Discussion:Accural and Payroll Tax Penalties
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Discussion Forum Index --> Advanced Tax Questions --> Accural and Payroll Tax Penalties
Discussion Forum Index --> Tax Questions --> Accural and Payroll Tax Penalties
| 26 June 2008 | |
| I have a client who is an accrual LLC. They have a lot of payroll taxes due over a 5 year period. They went to a tax service to help them reduce their payroll tax. Their plan failed and they were hit with substantial penalties. The payroll taxes were deducted when accrued. The penalties have never been recorded on the books as we had no idea what they would be. I am attempting to prepare the 2007 tax return and I am not sure what to do with the penalties. They have been making payments on the amount due and I have recorded these to offset payroll tax liabilities on the balance sheet.
Do I amend previous returns and add the penalties when assessed? I have never faced this situation before, so any thoughts are very appreciated. | |
| June 26, 2008 | |
| Penalties aren't deductible anyway. And most of us would just wait until it's all sorted out at the end to pick up the interest. | |
Michaelstar (talk|edits) said: | 27 June 2008 |
| As JR1 points out - it is an M-1 item. | |
Southparkcpa (talk|edits) said: | 27 June 2008 |
| In a VERY SIMILAR situation a few years ago, I needed to prepare a compilation report for a contractors license and I wanted to be certain that liabilty for taxes was stated on the balance sheet in the right amount. I made a JE to tie my client liability to the most recent IRS notice. The entry was LARGE, like 40K or so. The entry I made was something like.... dr penalty 35K, debit interest 5K, cr Liability 40K and the 35K was NOT deducted for tax purposes. How you break out the 35 and 5 is based on the doc's you have. | |
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