Use this One Simple Step to Avoid Tax Penalties
For many small businesses, tax form filing season can be one of the most dreaded times of the year. But there is one simple step that can save you and your business headache, heartache (and money): double-check all reporting documents and deadlines.
While checking these easy-to-find facts seems like a simple thing to do, it is one of the most neglected actions among small- to mid-sized companies.
It is vital to double-check the information on tax forms for accuracy, while also making yourself aware of all year-end deadlines to prevent fines or other penalties. Going by what you did last year is never enough, as forms, deadlines and regulations can change in subtle ways.
Raising the stakes, in recent years, the Internal Revenue Service (IRS) has increased penalties for misfiled or late tax forms. As a result, it’s essential to be vigilant in assembling and reviewing reporting documents. Re-reading those forms and setting reminders may be the easy fix that saves your business time, money and aggravation.
“Small-business leaders have enough stress in their daily lives, the last thing they need is to wonder after the fact if they have complied with all deadlines and regulations,” says Janice Krueger, a tax and reporting expert at Greatland, one of the country’s leading providers of W-2 and 1099 products for business. “A recent study revealed that 43 percent of filers are concerned about being fined by the IRS for not complying with new rules or regulations when reporting. We want to help alleviate those concerns by informing taxpayers about filing requirements and deadlines, along with the ramifications of errors, late filings and failure to file.”
Many 1099 and W-2 reporting penalties have increased over the past few years and it is critical that businesses file and complete all wage and income filings on time. Here is a list of filing penalties for W-2 and 1099 forms Greatland believes taxpayers should be aware of this season:
* The penalty for failing to file accurate information on returns is $60 per return
* The maximum failure-to-file penalty is $1.5 million.
* If returns are filed within 30 days after the due date, the penalty is $30 per return.
* The maximum penalty for organizations that issue returns within 30 days is $250,000.
* The penalty for filing returns more than 30 days after the due date, but before Aug. 1 is $60 per return.
* The maximum penalty issuing returns more than 30 days past the due date, but before Aug. 1 is $500,000.
* Failure to file information returns or if filed after Aug. 1 results in a fine of $100 per return.
For small businesses, defined as organizations with annual gross receipts of $5 million or less for the three most recent tax years:
* The maximum penalty for organizations that issue returns within 30 days after the due date is $75,000.
* The maximum penalty for organizations that issue returns more than 30 days past the due date, but before Aug. 1 is $200,000.
* The maximum consequence for small businesses that fail to file or file after Aug. 1 is $500,000.
To make sure your business has all of the accurate information needed, you can find a full list of federal and state filing regulations to remember on Greatland’s W-2 and 1099 fact center website.