Legal Question in Tax Law in California
have not filed for corporation
my husband is a computer programmer and got incorporated. he is more programmer than businessman so does not keep good records. he has not filed any taxes since he started (first 2yr has some income but last yr zero) and received notice that corporation will be suspended soon. to help, I requested fr IRS a report of all 1099's submitted by companies on my husband's corp id (and ssn) but number given is smaller than what i think(i am trying to reconstruct things but do not have all info) Can he just go with number given by IRS or will that hurt us later? We want to dissolve company asap.
2 Answers from Attorneys
Re: have not filed for corporation
First of all, you have a minimum state "franchise" tax owed to California for the privilege of havin a Corporation here.
If you know that you had more income than what the IRS has shown in the reported 1099's, and you don't include it in your tax returns, both the IRS and the state could later prosecute for tax fraud.
Your job, in preparing income tax returns, is to accurately show both income and expenses.
Re: have not filed for corporation
In addition to the comments already made, I would add that there is also a negligence penalty that could be imposed instead of a fraud penalty. But, nevertheless, you are definitely reqired to keep track of your own income and IRS/FTB are not necessarily limited by what is reported on 1099s. Only payments over $600 per year are reported on 1099s for services rendered. But, you could have lots of small jobs that add up to much, much more. Just come up with the best good faith estimate you can, keep the best reconstructive records you can for how you estimated, and tighten up record keeping going forward.
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