Emily Clarke

Why Tax Compliance is Important

Tax reporting and compliance may not be the most exciting topics in the world, but they are important. Failure to abide by laws and regulations surrounding tax reporting and compliance, at least in the United States, could land you a letter, or worse, a visit, from the Internal Revenue Service (IRS).

Once this happens, you may be in for a tax audit during which you'll need to provide detailed accounting for virtually every penny you've earned and spent for a given period. If issues are picked up during an audit, or you're found to be out of compliance, hefty fines and fees could follow.

How Do Compliance Issues Happen?

In many cases, compliance issues on a tax return are simple mistakes, but that doesn't mean they won't cost you. Of course, some people intentionally try to deceive the IRS, and this can be a very big problem if you're caught.

How to Stay Within Compliance

In general, you can stay within compliance with the tax code by simply being honest. This means reporting all eligible income on your annual tax return and only deducting things that can legally be deducted.

While you may be able to get away with small inaccuracies for a while, the IRS is relentless in its collection activities. If it notices a problem, that problem isn't going away until you've paid outstanding debts or you've legally resolved the matter. The bottom line? Don't take chances. If you're doing your own taxes, double-check everything before submitting, and never try to lie on your tax return.

Work With a Tax Professional

This is also why it's a good idea to work with a tax professional to fill out and file your tax return. A tax attorney or certified public accountant (CPA) can offer expert guidance that may catch errors before your tax return is submitted.

These professionals may also be able to provide representation before the IRS on your behalf should there be a problem. Although free tax filing services exist, it may be better to pay a fee to work with a CPA or tax attorney as these resources generally provide comprehensive services in the event of an audit.

Author Resource:-

Emily Clarke writes about multiple payment platforms, payouts API, marketplace payouts and more. You can find her thoughts at payouts API blog.