April 24, 2024 #1 Local News, Information and Event Source for the Century City/Westwood areas.

Don’t Let The IRS Come Knocking……………….

 Short-term loans (otherwise known as “commercial paper†) – on which many businesses rely to insure their cash flow remains constant – have dried up. The Federal Reserve just lowered interest rates yet again in an attempt to get cash flowing so that the recession doesn’t get any worse. We’ll see what their efforts yield but so far, not so good; unemployment is up, credit lines are down.

Because times are tight, many businesses are cash strapped. Even companies which are selling most of what they produce or booking services for as many hours of the day as they have available are having trouble meeting expenses. This is because of how difficult it is to get commercial paper. Commercial paper allows businesses to meet various expenses such as payroll during the have lag time between when goods or services are delivered and when compensation for these is re ceived. Thus, many small and medium sized businesses have fallen behind in their payroll taxes. While it may appear logical to pay employees before paying Uncle Sam, the consequences of this choice can be dire.

“Tax problems don’t ‘just go away,’†says Attorney Samuel C. Landis of Segal, Cohen & Landis, LLP, whose Beverly Hills firm specializes in tax controversy resolution and corporate restructuring. “Once you’re on the IRS’s radar you’re not off of it until the issue is resolved. Thus, it is best to be proactive to avoid liens and enforced seizure actions by the IRS.â€

The rules for the timing of businesses to make federal tax deposits vary depending on the size of the business. Late filed and/or paid federal tax deposits may result in huge penalties ultimately causing enforced collection action on the part of the IRS. If you’re reading t his and you haven’t already starting using the new payroll tax tables to calculate your payroll taxes – put down this magazine and get ye to a computer; the IRS expects employers to be using the new tax table by April 1st at the latest. So, while many creditors charge interest, their means of collecting money is more limited than the tools available to Uncle Sam which include the seizure of a business and, in extreme cases, jail. Further, the stimulus package may do more than put money in your pocket; it will likely entail more paper work for companies with employees. Despite the hard times, now may be the time to invest in upgrading your payroll software.

During bad times many small businesses are forced to rob Peter to cash flow Paul. But be careful to make sure that the IRS is always one of the Paul’s you pay. If you don’t have the cash for your payroll taxes, call the IRS or an attorney before the IRS calls you.

For more information call the IRS Business and Specialty Tax Line at 800-829-4933 or visit www.IRS.gov on the web. For information on California State tax issues contact The Los Angeles Employment Tax Office 5401 Crenshaw Blvd., Suite A, Los Angeles, CA 90043 1-888-745-3886 (information on other locations available at www.edd.ca.gov)

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