Filing for Tax Extensions Can Come at a Price TaxMasters CEO Patrick Cox Warns Businesses, Individuals to Prepare Now or Risk IRS Penalties, Long Term Compliance Problems
HOUSTON, Jan. 19, 2011 /PRNewswire/ -- Although small businesses and individual taxpayers have an extra three days to file their federal tax returns this year, preparing paperwork now is essential to avoid filing for an extension in April. While useful in some situations, extensions can lead to a downward spiral of IRS penalties and interest and long-term compliance issues, according to Patrick Cox, CEO of TaxMasters.
According to Cox, "Most taxpayers and small businesses do not realize that you are still vulnerable to IRS penalties and interest if you file an extension. What most people fail to understand—and the IRS doesn't always do a great job of communicating—is that if you owe a tax liability, an extension does not exempt you from paying what you owe in April. Too many of our clients feel tricked by the IRS, because they thought they followed the rules and instead are being harassed by IRS agents for thousands of dollars in interest and penalties."
According to Cox, whose company is a leading provider of tax compliance and repayment services, truancy often begins with an extension.
"A large portion of our clients—both individuals and small businesses—are in tax trouble because years ago they didn't prepare their paperwork in advance, had to file for an extension and never did the necessary work to make the October extension deadline," Cox said. "If you do not prepare now for April's filing deadline, you are starting to dig a hole that will be very difficult to get out of come October when you still have to file and pay your taxes but now owe the IRS hundreds or even thousands of dollars in penalties and interest."
According to Cox, to avoid having to file for an extension, get your personal and business documents organized now. Businesses should be preparing at least two months prior to April's deadline and speaking with a CPA to ensure their filings are in order. If you are self-employed, hire a licensed tax preparer. The IRS knows that certified tax preparers are likely to ask the right questions and make sure the taxpayer is handling their taxes properly, so they tend to audit returns prepared by professionals less often than self-prepared returns.
About TaxMasters, Inc.
TaxMasters, Inc. (OTC Bulletin Board: TAXS) is the first publicly traded tax representation firm in the United States. Started by Patrick R. Cox in 2001, TaxMasters offers a full suite of compliance and repayment services to taxpayers across the country facing seemingly insurmountable tax problems and substantial federal tax debt. Tax services from TaxMasters include IRS consultations, tax return preparation, settlement analysis, and assistance with IRS automated collections, Revenue Officer involvement and collection due process.
Employing over 300 people, TaxMasters leverages the expertise of ex-IRS agents, enrolled agents, attorneys, CPAs, and seasoned consultants ready to counsel and assist the US taxpayer with their specific tax problems today.
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