Any business that does not promptly file their tax returns may be subject to penalties from the Internal Revenue Service. While organizing the information and documentation necessary to file a business tax return is tedious, getting on the bad side of the IRS is even worse. If you require assistance filing back tax returns for your company, you should consult with an experienced Roseville corporate tax return accountant.
At Cook CPA Group, we are dedicated to providing your business with the accounting services necessary to keep your business operating efficiently. Our team of accountants acknowledges the complexity of filing old tax returns for your business, and we are here to help you alleviate that burden.
How to File Corporate Back Tax Returns
Before you begin to file corporate back tax returns, you should ensure that you have all the information you need to start this task. For example, to file a business tax return, you will need documents like a balance sheet, profit and loss statements, and information about your employees if you need to file an employment tax return too.
The IRS typically keeps detailed records regarding what corporations should have paid taxes in a certain year but failed to file on time. If you need assistance gathering the necessary documents to file your back taxes, the IRS should be able to provide you with a business account transcript detailing various types of information like tax credits or tax penalties.
It is also important to understand how you are going to be taxed. When a corporation is established, the IRS will automatically tax it as a C corporation. A C corporation pays income tax on any profits generated and, on the salary, and dividends distributed to its shareholders.
You can also qualify to be taxed as an S corporation. This type of company places tax liabilities on the shareholder’s personal tax return. Various requirements and steps must be taken before a corporation can be taxed as an S corporation.
Generally, corporations will use IRS Form 1120 to handle tax filings. Working with an experienced accountant to fill out the business tax return would be a wise idea. Unfiled tax returns are heavily scrutinized by the IRS, and any inaccurate information could lead to serious issues like a tax penalty. That is why it is important to ensure that the information on your back tax return matches up with the information on your business account transcript.
If you have more than one past-due tax return that you must file, the IRS may request that you file a return for the current year and the previous six years. These dates are subject to change depending on your unique situation. You should also note that the IRS may not allow you to file your back taxes electronically, meaning you will have to mail your forms manually.
To learn more about filing back taxes for your corporation, you should continue reading and speak with an experienced California back taxes accountant.
Penalties for Unfiled Corporate Tax Returns
There may be multiple penalties for failing to file your corporate tax returns. One possible penalty is that the IRS files your tax return for you. This process is called a substitute return, and it is not desirable because the IRS will not utilize all the deductions or credits you are entitled to if you would have filed the return personally. However, before a substitute return is filed, the IRS will typically give the corporation a time limit to file their return before they proceed with their assessment.
Another possibility is that the IRS will issue you a tax bill for failing to file on time. If you cannot pay this bill, the IRS may issue a lien on the property that is owned by the corporation. To avoid this scenario, you should keep in constant communication with the IRS to arrange a way to handle your tax bill. The IRS may permit you to create a payment plan, or they may even provide you with a penalty abatement under certain circumstances.
As long as you do not ignore notifications from the IRS regarding tax bills or unfiled returns, you should be able to make an arrangement that permits you to handle any penalties that may stem from an unfiled return. Failing to communicate with the IRS could result in the IRS levying property that belongs to the corporation in order to pay off your bill.
Our Sacramento Corporate Back Taxes Accountants are Ready to Work with Your Business
If your business has unfiled tax returns, you must solve this issue as soon as possible. The accountants at Cook CPA Group possess decades of combined accounting experience that we have utilized to serve business owners in Sacramento, Roseville, and various other locations throughout California. Our diligent accountants will work tirelessly to ensure that the tax returns for your business are filed promptly and with accurate information.