If You Are Not Filing Local Business Tax Returns, Act Now To Minimize Your Exposure

Many business owners are truly unaware of their Business Tax registration and filing obligations.   Most businesses in Tennessee are obligated to register for the Business Tax and file annual returns.  The business tax is a tax on gross receipts of the business.  Many service providers are surprised to learn that although their services are not taxable for sales tax purposes, those same services are taxable for business tax purposes.

The Tennessee Department of Revenue has determined that many taxpayers are not registered to file local business tax returns (also known as gross receipts tax returns).  Historically, the few business tax audits that occurred were handled by the local governments.  Now those audits will be handled by the Tennessee Department of Revenue who has made it a top priority to locate non-filers.  Non-filers will be punished through the assessment of tax, a 25% penalty and interest for six years of delinquent returns (and possibly as many as ten years).

Taxpayers have a rapidly closing window in which they can contact the Tennessee Department of Revenue and enter into a Voluntary Disclosure Agreement (VDA).  Under the VDA, the taxpayer will only have to pay tax for three or four prior years and no penalty will be assessed.    The Tennessee Department of Revenue is starting the process of contacting taxpayers to determine if they are in compliance.  Once you have been contacted by the Department of Revenue, you lose the ability to come forward voluntarily and enter into the VDA program.  It is important that delinquent taxpayers act now to enter into the VDA program before they are contacted by the Department of Revenue.

Because many of our clients file their own Business Tax returns, we do not know which of our clients have failed to register and file returns.  If you think you may not be in compliance, please contact us at your earliest convenience for further discussion.

Additional information on VDA program can be found at http://state.tn.us/revenue/notices/business/09-15.pdf  and additional information on the Business Tax can be found at http://state.tn.us/revenue/taxguides/bustaxguide.pdf .

Tags: Business Tax Returns, Dempsey Vantrease & Follis

This entry was posted on Wednesday, November 25th, 2009 at 5:00 pm and is filed under Accounting. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.