Daniel HonanFounder, Profitable Painter CPA PLLC · I help painting contractors increase profits & cash flow while reducing taxes♦ Bookkeeping ♦ Tax

What every Painting Business Owner needs to know about IRS Willful Non-Compliance?

Name: What every Painting Business Owner needs to know about IRS Willful Non-Compliance?
Uploaded: 2023-08-07T16:15:01+00:00
Duration: 59 s
Channel: Daniel Honan
Description: In this video, the speaker warns painting business owners about the serious consequences of willfully ignoring IRS obligations. He explains that IRS Code…

7 Aug 2023 · 1 min

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In this video, the speaker warns painting business owners about the serious consequences of willfully ignoring IRS obligations. He explains that IRS Code Section 7203 criminalizes willful failure to file tax returns, pay taxes, or keep required records, and can lead to criminal penalties. While the IRS typically uses this as a last resort, the enforcement escalation begins with demand letters, then may progress to filing a lien on a home, levying bank accounts, garnishing wages, and for business owners, garnishing accounts receivable. Additional severe actions include passport revocation and garnishment of pension or Social Security benefits. The speaker emphasizes that these measures are triggered when taxpayers fail to respond to IRS communications.

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The worst thing you can do with the IRS is to ignore them. It's IRS Code Section 7203 that allows for criminal penalties to be applied to people who have willful noncompliance. So if you're required to pay taxes, to file returns, or to keep records, and you willfully, you know, keyword willfully, refuse to comply, that's when these criminal charges can be implemented. It is definitely a tool they have at their disposal, but it's usually kind of a last resort. Usually when someone owes but does not pay, the IRS starts off with demand letters. If they are going to take it up a notch, they might do a lien against your home. So that if you sell your home, IRS gets paid before you do. They might take it up further by levying bank accounts, which is where you wake up one morning and poof, your balance is zero because the IRS took what was in there. That is, that is something that can happen. Might garnish wages, or if you're a business owner, they have the ability to garnish your accounts receivable, which is where they contact your customer and say, hey, I know you owe so-and-so money, but before you pay him, you're going to pay us because he's in arrears with his taxes. Other things too, like, um, you know, taking your passport so that you can't travel, or garnishing pension or Social Security payments. It doesn't have to happen to you. These are things that happen when the IRS feels that they are not getting a response from the taxpayer.