SO YOU DON’T WANT TO PAY THOSE PAYROLL TAXES…..

…….Or, beware of what you seek

The IRS is the largest, most powerful collection agency in the world. The monster is alive and well. The Service has become very active in the auditing and monitoring of businesses that do not pay their payroll taxes.

I have always been amazed by the number of businesses that think the solution to their cash flow problems is to not pay the payroll taxes. Business owners and anyone that signs checks or reports, or is responsible for payroll preparation in any form are liable! That is correct. If you are the trusted bookkeeper that prepares the payroll, you are liable for the taxes. If you are the owner that just assumes the taxes are being paid, you are liable.

We have clients that owe back taxes for extended periods of time. Essentially there are very few options. You may pay the taxes in full and get on with life. You may do an installment plan. This exercise very seldom retires the liability since the interest continues to be applied.

Or, you may attempt to do an “Offer In Compromise.” This choice allows you to pay less than you actually owe. These are the guys that you see on TV with the big smile. The problem with this approach is that very few businesses qualify. This is not a negotiation. It is begging at the highest level. An overwhelming number of offers are rejected. If you have any assets either personal or business, the chance of an offer being accepted is remote. The Service will simply attach those assets and keep on billing.

The penalty for non-payment is very high. It is not unusual to see penalties that double the tax amount. In the old days, the IRS was very lenient on collections. It was rather easy to get both penalties and interest charges waived. Those days are over. The Government is aggressively seeking compliance with the payroll laws. They are in no mood to negotiate. They have allocated significant resources to perform the task.

In our next blog, we will let you know some of the things that came out of a recent payroll tax audit by the IRS. You will be shocked at the things that they look for and the things that you, as a business owner, are liable for.

Steve Cook is the managing member of Cook, Gola and Company, PLLC, certified public accountants with offices in San Antonio and Austin, Texas.

NEVER UNDERESTIMATE THE HEART OF A MOUSE…

….OR: Your Texas Legislature at Play

The Texas Legislature did not quite reach a budget accord. It seems that one gal had the tenacity to stand up to the establishment. I guess that means that all of those legislative folks will be spending part of their summer in Austin and not at their home.

In the end, I suspect that the establishment will win. I hope none of them have kids or grandkids in school, need any Medicaid, or want a new road because it isn’t happening! Our boys in Austin just plan to punt on first down.
The no new taxes mantra has gotten a little out of hand. As a taxpayer, I do not want any more taxes. That would cut into my fun money. As a citizen that dearly loves Texas, I am appalled at the legislature’s approach to our financial issues. Everything in the world has increased in price over the years. Government is not exempt from this trend. Simply put, if a trip to Office Depot cost me more today than yesterday, it also costs the State more. I remember when a burger at Whataburger was $ .50, gas was $ .20 per gallon, etc. The cost of life has increased. One legislator –a man whose claim to fame as a sportscaster in Houston that painted himself blue on Oiler game days - suggested that the solution was for government to just “tighten their belt.”

I am sure that there is some waste. I waste money. But, as a CPA that audits government entities, I will tell you that local governments bargain harder and watch their spending far closer than any of us civilians. Government entities pay their employees less, have fewer benefits, and older equipment than any of our non-governmental clients. ….and that’s a fact Jack!

At some point we have to increase revenues and trust that each entity will use the money wisely. We can do that and create new taxes. All that we need to do to increase revenue is apply the sales tax laws equally and re-set the Texas Margin Tax back to its original level.

There are too many exemptions from sales taxes. Let’s just tax all services except food and medical as the original sales tax law was designed. Why should professional services like attorneys, CPA’s, engineers and the like not collect sales taxes? Why should “packaged purchases” pay less sales tax than individual item purchases? The answer to these questions is simply special interest groups. Why not just treat everything the same?

When the Texas Franchise Tax calculation changed several years ago, companies that had always paid the state franchise tax were exempted.
We don’t need new taxes. We just need to put the existing taxes to work. Seems simple enough.

Steve Cook is the managing member of Cook, Gola and Company, PLLC, certified public accountants with offices in San Antonio and Austin.