What are the rules regarding tax fraud and the commingling of funds?
If you have more than one taxpaying entity, the entities must be kept completely separate. A corporation, for example, is a living, breathing “entity” under the law. It has its own social security number, more commonly known as your Federal Employer Identification Number. It does its own business. If the corporation has a problem paying its bills, then the owner cannot be held responsible for those bills, unless the creditors can pierce the corporate veil. But its income and expenses must be kept separate from other entities. You cannot deduct one company’s expenses, on another one’s income tax return. You cannot deduct your personal expenses off of the corporation. If you commingle funds, you are committing tax fraud. In doing so, you will pay additional tax, interest, penalties, and in extreme cases face jail time. If you are asking this question in the first place, then it’s time for a new accountant. Call our offices today.
Related Questions
- What are our shared responsibilities for ensuring that all funds under the ARRA are used for authorized purposes and instances of fraud, waste, and abuse are prevented?
- WHO DO I CONTACT ABOUT FINANCIAL MATTERS, MINISTRY OPERATING FUNDS, AND TAX STATEMENTS?
- How Do You Report A Business You Suspect Is Committing Tax Fraud?
