Small Business Tax Extensions and you!

Over the last two years Congress has significantly increased the penalties for late filing various forms. That trend is also true with many state taxing agencies; including The Indiana Department of Revenue. There are often “failure to file” penalties associated with personal income tax returns, business income tax returns, Federal payroll tax forms, State payroll tax forms, etc. The various taxing agencies have increased the “failure to file” penalties for two main reasons:

To generate revenue.
As an attempt to “convince” taxpayers to file all of the required tax forms on a timely basis.

There are many tax forms for which an extension can be filed. If an extension is filed then the tax payer has additional time to file the necessary forms. If you file an extension you are granted additional time in which to file your tax forms; however, an extension does not give you more time to pay the necessary tax. If you file an extension and it turns out that you owe tax with the filing of the tax return you will have to pay additional interest and in many cases additional penalties for underpayment of tax.

Taxpayers are always better off filing a tax return on a timely basis even if the taxes cannot be paid at that time. Unfortunately a large number of taxpayers have decided not to file their tax forms on a timely basis because they mistakenly think that it is better not to file a tax return if you cannot pay the amount owed in full. Nothing could be further from the truth.

Small businesses can often be forced to pay several hundred dollars or even several thousand dollars for filing tax forms late. This is an unnecessary additional expense that can easily be avoided.

If you have tax forms that are past due please give our Fort Wayne office a call at 260-338-0833 and we can assist you in filing these late tax forms!

Mike Sylvester, CPA/ABV “accredited in business valuation”