HerouxCompany LLP

Individuals + Prior year returns, tax information forms (i.e. W-2s, 1099s, 1098, K-1s, brokerage tax summaries with basis information, etc) summary of deductions (business deductions, charitable contributions, real estate and personal property taxes, job expenses, medical expenses, etc). A tax organizer, usually mailed to you in January, is also useful in our preparation. If you have not received an organizer, please contact our office.

Businesses + A majority of businesses use QuickBooks (or other software) to organize and report on the operation's financial activity. If you use this type of software, we strongly encourage you to reconcile all banks, credit card and other financial accounts and review financial reports prior to sending backup files. If you do not use packaged accounting software, we ask you to summarize your activity as carefully as possible, whether on a spreadsheet or a simple list, and provide us with monthly bank statements. We may be able to provide you with a format of listing revenues and expenses if your operations are relatively simple. We will also need to maintain a "permanent file" for your business that may include documents such as, the operating agreement, bylaws, approval of S-status, loan documents and amortization schedules, IRS correspondence, asset listings with depreciation accumulated.

Of course, we ask you to send us your information as soon as possible once you have organized and reviewed a complete set of information. Our work flow provides a faster turn-around time the earlier information is received. For corporations, tax documents must "generally" be submitted to us no later than February 28th to ensure your taxes will be finalized by the March 15th deadline. For individuals and partnerships (Form 1065), tax documents must "generally" be submitted to us no later than March 23rd, 2012 to ensure your taxes will be finalized by the April 17th, 2012 deadline. Please check the tax organizer we send each year for exact deadline established for each tax season. We can usually have your returns finished in two to three weeks.

In regards to businesses, the tax code in section 162 provides "ordinary and necessary expenses" are allowed as deductions. But the tax code is thousands and thousands of pages long, so please contact us for application of specific situations. The best approach for you is to be as organized and accurate as possible in accumulating financial information and to contact us if there are any questions or concerns as to a deduction prior to the expenditure.

Tax law is an ever changing practice. Each year brings new benefits and expiration of prior benefits. We make every effort to stay on top of current changes through continuing education and tax update and research subscriptions while driven by our passion to provide the best service possible to our clients. Therefore, whether at tax time, or if you see or read something in the news, were are here to assist you with any concerns or opportunities that may effect your financial situation.

IRS link for law changes

NC Department of Revenue link for law changes

We encourage electronic filing of tax returns and there is no extra charge to have it done. The benefit is that we receive confirmation your return has been accepted by the IRS, so electronic filing is as good as certified mail without the hassle of a trip to the post office. All we need from you is a signature on an IRS form authorizing electronic filing. Anyone is eligible to file electronically as long as the tax return is not being filed after its extended due date. If you are expecting a refund, it will be received much sooner than traditional paper filing of your tax returns. An electronically filed return can usually have the refund received in 10-14 days versus six to eight weeks for a refund from a paper filed return. We will need your checking or savings routing and account numbers. Refunds can be split between accounts in certain circumstances. If you have a balance due, the IRS will allow you to have the tax drafted from a banking account electronically. If you ask us to process your payment electronically, we will need your bank account and routing number. We suggest the payment is scheduled for the due date of the return, unless you direct us otherwise. However, you do not have to submit a payment electronically if you owe tax. You are still able to submit payment with a voucher we provide you, Form 1040-V. Many state returns, including North Carolina, can be filed electronically, but currently North Carolina does not have the ability to draft for balances owed. We do not offer and do not advise the use of refund anticipation loans.

Both the IRS and the North Carolina Department of Revenue have links on the home page of their websites to check the status of your refund, as well as most other states. You will need to enter your social security number, number of exemptions and amount of expected refund. You should wait at least three weeks from the time the electronic return data has been accepted by the agency before checking the status of a refund. Please be aware that if the taxing agency believes you owe taxes from any prior periods, they will not issue a refund.

IRS refund link { or call 1-800-829-1040 }

NCDOR refund link { or call 1-877-252-4052 }

Individual Returns + April 15th
{ if extended, October 15th }

Partnership Returns + April 15th
{ if extended, September 15th }

Corporations and S-Corporations + March 15th
{ if extended, September 15th }

County Business Property listings + January 31st
{ if extended online in Wake County, May 31st, otherwise, April 15th }

Payroll reports +

Form 941, NC-5Q and NCUI-101 +
April 30th, July 31st, October 31st, January 31st

Form 940 and Form 944 + due January 31st

Form NC-5 + due either monthly or quarterly

Forms W-2 + submitted to employees by January 31st

Form W-3 + submit to the Social Security Administration by February 28th

* Please be aware of your filing requirements for payroll whether monthly, quarterly or semi-weekly.

