Any individual struggling with taxes owed to the IRS has two things to worry about: 1) their tax problem, which demands a shocking amount of attention, and 2) filing their current year's returns on time so that their overdue bill doesn't get even more out of hand. Unfortunately for many people, it can seem like it's just one thing piled on another. Making sure that your bookkeeper and tax preparer understand your tax situation can be crucial to an accurate return and fewer issues in the long run.
Our tax preparers at Parent & Parent LLP focus on more than just filling out the necessary forms with numbers they have calculated. Instead, they are constantly examining each individual return for glaring errors, red flags, or changes that can be made to yield better results. As part of the tax preparation team, I take pride in the work we do, and I want to share a recent challenge — and success — that I had.
"Mr. Green" was a successful business man. He opened up a pet-sitting business that exploded with popularity overnight. Before you knew it, he was operating 7 days a week and 365 days a year. Mr. Green now had assistants, bookkeepers, and employees in place to handle the responsibilities he no longer had time to oversee.
Mr. Green's business grew so rapidly that he incurred a minor tax issue for 2013 and was on track to incur a new liability for 2014. When I received his file I noticed that some of the bookkeeping did not make sense — the margins were not where I knew they should be. I contacted Mr. Green's bookkeeper, who assured me that the numbers were right, but my curiosity got the best of me. I created a small ruse to get the raw bank statements from her.
And yes, after I reviewed the real numbers I was able to figure out that Mr. Green's bookkeeper forgot to report a whole quarter of payroll costs! In fact, those unreported payroll expenses added up to roughly $500,000!
This error was corrected and Mr. Green's adjusted gross income was reduced by $500k, saving him nearly $250k in tax liability for the 2014 tax year and making it so that he could actually pay his estimated tax payments. This also reduced Mr. Green's reasonable collection potential, aiding our firm in achieving a successful partial payment installment plan that he could actually afford.
Making sure that you have a competent tax preparer can really pay off; in this situation, it changed Mr. Green's case drastically. Sometimes in order to find the best resolution, some "sneakery" is necessary.
If you have a tax matter you need assistance with, contact us. We can help from tax planning to tax prep, to resolution of issues. Read reviews of Parent & Parent LLP here.