Lynda ArtesaniLegal Accountant and Data Migration Specialist at The Proper Trust

Avoid Massive Penalties - The Crucial Tax Tip You Need to Hear

12 Nov 2024 · 1 min

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In this brief segment, the speaker explains that the IRS caps penalties for tax non‑compliance when the taxpayer voluntarily discloses the issue, but imposes no maximum penalty when the non‑compliance is deemed intentional disregard. The speaker stresses that if there is any evidence the taxpayer knew they should have complied, they must proactively disclose the problem to the IRS. The discussion also highlights the strategic choice a business faces: deciding how much risk to retain by delaying disclosure versus the potential for unlimited penalties if the IRS discovers intentional non‑compliance.

Chapters

Penalties for noncompliance are capped if they are voluntarily disclosed. Oh. There is no maximum penalty for noncompliance if it's intentional disregard. So once there's any evidence that you know you should be doing it, do it. Okay. Because you're— that, that's the line when you now are in a situation where you're saying, I need to disclose, I'm going to disclose sometime. Do I— how much, how much risk do I want to put on my business? Mm-hmm. If you know about it, there's— I mean, I mean, right, speaking of, if you were— if there's any way the IRS can know that you knew about it, then you need to go— just, you need to intentionally disclose yourself.