Tax resistance is a common habit in many countries. Every government has put forth regulations regarding tax payments from its subjects, whether small or developed business owners. Even though it is a mandatory step to pay taxes, some individuals resist doing so for reasons best known to them. Since time indefinite, this has been considered an unjust issue and unfair. This is because of the rift between tax and non-taxpayers.
This habit has seen many empires through their sudden collapse because of opposition. This material deeply considers the meaning of tax resistance, why people neglect to pay taxes, the benefits of being a compliant entity, and the effects of tax resistance on an individual’s business.
What is Tax Resistance?
Tax resistance may be termed as the refusal to pay tax because of personal issues like a rebellion against the government or government policies. This behavior has a trigger that is stirred by a generalized reaction, whether passive or active, which is violent.
Why Do People Neglect Tax Payments?
Everyone has their reasons for failure to pay taxes. While this is a government policy, every business experiences individual setbacks preventing them from fulfilling this policy. The main reason why people fail to pay taxes is briefly discussed below:
Resistance to the Tax “Per Se”
This reaction is formed by an individual’s antipathy rooted in their natural impulses and tendencies to refuse to fulfill the tax obligation. Trusted sources identify that such tendencies are based on extreme loss of freedom, verified in the loss of consumption, a manifestation of freedom. When seeking profit maximization, taxes are regarded as an obstacle, so people evade it through the decision of the administrative bodies.
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How Tax Resistance Hurts Your Business
As discussed above, there are plenty of personal reasons why business owners refrain from paying taxes. While these reasons may not be named in detail because each business has its setbacks, tax resistance is a risky choice that any business owner could think of taking. The constitution puts everyone under oath to obey legal laws and be subjection to them to avoid issues with the government. While tax paying is a government policy, failure to obey this command will have serious consequences for your business. The following are the consequences of unpaid business taxes:
IRS Notice
If you fail to pay your taxes or probably delay payment, Internal Revenue Service (IRS) will send a notice via your registered email outlining the due dates (possibly 30-60 days), prompting you to make the payment within that period. Ignoring the warning could result in additional charges, penalties, fees, or an ambush from an IRS agent. If you receive this kind of visit, your business could be closed, or you could be forced to overspend on unwarranted penalties. After a disagreement with the IRS, never send them records they did not request. Unfortunately, this could result in expanding the scope of your audit. Seek help from a qualified tax attorney other than hiring a litigation attorney.
Late Penalties and Fees
There is a constant fee of 10-15% penalty for failure to pay your taxes or issuing late payments. This penalty applies to late payments or general tax resistance every month. An additional penalty is issued to a federal short-term rate of about $135 with an additional 3% penalty. This issue is critical because there is a penalty of up to a 2% fee for the delay in paying your tax, even for 1 week or less.
In instances where there is an error from the IRS regarding your tax payment inaccuracy, you could earn yourself a penalty of up to 20% of your normal tax payment amount. If your business is found guilty of failing to report income or proving small business tax reductions when it gets more than the general income on paper, there are charges to be incurred. You must pay interest on the penalty until it is paid in full.
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There Are Federal Seizures and Tax Liens
The federal levy payment program has been handed the authority to suspend certain benefits from business owners. In case of tax resistance, federal agents suspend some of the business benefits you receive from the government. These include Medicare provider and supplier payments, military retirement benefits, select federal salaries, and certain individual earnings from Social Security.
The IRS is also permitted to levy the assets of your unpaid business taxes when tax resistance is reported on your business. This could be strenuous and problematic because it disrupts your normal schedule for running your business. It could also lead to huge losses of income.
IRS seizes or looks into huge properties like the company’s equipment, business bank accounts, cars, and business permit. In cases of tax resistance, this indicates that IRS is far superior to any other sources, including debtors, in instances where your business becomes insolvent. The federal government may place a tax lien or levy against your business if you neglect your bill payment.
You May Face Criminal Charges
This is the worst that can happen when claims of tax resistance are reported on your business. The IRS and the federal government have the authority to examine business that evades tax payment.
When these bodies find that your business refrains from paying taxes you may be subject to criminal charges. This affects those who use fraudulent means and those filing false tax returns, falsifying deductions on the returns, failing to report cash receipts accurately, creating fraudulent invoices, and hiding the overall income.
These criminal charges are imposed on business owners because matters like these are considered intentional and not precise. The willful failure to pay taxes could result in a felony charge punishable by a fine of $10,000, and 5 years in prison.
Read: How to Identify Bias in Business Compliance and Address It
All these consequences can be avoided by regular payment of taxes and on time. As discussed above, these are all intentional choices anyone could save themselves from. It saves you from spending a lot of cash on penalties and keeps your business safe and running smoothly. It also retains your reputation in case your business is famously known, whether locally or internationally.
Concluding Remarks
As soon as the government releases a new budget for the terms of service, it is easier for people to point fingers at the government’s failures. They forget that at some point when they resisted tax payment, it must’ve resulted from mishaps.
Today, people have frankly shown how rebellious they can get by imposing tax resistance manifestos on innocent people. While this could sound like an innocent person’s fight for justice, it could affect your business in many ways. Nonetheless, tax compliance is a government regulation for every registered business owner. Therefore, remaining submissive to them could go a long way to helping you grow and secure your business.
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