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Know when to deposit taxes electronically

by on
in Small Business Tax,Small Business Tax Deduction Strategies

If you're required to file your payroll taxes electronically, don't quibble with the IRS, even if you're more comfortable walking a check to the bank.

Here's a recent example of the potential consequences: An Ohio company made its deposits on time but failed to do so electronically, as required. It didn't trust the electronic process. (In general, companies whose total tax deposits exceed about $200,000 a year must deposit electronically.)

The IRS slapped the company with $174,000 in penalties and the Tax Court agreed, saying failing to file electronically, when required, is the same as failing to file on time. (F.E. Schumacher Company, Inc., 2004-1 USTC 50,166)

Note: For more Lessons from the Tax Court, see page 2.

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