Tips to Save Yourself from Tax Penalties

Tuesday, July 10, 2012

Tips to Save Yourself from Tax Penalties

A number of people try to hide their actual income source and earnings. This trend has been in practice since ages, and still practiced by over 60% of the population. There are number of ways that taxpayers have created to avoid disclosing their income. Therefore, the tax authorities had to take stringent measures to penalize such people. They have created several laws and ways to levy fines and penalties. Not many people are aware of the fact that some actions of taxpayers can even result in criminal charges.

In this article, we will talk about crucial steps you should take to avoid Tax Investigation by tax authorities. You can follow these rules if you are being charged for tax penalties to come out of the situation with ease.

1. Try to keep yourself calm

Many people are really scared to undergo any kind of investigation held by the tax authorities. It can lead to emotional breakdown as well in extreme cases. Therefore, as soon as you get the news of an investigation, do not get terrorized by it. As a proven fact, only 2.5% of the cases end in a custodial sentence, rest of them gets resolved by paying the actual tax. So, do not panic and take things easy on yourself. This will help you to organize your finances in a much better way.

2. Seek an expert’s advice

If you are being investigated by your country’s tax authorities, then it is advised to get in touch with an experienced and well skilled accountant or advisor. You will need someone to guide you through the right path and who is well aware of the rules and regulations of the law in action.

3. Never talk about your financial affairs in public

It does not matter how many you meet throughout the day, or whether you have a huge circle of closed and trustworthy friends. Do not ever talk about your financial affairs amongst your circle, except your tax advisor. It is not at all a good idea to discuss about your legal cases in front of your social circle. You might get some advice from your well wishers, but remember it can be wrong too. This can also lead to killing off any chances of reaching a settlement with the authority.

4. Do not even try to mislead tax authorities

You should know that your tax investigator has huge resources at his disposal from where he can get to know every pin to point details about you and your life. So never try to play mind games with them as long as you are willing to make the settlement.  Also, make yourself prepared to answer all kinds of questions that the investigator may ask you. Avoid making partial disclosure of your income, as it may not give you a chance of getting good deal on settlement if the tax investigation officer will get to know about your cheat.

Hence, if you would deal with the taxes patiently, and calmly, then you are most likely to get some good alternatives to pay your penalties and interest. The key to get all things done smoothly is to maintain good records and understand the guidelines well enough.

Author’s Bio:

Sachin writes about travel, finance, business, fashion, computer tips, technology, internet marketing and tutorials. He loves travelling and making new friends.

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