It’s 7:06 PM. You decide to finally end the incessant blue glow your unfinished projects reflect in your face by shutting your laptop off for once and for all. Now, it’s time to stretch, close your home office door for the night and start thinking about dinner.
But wait. Just as you start walking toward the fridge, you notice an envelope on the edge of the kitchen table addressed to you with the word “URGENT” stamped on it in big red letters.
Uh-oh,
Your worst fear as a business owner came true. The big boys from the dreaded Internal Revenue System aka the IRS aka the federal government’s bill collectors are coming for you.
*Cue dramatics*
I know it’s hard but just breathe. Don’t panic! And PLEASE don’t assume the worst.
I’ve received multiple IRS notices about my personal tax return notices over the years.
We all get notices from time to time, it just means the IRS flagged your tax returns based on certain criteria. Don’t be alarmed – it could be anything.
The most important thing you can do is to first read what the notice is about to understand what the IRS is attempting to communicate to you.
If the letter says you owe a certain amount of money, the last thing you should do is pay it blindly. Especially if you don’t understand the terms of the letter 100%. This is the time where you probably should seek professional help.
You should be able to contact an accountant and use 15 minutes of their time to explain the situation. Often times, this initial conversation is complementary and should give you clarity and understanding regarding what the IRS notice is about. Keep in mind that more complex issues would require more time and thus may cost you — but having that understanding is priceless, trust me!
For the people in the back that did pay an accountant to do their taxes and they still ended up with a tax notice assessing additional taxes due: I’m sorry, but it does happen. This doesn’t mean your Accountant is incompetent. Again, it’s vital to know what the IRS notice is stating so you can determine what the issue is and act accordingly. Many times, the issue really is no one’s fault or wrong-doing. Licensed Accountants have a duty to provide services in an ethical manner; we tend to love what we do and strive to give our clients the best possible result, ethically. You just have to find the right accounting professional by paying attention to key signs and asking questions (Side note I’m working on a checklist to help business owners find the best Accountant for their bookkeeping & tax needs, so look out for that.)
Remember, the IRS only thinks you owe a certain amount of money but they aren’t above making mistakes or getting their information wrong. As a CPA, I can’t tell you how many loopholes I uncover for my clients in an effort to save them some serious cash. In almost every situation, I am successful with reducing their tax bill or wiping it out entirely.
I had a client that came into my office hysterical because the IRS sent her a notice claiming she owed $20,000. We worked it out and explained the situation to the IRS by mailing a letter I drafted and a couple months later she called me about a $7,000 refund the IRS sent to her in response to my letter.
Lesson to be learned: the IRS is not GOD!
A huge tax bill candsend small businesses (and individuals!) over the edge, but it doesn’t have to be that way. Staying calm, understanding what the letter is telling you fully and finding a competent tax professional will serve you better than ignoring the notice or paying the amount blindly.
To more money in our pockets,
Chika Obih
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