When it comes to compliance issues related to tax laws and regulations, the Internal Revenue Service is known for having an unforgiving and stringent approach. However, despite the IRS' inflexible approach to compliance issues, the agency routinely and often with little to no notice makes changes to the U.S. tax code.
In fact in 2014 alone, according to Business Weekly, some major tax changes affecting business owners include those related to the Affordable Care Act, deduction eliminations and limit reductions and net investment income taxes. For small business owners who operate on a thin profit margin, one or more of these tax changes could significantly impact the future of their business. What's more, business owners who fail to comply with changes or additions to the U.S. tax code run the risk of facing IRS fines and even criminal charges.
In response to growing concerns over the ever-changing nature of the U.S. tax code, the Taxpayer Advocate Service, which advocates on behalf of taxpayers at the federal level, made numerous recommendations to members of the U.S. Congress on ways to simplify existing tax code.
In 2012, the TAS surveyed 3,300 U.S. business owners and found that a whopping 84 percent of respondents believed the tax code is unfair. What's more, 88 percent reported they don't believe that taxpayers comply with the code or "pay their fair share."
TAS determined that existing tax code places undue financial and time burdens on business owners to keep informed to the numerous annual changes to tax code and to hire financial and tax professionals to aid in this endeavor. To understand the problem, all one has to do is attempt to read any one of the thousands of pages that comprise the U.S. tax code, which according to Wolter Kluwer CCH Standard Tax Reporter, totaled 73,954 pages in 2013.
When it comes to being compliant with provisions of the U.S. tax code, small business owners are almost set up to fail. Business owners who learn they are the subject of an IRS investigation or who discover errors made on past tax returns could potentially result in criminal charges would be wise to discuss their options with a criminal defense attorney who handles tax matters.
If you need legal advice:
Source: Taxpayer Advocate, "The Complexity of the Tax Code," 2014
Business New Daily, "5 Tax Changes Small Business Owners Need to Prepare," Nicole Fallon, Aug. 26, 2014
