Without question, tax laws are some of the most complex laws in the United States. You must follow specific rules and regulations for all tax-related activities. These include reporting income, storing receipts and invoices, filing tax forms and tracking business transactions.
On top of this, you must also adhere to all relevant deadlines if you wish to avoid penalties imposed by the Internal Revenue Service (IRS). With these things in mind, it is no wonder that many successful Grand Rapids businesspeople are prone to mistakes when tax season rolls around.
What kind of mistakes can lead to legal trouble?
Sometimes, an error on your tax return will hurt you instead of the IRS. You could fail to list all your available deductions, for example. Other times, what seems like a simple mistake could result in tax fraud charges. Examples of errors to avoid include:
- Failing to file an annual tax return
- Failing to report your income accurately
- Failing to collect employment-related taxes
- Overestimating your tax deductions
- Overestimating your annual expenses
If you are already under investigation for tax fraud, misleading investigators or making false statements can add to your legal woes.
Most tax fraud charges occur because the preparer made errors like those above. To an IRS auditor, these mistakes may look like you are attempting outright fraud or looking to reduce your legitimate tax obligations. If convicted for tax fraud, you could face an array of civil penalties. There is also a risk of incurring harsh criminal penalties upon conviction.
We recommend seeking guidance when filing your tax returns to ensure no errors occur. It is also vital to learn as much as possible about Michigan tax laws, especially if your annual tax obligations are complicated.