Mason-Dixon Dragway

April 27, 2006
While visiting clients in Pennsylvania, I was invited to the Mason-Dixon Dragway to see Erik racing his Camaro and his friend Dave taking his cycle on the 1/4 mile run. Dave set his all-time record for the quarter mile at 9.86 seconds. Unfortunately when it was Erik's turn, it started to rain and the race track had to close. Erik was the only one in his class that showed up because of the weather. Had it not rained for another 30 minutes, Erik would have won $1,000 big ones just by running the 1/8 mile. Don't ask me how Erik feels about that, unless you want me to type some weird symbols! Henry (CEO)

"How long should I keep my records in case of an audit?"

January 15, 2006
It depends on the kind of audit and whether it is the Internal Revenue Service or the state Department of Revenue that is doing the audit. Currently the I.R.S. is auditing the 2003 year tax returns.
However when they audit one year they usually want to see the year before and the year after which means that your 2002 and 2004 tax returns will also be looked at. Generally the statute of limitations runs out three years after you filed your income tax returns.
However the rules are different when it comes to payroll and sales taxes.
One of our clients got a notice from the I.R.S. in December, 2005 asking about the 3rd quarter Form 941 for the year 2001! So obviously they waited more than 4 years to inquire.
Another client got a notice in January, 2006 from the state Dept. of Revenue about their 2002 sales tax figures that did not seem to match the Schedule C that they filed on their 2002 federal income tax return. Again the state waited more than 3 years to inquire.
So it seems that it would be good to save your records for at least 5 years to cover normal income tax, payroll tax, and sales tax audits. Pictured above is our room at the La Mansion Del Rio where we stayed on the Riverwalk in San Antonio, Texas. Henry (CEO)

"Do you work with businesses that are behind in their payroll taxes and need a payment plan to repay them?"

December 10, 2005
We do try to help people with their payroll problems. The IRS is quite strict when it comes to businesses that don't pay their withholding taxes on time. The penalties are high but if the business owner makes the current payroll payments on time then the Internal Revenue Service will allow installment payments on the prior payroll periods. Pictured above is our cruise stateroom while arriving at Tortola, British Virgin Islands. Henry (CEO)

"Please explain what is the tax advantage of an 'S' corporation."

December 5, 2005
From a tax point of view, generally an 'S' corporation only pays tax on the profits and not on the withdrawals, unlike a 'C' corporation which pays a tax on the profit AND the stockholder pays on the dividend withdrawals. Sole proprietors; limited liability companys (LLC); and partnership income is generally subject to self-employment taxes. 'S' corporations don't pay any self-employment taxes on the profits, however the Internal Revenue Service does expect the owners to pay a "reasonable" compensation for services provided to the corporation by the owners. Pictured above is my wife at a small village in Tortola, British Virgin Islands. Henry (CEO)