The IRS Won’t Forgive Your Honest Mistake!

At my office, we work closely with taxpayers and business owners, many of whom are having trouble with the IRS. In almost every case, these taxpayers previously made an honest mistake (which is easy to do, considering how complicated our tax code is), and are now paying for it. However, you wouldn’t know it from speaking to the IRS. The agency has no sympathy for mistakes or misunderstandings, honest or not. A recent story published on CourtHouseNews.com drives this point home:

The IRS can keep more than $409,000 seized from a luxury car dealer accused of structuring cash deposits to duck reporting requirements, a federal judge ruled.

U.S. District Judge Ed Kinkeade said the government “had reasonable belief to file forfeiture proceedings against the defendant property and finds proper notice/publication of the forfeiture action was made,” according to a final judgment of forfeiture signed Monday.

 Authorities accused Brigette Brown, owner of Carrollton-based International Motor Productions, of making several deposits below $10,000 to skirt IRS reporting requirements. They seized the money in December 2010.

Brown admitted to a local NBC affiliate that she had broken up larger cash payments to avoid IRS scrutiny. Cash deposits larger than $10,000 must be reported to the IRS under federal law.

“I didn’t know there was anything wrong with it,” she told NBC 5. “I run a very honest, legitimate business.”

She denied structuring the deposits, however, saying “they were simply deposited as they were earned.”

Brown told the station that she will miss the money, but is ready to move on. She said she hopes her case will be a lesson for other business owners who do not understand deposit reporting requirements.

“I’ve always been told you want to stay under the radar with the IRS,” she told NBC 5. “I think everyone under the sun thinks that same thing.”

In August, Brown was charged with one count of failure to file an IRS Form 8300, which reports cash payments of more than $10,000.

She faces up to five years in federal prison and a $250,000 fine.

The moral of the story is simple: seek expert guidance when it comes to tax reporting. The cost of hiring a professional is nothing compared to the potential penalties you face if you make a mistake, innocent or otherwise. And given how outrageously complicated our tax code has become, it is highly likely that even the most intelligent business owner will make a mistake at some point. It is a risk that is quite simply not worth taking!

If it’s too late, and you’re already facing a dispute with the IRS, we can help! We’ll deal with the IRS and help you come up with a plan to resolve the situation as quickly and painlessly as possible. Give us a call today and take your first step towards RELIEF from your IRS dispute.