ATTENTION BUSINESS OWNERS: Don’t Mess With The IRS!
Have you heard about the indictment issued to the family which owns local Milwaukee restaurants El Beso and El Fuego? Their violation of federal tax laws has put them in some major trouble. Take a look at the report here:
As you can see, the IRS is not someone you want to mess with. Not reporting cash sales is a huge red flag to the IRS, especially since they started requiring credit card companies to issue 1099’s. If the IRS notices that your total reported sales are close to the amount reported on the 1099-K for credit card sales, then they may choose to investigate via audit. Another mistake they made was paying employees in cash. These wages were not reported to the IRS and therefore there weren’t any employment taxes paid on those wages.
This case is an extreme case of unethical practice. However, there are business owners that may not be aware that they are breaking federal laws. That’s why it is important to have knowledgeable professionals overseeing your financial decisions. This will help you keep up to date on payroll taxes, sales taxes, and stay compliant with IRS law.
Let this be an eye opening lesson to all business owners.