Monday, February 26, 2018

Fines and Penalties for Late Filing S Corporation and Partnership Returns


Written by:
Doug Zandstra CPA, CFE, EA
Certified Public Accountant
Certified Fraud Examiner
Enrolled Agent
29 Pearl St NW, Ste 225
Grand Rapids, MI  49503
616 970 3000
dougzandstra.com
email dougzandstra@gmail.com


So you are going to set up a new business.  An LLC is one of the most common forms of entities.  What happens when you register and apply for an Employer Identification Number with the IRS?  

Well, you give them little bits of information, and they give you a number.  They also tell you what form you need to file and when.  

What happens if this is not the form that you expected to fill out?  What do you do? 

I can tell you what not to do - and that is to not send in the form that they are expecting.  If you apply to be an LLC, and you are instructed to submit a 1065, then do not send in a 1120S.  The late filing clock starts the day after the return is (was) due.  

Think about it, when you applied for that EIN, you gave them some personal information including your name, address and your social security number.  They gave you an EIN and your filing requirements.  If you do not file the return that they are expecting you will get one of these nasty little notices that I have below.  CP162

So what are the penalties?  

Well - if you registered to be an S Corporation or a Partnership, the are $195 per partner, per month.

There are elections and things that you can do when you are registering your business to notify the IRS that you are intending to file something other than what your initial registration is, but these elections must be made timely, and following established procedures.  

Avoid penalties.  File the returns that you registered for.  Document that you made elections timely.

Business registrations are mostly computerized, when you register, your application is processed by a computer, and making changes requires human interaction.  

So be careful because these little notices are generated by that same computer.  





Friday, February 23, 2018

Unconscionable Fines and Penalties Imposed by The State of Michigan Department of Talent and Economic Development - Talent Investment Agency

Written by:
Doug Zandstra CPA, CFE, EA
Certified Public Accountant
Certified Fraud Examiner
Enrolled Agent
29 Pearl St NW, Ste 225
Grand Rapids, MI  49503
616 970 3000
dougzandstra.com
email dougzandstra@gmail.com

In a prior blog post, I gave a stern warning, and also provided a few examples of the potential for penalties and interest that can be imposed if you do your own payroll and have some kind of mixup. 

Here we have another example of how the State of Michigan inflicts horrendous fines and penalties on small businesses.

Before I explain what is below, I want to compare the practices of cash advance stores to the State of Michigan using a very recent illustration. 

Scott Tucker, the owner of a Cash Advance business was recently sentenced to 16 years in federal prison for various illegal lending practices   Scott Tucker Sentenced To More Than 16 Years In Prison For Running $3.5 Billion Unlawful Internet Payday Lending Enterprise

The State of Michigan is able to gets away with even worse IN ADDITION the State of Michigan collection authority is much stronger.  Once imposed, these penalties are difficult, almost impossible to get removed.  If you are unable to afford a lawyer, or a CPA or someone who knows the system to represent you, you cannot win.

Below is an example of a taxpayer who apparently owes $169.20 to the State of Michigan, Department of Talent and Economic Development - Talent Investment Agency.   This group used to be referred to as the Unemployment Agency. 

The tax owed is $169.20
The penalty is $4,480.00  
this is a
2,650% PENALTY

Scott Tucker who was sentenced to 16 years in Federal Prison.

Below the first example is an example of the weapon of choice by the State of Michigan to ensure that you do pay.  Liens.  The document shows a lien was filed by the State of Michigan for a $30.00 debt.

Just beware of the billing and collection practices used by the State of Michigan




Doug Zandstra CPA CFE EA
Certified Public Accountant
Certified Fraud Examiner
Enrolled Agent
29 Pearl St NW, Ste 225
Grand Rapids, MI  49503
616 970 3000
dougzandstra.com
email doug@dougzandstra.com



The Michigan Unemployment Insurance Agency (MESC) has another revenue source.  Effective October 1, 2016, if a business owner has a a lien from the MESC, there will be an additional assessment to have the lien released.

The new SB-599 mandates that local register of deeds offices collect the additional fees and remit them to the State of Michigan.

Michigan Department of Treasury issued and released approximately 73,000 liens, and the Unemployment Agency issued and released 113,595 liens (house fiscal agency report)

According to the SBA there were about 160,000 small businesses in Michigan with 1 - 20 employees (SBA.gov)

The







Doug Zandstra CPA CFE EA
Certified Public Accountant
Certified Fraud Examiner
Enrolled Agent
29 Pearl St NW, Ste 225
Grand Rapids, MI  49503
616 970 3000
dougzandstra.com
email doug@dougzandstra.com

Friday, February 2, 2018

Hire A Payroll Professional

First of all - I do not do Payroll.  I do not even do my own payroll.

There are some things a business owner needs should NOT do.  I see this all of the time, in an effort to save money, keep costs down, there is a mentality of doing everything you can to save money instead of hiring a professional.

Personally I have made valiant attempts at : plumbing, electrician, welding, car repairs, oil changes, roof repairs, and even small engine repair.

What did I learn?  How to flood a basement, how much voltage it takes to stop your heart, how a a flying spark can set your pants on fire, what a car engine sounds like when the oil leaks out, how long it takes a tow truck operator to reach you in the middle of the night.  Did you know a lawnmower can keep running with no oil?  Do you know that duct tape does not stick to a copper pipe when there is water squirting out of it.

