Corporate attorneys assist businesses with a myriad of compliance issues, including those that involve federal and state tax matters. Retaining experienced legal counsel can ensure your business does not run afoul of the often complex tax codes that the IRS and Massachusetts Department of Revenue (DOR) expect companies to follow. We bring a multidisciplinary approach to advising clients in all aspects concerning business taxes.
The Importance of Tax Compliance
Businesses are required to comply with a number of tax laws and regulations. For instance, they have to report certain information to the IRS and DOR, including details about their employees. They must also notify the taxing authorities about the amount of money they pay their employees and how much money was withheld from worker paychecks, as well as pay the withholdings to the taxing entity. The company itself must file and report its income to tax agencies as well.
Failure to comply with tax laws is a serious issue that could risk the financial and legal health of a business. For starters, the company may find itself the subject of IRS and/or DOR audits and investigations. The business might be fined if it is determined to have violated the law, including by filing documents late or not at all. In some cases, businesses must defend themselves from employee lawsuits over their failure to follow tax laws. These and other consequences could cost the business enormous sums in legal fees, court costs, judgments, and diverted company resources. Ultimately, the business may take a hit to its reputation and market strength.
How our Attorneys Can Assist with Business Compliance
SederLaw’s attorneys practice across a multitude of relevant areas, such as corporate, tax, and employment law. Our experienced lawyers can help advise on matters such as:
- Tax withholding: Your business must withhold certain taxes from employee paychecks, for instance Social Security and Medicare, and ensure payments are timely forwarded to the IRS and DOR.
- Non-employee reporting: In addition to withholding taxes for employees, a business that uses independent contractors must report how much their contractors are paid.
- Employee misclassification: Many employers mistakenly classify their employees as independent contractors. Massachusetts employers can face criminal enforcement or civil penalties for misclassifying employees as contractors under the law.
- Sales tax issues: Businesses that sell goods are required to collect sales taxes and pass them on to the state, but many fail to do so.
- Business organization: How the business is organized (for instance, as a corporation or limited liability company) can make a difference in the amount of taxes paid and required forms to file.
- Income reporting: A business, especially one that accepts cash payments, may inadvertently underreport income and trigger tax compliance issues.
- Business write-offs: While the tax code allows businesses to write off certain expenses, these are often misunderstood and could land the company in hot water.
- Expiring deductions and credits: Some tax deductions and credits have expiration dates, and not keeping up with them may cause trouble for your business.
- Cash vs. accrual accounting: Companies are generally allowed to choose between a cash or accrual method for paying taxes, but they must be consistent and meet certain conditions.
- Missed filing deadlines: Perhaps the easiest way to fail tax compliance is failing to make required filings on time, or at all.
If you would like to learn more about how our attorneys can serve your business tax compliance needs, reach out to us today.