Forms 1099 and 1096 + sent to individuals by January 31st
Filed with the IRS using Form 1096 by February 28th

There are various negative consequences to filing and paying taxes late. They include (1) late filing penalty (2) late payment penalty and (3) interest on past due amounts. Quite often, overlooked or neglected filings incur all three of these assessments. We make every attempt to avoid penalties and interest. If you find yourself in a situation in which you can not pay tax you have incurred, please discuss with us in advance and we can advise you on the best ways to avoid as much penalty and interest as possible.

You may choose to enter into an installment agreement with the IRS. The IRS charges a one-time fee of $105 for this service, but it is reduced to $52 if you sign up to have the IRS process your payments electronically. Interest and late payment penalties will continue to accrue. The IRS will generally negotiate to a fair monthly payment such that past taxes are paid in full in a fair amount of time.

Some of the more common interest and penalties include +

Interest rates charged by the IRS fluctuate quarter by quarter.
The rate for the 4th quarter of 2009 is 4%.

Individuals S-Corps Partnerships Payroll Sales Tax

Individuals

The late filing penalty is usually 5% of the amount due for each month or part of month the tax return is filed after the due date or extended due date of the tax return. The maximum amount of this penalty is 25%.

The late payment penalty is ½ of 1% of the amount due for each month or part of month the unpaid tax is paid after the original due date of the tax return. The maximum amount of this penalty is 25%.

North Carolina assesses late filing penalties of 5% of unpaid tax per month, maximum of 25%; a late payment penalty of 10%; and interest at their stated rate, which is currently around5%.

NC Department of Revenue Penalty and Interest information

NC interest rates

Back to penalties

S-Corporations

Beginning in 2010, late filing is $195 for each month or part of a month for each shareholder (up to 12 months.)

IRS link for late filing of S-corp

The North Carolina Department of Revenue charges penalties also, but they are generally based on tax owed.

Back to penalties

Partnerships

Beginning in 2010, late filing is $195 for each month or part of a month for each partner (up to 12 months.)

IRS link for late filing of Partnership

The North Carolina Department of Revenue charges penalties also, but they are generally based on tax owed.

Back to penalties

Payroll

IRS Deposit penalties for 941 and 944 payroll taxes are based on the amount of the tax deposit. For a deposit 1-5 days late, 2%; 6-15 days 5%; 16 or more days, 10%; more than 10 days after a notice date, 15%; deposited not using EFTPS when required 10%

IRS payroll penalties

IRS late filing penalties for Forms 941 and 944 include a late filing penalty of 5% of the amount due for each month or part of month the unpaid tax is paid after the original due date of the tax return. The maximum amount of the late filing penalty is 25%. Also, for each whole or part month that the tax is paid late, there is a failure-to-pay penalty of 0.5% per month of the amount of tax, with a maximum of 25%.

NC withholding + There is a 10% penalty for late payment of the tax due. There is also a penalty of 5% per month (max 25%) for failure to file the report when due.

NC withholding penalties

NC Unemployment + The Employment Security Commission charges a late filing penalty of 5% of the amount of tax due per month, or portion thereof, to a maximum of 25%. A late payment penalty is 10% of the amount of tax due. Interest is currently charged at an annual rate of around 5%.

ESC penalties and interest

Back to penalties

Sales Tax

Sales tax in North Carolina + If tax is due, both a failure to file penalty of 5% per month or fraction thereof with a maximum of 25% (minimum $5.00 State and $5.00 county) and a failure to pay penalty of 10% (minimum $5.00 State and $5.00 county) will be due. Interest is due on the amount of tax due from the date the tax was due until it is paid.

NC sales tax penalties

If you are a client of ours, please fax or email a copy of the notice to our office as soon as possible. If we prepared your return, quite often the notice can be easily resolved with no adverse effects. We may ask you to sign a Form 2848, Power of Attorney, such that we may discuss the situation directly with the IRS on your behalf. If we did not prepare your return, we will be glad to assist you in resolving the problem as quickly and favorably as possible. We will need you to sign a Form 2848, Power of Attorney, and provide us with copies of the tax return as filed with supporting documentation. If you are being audited, we can also represent you before the IRS.

For tax purposes, we generally recommend you keep your records for seven years. For records involving purchases of assets or investments, we recommend keeping those as long as you hold the asset or investment, and then, seven years afterwards. The reason seven years is suggested is because the IRS may be able to go back six years once a return is filed.

For more information

Frequently used employee forms +

Form W-4 2009

Form NC-4

Form I-9

Links to Federal and NC withholding tables +

Federal Withholding Tables

NC Withholding Table & Instructions

Yes, we accept Visa and MasterCard only.

Have your loan officer email + Angela@hcocpa.net

Include specific contents of the letter needed and she will generate on your behalf in a timely manner. We cannot send information to a third party, such as a bank or mortgage broker, without written consent from the client.