Repair Service Industry Unfiled Income Tax and Compliance Issues Chicago Illinois

Chicago Small Business Accountant

Updated July 28, 2015
 
Repair Service Industry Unfiled Income Tax and Compliance Issues Chicago Illinois
 

Compliance in the repair business is essential.

Unfiled Income Tax Returns in Chicago for the repair business Industry
 

Generally, one of the reasons why new clients would come to a recommended small business accounting firm like ours in Chicago, would be un-filed income tax returns and compliance issues. the problem with small businesses being behind in filing income taxes, is by no means a new phenomenon. the so called Tax Gap has existed in this country since before the formation of the Internal Revenue Service itself. there have always been those businesses who did whatever was necessary to remain in compliance and those who, for whatever reason, did not.

 

This Income Tax Gap is currently, conservatively estimated at $300 Billion annually in lost federal tax revenues.

 

There has been an enormous amount of press in recent years devoted to this problem. I’m sure that we have all heard the stories of individuals and business owners who haven’t filed an income tax return in the past twenty or so years. Many ask a reasonable question like, “How is this possible?”

 

I asked this same question to an IRS Agent that I met at a continuing education seminar many years ago. If I may paraphrase, this is generally the answer that was given. Lets say that a person hasn’t filed an income tax return for the past two years. Before the IRS sends out letters asking for the returns to be filed, they will look at the results of the past few years that were filed. If those years resulted in a large refund, then the IRS is not going to send out a letter asking them to file the returns. The IRS, again this is generally what the IRS Agent told me, would rather not refund the money. they would rather hold onto the refund. So…

 

A couple of years ago, under intense pressure from various sources, the IRS instituted a new program to get taxpayers back into compliance. the AUR or Automated Underreporter System is designed to utilize information provided by third parties such as banks to automatically send out either CP2000 notices which propose an additional tax due, or simply select businesses or individuals for audit. This process is designed to select approximately 30% of the AUR inventory in any given tax year. Approximately 16 million tax submissions annually are tagged as AUR cases. In 2008, the IRS collected $4.7 billion from its document matching program.

 

It has also been my experience that un-filed income taxes have much greater and longer lasting effect. The overall effect is simply that businesses don’t tend to do as well as those that stay in compliance. Those businesses that don’t file income tax returns can’t get loans to either expand their revenues or finance on-going operations. they can’t lease equipment, purchase property, or get the capital necessary to move on to the next level.

 
If you are having problems with your Repair Service Industry Unfiled Income Tax and Compliance Issues Chicago Illinois or have issues with your accounting in general, we would love to help. I enjoy hearing from my readers, and can be contacted at
 
Chris@AccountingSolutionsltd.com
 
Additional Accounting Articles and information on my firm can be found at
 
www.AccountingSolutionsLtd.com
 
Chris Amundson is the President of Accounting Solutions Ltd., a full service public accounting firm of Certified Public Accountants and Enrolled Agents handling the bookkeeping, accounting, tax preparation, and audit representation needs of Businesses, Estates, Trusts, and Upper Income Individuals.

Chris Amundson is President of Accounting Solutions Ltd. located in Chicago, Illinois

Chicago Accounting Firm & Tax Solutions for Small Businesses

Last updated on September 17, 2015
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