Disclosing your tax information shouldn’t be a court battle. But since 2011, 90% of the time the IRS has used the court for tax information from companies has led to some legal battles that can be avoided. It is as simple as giving a form on your company’s taxes and returns known as Form 4564. Here is the Facebook legal battle that is used to describe the simplicity of disclosure.
Facebook has stonewalled their tax information following a transfer to an Irish subsidiary account in 2010. The IRS is currently investigating the social media mogul for this type of action as well as the tax information the company refusing to fill out by the Form 4564. The Department of Justice has also summoned the company to court following their lack of cooperation with the IRS. But somehow Facebook is not the only powerful company that has been put to the battle of the courts. In fact, there are other companies following the same summoning and lawsuits that could be costly.
Ideally, the IRS has been using more court battles for company tax returns. The best way to avoid that issue is to provide the information as quick as possible. The Form 4654 is just a simple measurement of how much the company pays in taxes and how much they make in returns. It also discloses basic information on your company’s growth. Although there is no legal obligation for your company to fill out the form, it is best to do so because courts are expensive, not to mention the lawyers helping your case.
By disclosing the information, your company avoids heavy penalties and interest fees. Plus, your accounts will never be frozen or held by the IRS if you tell them beforehand to do so. There should be some obligation to comply with the IRS and it should be as cooperative and as smooth as possible. There is no need to drag your company through a court battle where the decision gets handed to the IRS every time. The best piece of advice is to never refuse to disclose your company’s information. Always make sure you stay ahead and fill out the form as best as you can. Just make sure to mention what is needed on the document and not tell the IRS that you refuse to do so.
In the wise example of Facebook’s upcoming legal battle or current investigation into their company’s tax and financial information, your company can hopefully learn from their stonewalled cooperation and make sure that you can do your best to stay on the good side of the IRS.