...but then again...maybe not..." careful there son, those ribs are boiling hot... \_\|_/ (='.'=) Here there be bunnies... (")_(")ooo Pacific Rim BBQ Bob's Brew and Que

10-05-2011, 12:00 PM	#9
danbrazelton Got rid of the matchlight. Join Date: 09-12-11 Location: San Francisco, CA Downloads: 0 Uploads: 0	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.

10-05-2011, 06:05 PM	#15
HBMTN is One Chatty Farker Join Date: 10-16-08 Location: Fairfield, Virginia Downloads: 0 Uploads: 0	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.

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