June 4, 2020 Meeting Notes - Dale Kennedy
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Dale Kennedy, CPA
June 4, 2020 Meeting Notes (Virtually held over Zoom)
By Jackie Haldorson
Vice President Melissa Barton opened up the meeting with the announcement that Member Spotlights will soon be featured on ASAP’s social media. We can then copy & share to our own social media platforms. Remember to like and follow fellow members!
Our guest is CPA AND Attorney Dale Kennedy with Kennedy Tax Solutions.
https://kennedytaxsolutions.com/
Q: What are some red flags you have seen?
A: Not depositing payroll taxes, the IRS doesn’t take too kindly to a business using it’s employee’s taxes to fund their business. Payroll taxes can be the most expensive and difficult to deal with. We are the Gatekeepers, disclose what you know to the tax preparer.
Q: At what point can OR or IRS decide to stop charging interest?
A: Never, the only item that is potentially abatable is penalties but the reasons need to be clear and specific
Q: Would you recommend contacting the IRS on your own or hire someone?
A: Depends on the amount involved and the sophistication. If the client has been burying their head in the sand and notices have been piling up, it’s more of a guarantee that it will get dealt with when you hire someone. If someone owes 1K penalty, they could probably do it themselves. If its 10K or 100K penalty, that might warrant getting someone else involved.
Q: I had a client that had their bank account cleared out by the IRS, when do they do that?
A: There will always be a notice ahead of time. They were probably notified and its in a stack of unopened notices that have been piling up.
Q: What are the repercussions of an LLC that owed payroll taxes but has since closed the business?
A: Payroll tax liabilities pierce the corporate/LLC veil. When a business closes, most everything stops at the entity level, and doesn’t pass on to the owners/shareholders. Payroll tax liabilities always go to the shareholder. If we as bookkeepers are the ones deciding what gets paid, we could become liable if the business doesn’t pay their payroll taxes. Always have the decision to not pay payroll taxes come from the owner.
Q: What are your needs from Bookkeepers?
A: I often have need for emergency room bookkeepers that can show up at 2am on Saturday because the data is due on Monday and someone has to enter in 1000 checks, etc. And then run reconciliations and produce financial statements.
Q: What mistakes do you see Bookkeepers make?
A: When a GAAP based/CPA audit happens the P&L is secondary, there is little reconciliation save for some reclassification. The beat down is the balance sheet. Bare minimum is cash reconciliation.
Q: What is the threshold you recommend for a business to engage a CPA do their taxes?
A: Smaller business will be better served by H&R Block, Jackson Hewitt, LTC, EA. For instance 40K revenue or less
Misc Info
Kovel Agreement is available for an added layer of protection for more serious cases, the accountant address all correspondence to the lawyer, not the client
Correction answers for tax problems; installment plans, settlements, audit reconsiderations, bankruptcy (discharges all taxes except payroll taxes)
IRS has built a lot into the system for the taxpayer to be heard, to allow settlements, etc. OR is more difficult, agressive to deal with. This is because OR is more desperate for money, we are a 1 tax state.
Factors for corrections; amount of money involved, time left on statute of limitations (IRS generally has 10 years, OR is forever), the client’s willingness to play the game, and the clients intestinal fortitude
Don’t ever assume the IRS or the State will be fair and judicious
OR has a notice cycle - when you have a new client it’s a good idea to see where they are in that cycle, what is OR trying to tell them?
Sometimes not showing up to an audit is the best option for a client
Cannabis business should always be C Corp
If a client comes and says they haven’t filed for the last 10 years, generally the IRS/State is just looking for the last 6 years
If there is a huge mess, may be best to start a new QBO file. You don’t need to fix the problem but it leaves the historical data