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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 15186
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Need help with delinquent County Taxes (Net Profit Occupational

Resolved Question:

Need help with delinquent County Taxes (Net Profit Occupational License Fee).
Submitted: 1 year ago.
Category: Tax
Expert:  Megan C replied 1 year ago.
Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

Thank you for your question - what kind of help do you need exactly? What are the particulars of your situation?
Customer: replied 1 year ago.

Thank you for our response. I have a small business in my home whereby I generate reports for the Thoroughbred Industry. Business was started in 1998. I have always done my own Federal and State Taxes (for the past 40 years). I learned just the other day from the Woodford County Fiscal Court Tax Collector that I should have been paying 1-1/2% of the Net Profits. I had no idea about this. SO my questions are regarding what they call Occupational License Fee taxes. How much trouble am I in? How far back can they go by law? I have turned everything over to an accountant that I know that has handled some things in the past for me. Should I seek legal advice? What authority does a county have in collecting taxes? etc. I probably have more questions once I get your response to this.

Expert:  Megan C replied 1 year ago.
Thanks for your question, and thanks for using JustAnswer.com.

First off, if your not paying the tax was an oversight, you're not in trouble but you will owe penalties and interest on your tax bill. According to Kentucky Law, since no returns were filed they can go back an unlimited amount of time (SOURCE).

If you have an accountant working with you, then you don't need legal advice. An accountant can deal with this issue for you. Now, the only time you really NEED an attorney is if they try to claim that this is criminal, which from your scenario it just sounds like an oversight. File the returns, pay the tax, and you'll be fine.

A county has the same authority as virtually any other taxing body. They can attach to your business assets, levy your bank accounts - and do virtually anything that Kentucky could do.

Since you have never filed, your accountant should contact the county and see how many years that they want you to go back and pay taxes on. Since you've never filed, they might agree to the last six years and then again they may want more years. If you're working with them, you'll be better off in the end.

Please let me know if you need additional assistance. Thanks again for using JustAnswer.com and have a happy New Year.

** Please take a moment to rate my response as "Excellent" so that I may be compensated for assisting you today. Please let me know if my assistance was anything less than "OK Service", as I am compensated based on whether or not I have assisted you with your issue. If you need further clarifications, PLEASE WAIT TO RATE MY ANSWER UNTIL AFTER RECEIVING FOLLOW UP FROM ME. If I receive anything less than OK Service, I do not get paid. Thank you for your kind understanding in this matter. If you have difficulties rating, then simply respond stating that you are having difficulties rating and thank me for my excellent, good, or ok service and we can get the rating applied by the site*
You should be aware that your question, as with most tax questions, can never really be answered completely...addressing all the permutations; that is because of the many assumptions that have to be made I have done my best to determine what I think you are asking and answering it in the most direct and understandable manner possible. If, however, after reviewing the questions, you have any uncertainties or further questions, please do not hesitate to ask.

Customer: replied 1 year ago.

One other point. I started paying my wife and myself a salary about 6 years into the business. I withheld the Woodford County payroll tax but never sent it in. This is the first time I had ever done payroll and I simply overlooked it the first year. This was clearly my fault, however, I had no idea that there was also a net profit tax. I guess if I would have filled the withholding tax I would have learned about the withholding taxes. I am not an accountant and clearly screwed up. Beginning this year I am turning everything over to my accountant. Am I ok or do I need to be worrying about the criminal side. Also, if I made $75,000 profit for the past 14 years with penalties, interest, etc. can you give me a ball park figure what I might owe? More or less than say $20,000.

Expert:  Megan C replied 1 year ago.
I wouldn't worry about the criminal side. Negligence is not against the law.

I can't give you a ballpark of what you owe, because I am unfamiliar with the penalties and interest that would be applied by the state. The accountant you turned everything over to should be able to give you a ballpark figure, however. I would think that the amount you would owe would be over $20,000 - especially with the payroll taxes that have not been remitted. However, this is just a guess as I haven't looked at your file.

Not paying payroll taxes usually comes with steeper penalties, because like you said - you withheld the amount from wages. You will also have to pay these taxes.

Your accountant can work with the county to ensure that you minimize the damage. They can also work to get a payment plan in order in the event you don't have the cash to pay the tax. Keep in mind that penalties and interest continue to accrue when you are on a payment plan.

Good luck with this. You were wise to get an accountant on the case. They should be able to get this situated for you sooner rather than later, and hopefully the hit is not that bad.

Hope all goes well, and have a happy New Year. Thanks for using JustAnswer.com.

** Please take a moment to rate my response as "Excellent" so that I may be compensated for assisting you today. Please let me know if my assistance was anything less than "OK Service", as I am compensated based on whether or not I have assisted you with your issue. If you need further clarifications, PLEASE WAIT TO XXXXX UNTIL AFTER RECEIVING FOLLOW UP FROM ME. If I receive anything less than OK Service, I do not get paid. Thank you for your kind understanding in this matter. If you have difficulties rating, then simply respond stating that you are having difficulties rating and thank me for my excellent, good, or ok service and we can get the rating applied by the site*
You should be aware that your question, as with most tax questions, can never really be answered completely...addressing all the permutations; that is because of the many assumptions that have to be made I have done my best to determine what I think you are asking and answering it in the most direct and understandable manner possible. If, however, after reviewing the questions, you have any uncertainties or further questions, please do not hesitate to ask.

Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 15186
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Megan C and 10 other Tax Specialists are ready to help you
Expert:  Megan C replied 1 year ago.
Thank you for the positive rating. Please remember me the next time you have a question. Simply enter "MyVirtualCPA" in the subject of your question, and it will be routed directly to me. Thank you again for using JustAnswer

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