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To the IRS, tax mistakes can be as bad as deliberate deception

On Behalf of | Nov 1, 2017 | Blog |

Being a business owner in Washington state is a lot of work. It can be rewarding, but there it also means doing a million things a day to keep the company successful and out of trouble. You can hire people to help you, but ultimately it’s up to you to make sure the bills are paid and the work gets done.

When it comes to taxes, it’s especially important that you stay on top of everything. Business owners generally must file returns for income taxes, property taxes, payroll taxes, Social Security taxes and more. And when there is a mistake, the IRS or state tax agents will aggressively pursue payment.

Deception or mistake? It doesn’t matter

Not every alleged tax evasion is due to deliberate deception, but tax agencies do not excuse sloppy bookkeeping either. For example, a private college in California is facing questions about more than $20 million in expenses claimed on its tax returns. The school says it cannot say what the money was specifically spent on.

The school is called San Diego Christian College. According to KFMB-TV, the college listed more than $20 million in “other expenses” and “fees for services” for fiscal years 2012, 2103 and 2014. The IRS says it never received more detailed documentation explaining those claimed expenses.

‘Very sketchy’ budgets

The federal government has been concerned about San Diego Christian College for a while. A 2016 report by the U.S. Department of Education gave the school a failing fiscal grade due to a “very sketchy multi-year budget” and other record-keeping irregularities.

Whether the lack of record-keeping at this school was deliberate or the result of careless business practices is not totally clear, though a former IRS official who reviewed the financial records suggests that school is understaffed an suffers from a lack of oversight from its chief financial officer, whose office is 500 miles away from campus.