All of these "learning experiences" came at a cost.  What was learned?  I learned that some things are better left to the professionals, and that in the end, your time and energy is better spent doing what you do.

In the world of payroll, I can say without a doubt that using a payroll service will save you from :


  • Notices from the IRS
  • Endless deadlines,
  • IRS Rules (which never make sense)
  • Payroll tax tables
  • Passwords and security for IRS, Michigan, and Unemployment web sites.


Make a mistake and you will get :

  • Penalties
  • Liens - you won't be able to buy that house
  • If your Federal balance is more than $50,000 your passport will be revoked.  Goodbye Mexican vacation.
  • Lower credit
  • Installment agreements
  • Your name and address will be published in the legal news


Then simply consider the cost- a payroll service for a small business with 2 - 3 employees may cost $600 - $1,200 a year.

A mistake can cost you thousands, and below I have some examples of what can happen when you do payroll yourself.

I will happily take your money to fix your payroll problems.  In the end, it will cost you more than you can imagine.

If a doctor told you to do something, you would do it.  If a lawyer told you should do something, you would do it.  If a CPA tells you to hire a professional service to do your payroll, you should do it.

I recommend ADP

Emily Hoffman  616 482 1242
emily.hoffman@adp.com

Example 1 - Mystery Unemployment Liability



Example #2 Installment agreement




Example #3 Michigan Penalty and interest from "Missing Payment" 

                                  **************** 35% Penalty and Interest*********************




Example #4 Forgot to include payment




Example #5 Mystery Tax "Internal Adjusment"  ?????


Example #6   Math Error?



Doug Zandstra CPA CFE EA
Certified Public Accountant
Certified Fraud Examiner
Enrolled Agent
29 Pearl St NW, Ste 225
Grand Rapids, MI  49503616 970 3000
dougzandstra.com
email doug@dougzandstra.com


Monday, December 18, 2017

2017 Tax Worksheets

In order to complete your returns, we ask that you complete our worksheets in advance.

Please use the appropriate worksheets and fill them in as completely as possible

Thank you!

Must Complete - 

1040 Individual Worksheets

If Applicable

State and Local Taxes

S Corporations

Sole Proprietorships

Rental Property


Monday, November 28, 2016

Charitable Contributions Simplified

Charitable Contributions Made Simple:

It was Thanksgiving, you were stopped at the light, and you gave the homeless guy $20.00

Or, you moved last year, and that stuff that didn't move with you that was sitting in the corner?  It made its way to the donation center drop off

Now its time to do your taxes.  What is a nice guesture?  What can you write off?

Here are the basic rules for making tax deductible charitable contributions -

1.  The charitable organization has to be approved by the IRS.  You can see if they are approved by checking the website  <CLICK HERE>

2.  Services are not deductible.  If you volunteer at the soup kitchen, you can't deduct the value of your time.

3.  You need to document your donation.  You need to keep a cancelled check, or have a written acknowledgement for any single contribution of more than $250

The requirements for documentation are
a.  the name of the organization that you are making the donation to,
b.  if you are getting anything in return,
c.  a description and "good faith" estimate of the value of the items that you are donating.

If you donate clothes or household items, you will never know what the Charity ultimately sold them for, thus there will always be a difference between the donor's charitable deduction and the charitable organizations income.

The best thing to do is to have all of your documentation about your donation
What was it?  When did you buy it? Where did you buy it?  How much did you pay for it?  What condition was it in when you donated it?

Even better - set aside some of that I Cloud storage for your tax records - take some pictures of your donations.

Happy Holidays


Doug Zandstra CPA CFE EA
Certified Public Accountant
Certified Fraud Examiner
Enrolled Agent
29 Pearl St NW, Ste 225
Grand Rapids, MI  49503616 970 3000
dougzandstra.com
email doug@dougzandstra.com

Tuesday, August 23, 2016

Genius Internal Control Procedure for Any Small Businesses

I have worked with many small businesses, such as restaurants, ice cream shops, hardware stores, - you know - the little guys.  You walk in, find what your looking to buy, go to the counter and pay for it.  If its not the owner of the business, it is someone that he or she has hired.  Someone that they have placed confidence in.  Unfortunately, It is the small businesses that simply do not have the resources to fight theft and fraud until it is too late, after the damage has been done. 

Recently, I was at a beach bar in south Florida that had an interesting sign, which I thought was pure genius, if you do not receive a receipt for your purchase, or if it does not match what you ordered, call this number and receive a 25.00 gift card.  

I have not seen something like this before.  In fact I go to this place every year, and the sign is new.  

In terms of internal controls and fraud prevention, this is absolutely genius.  It is extremely simple, no security cameras, no fancy oversight, and it continuously monitors itself.  

1. Employees are aware of the program, there is no need for an elaborate screening process.

2. Monitoring is automatic, all done by customers

3  No experts are needed

4.  Cost effective, just a phone number is needed.

Sometimes the best internal controls are the simplest.








Doug Zandstra CPA CFE EA
Certified Public Accountant
Certified Fraud Examiner
Enrolled Agent
29 Pearl St NW, Ste 225
Grand Rapids, MI  49503616 970 3000
dougzandstra.com
email doug@dougzandstra.com