What happens if I make mistakes on my business tax returns?

Businesses are required to file tax returns, as are individuals, and must also prepare reports based on payroll taxes.  Any business with employees must pay two types of payroll taxes:

• The tax where the employer withholds some of the employee’s wages and withholds them for Federal, State, and Social Security taxes.  This tax is called the withholding tax.
• The tax where the employer pays a tax, from his or her own funds, for having employees

If as a business owner you make mistakes paying or filing these tax returns, the penalties can be severe.  In the example of payroll taxes, you can expect some of these penalties: 

• You can pay 2 to 10 percent penalties for failing to file Federal and/or State payroll taxes.

• You can pay a fine of $50 per form for failing to provide employees with W-2 forms by the due date for such forms.

• If you fail to withhold federal or Social Security payroll taxes, you can face even stiffer fines, up to 100 percent of what you were to pay in such taxes.

To avoid making these costly mistakes, hiring an attorney for business taxes is a good idea. If you are concerned that you have already made a mistake on you business tax returns, you must consult with a tax attorney as soon as possible before you face stiff fines from the IRS.