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Subject Author Date
self employment income reporting error ... help please! anthonyzhe 06-17-2006
Posted by anthonyzhe on June 17, 2006, 9:05 pm
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 I started an online business last May of selling imported
goods from China. I obtained a seller's permit from the
city of Oakland and set up the business as a sole
proprietorship.

I recently received my state board of equalization sales and
use tax return form asking me for my total gross sales from
June of 2006 to June of 2006. After reading the return and
doing some research I learned that the taxes I owe from the
income of my company is not paid on this form - but rather
should of been paid on my tax return I filed in April of
2006. The use and sales tax form is only to pay for the
sales tax on the items i sell.

Now I fear I have underreported my income, and therefore
underpaid my taxes for tax year 2005. The online business I
started had gross sales of $39,000 from June of 2005 to June
of 2006 - I am fearful of an audit and want to disclose this
income to the irs - however I do not know how to proceed.
It was a careless error on my part - can you give me any
advice about how to proceed - or the name of a tax attorney
I can retain for consultation?

I am quite worried about this problem - and dearly need some
advice.

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Posted by Phil Marti on June 18, 2006, 11:29 pm
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> I started an online business last May of selling imported
> goods from China. I obtained a seller's permit from the
> city of Oakland and set up the business as a sole
> proprietorship.
>
> I recently received my state board of equalization sales and
> use tax return form asking me for my total gross sales from
> June of 2006 to June of 2006. After reading the return and
> doing some research I learned that the taxes I owe from the
> income of my company is not paid on this form - but rather
> should of been paid on my tax return I filed in April of
> 2006. The use and sales tax form is only to pay for the
> sales tax on the items i sell.
>
> Now I fear I have underreported my income, and therefore
> underpaid my taxes for tax year 2005. The online business I
> started had gross sales of $39,000 from June of 2005 to June
> of 2006 - I am fearful of an audit and want to disclose this
> income to the irs - however I do not know how to proceed.
> It was a careless error on my part - can you give me any
> advice about how to proceed - or the name of a tax attorney
> I can retain for consultation?

You need to file an amended (or original) return for 2005,
preparing a Schedule C for your 2005 business income and
expenses.

I think your chance of being prosecuted for criminal fraud
is nil, and that's the only reason you'd need an attorney.
You do, however, desperately need an accountant.

--
Phil Marti
Clarksburg, MD

<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Missy on June 18, 2006, 11:29 pm
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anthonyzhe@gmail.com wrote:

> I started an online business last May of selling imported
> goods from China. I obtained a seller's permit from the
> city of Oakland and set up the business as a sole
> proprietorship.
>
> I recently received my state board of equalization sales and
> use tax return form asking me for my total gross sales from
> June of 2006 to June of 2006. After reading the return and
> doing some research I learned that the taxes I owe from the
> income of my company is not paid on this form - but rather
> should of been paid on my tax return I filed in April of
> 2006. The use and sales tax form is only to pay for the
> sales tax on the items i sell.
>
> Now I fear I have underreported my income, and therefore
> underpaid my taxes for tax year 2005. The online business I
> started had gross sales of $39,000 from June of 2005 to June
> of 2006 - I am fearful of an audit and want to disclose this
> income to the irs - however I do not know how to proceed.
> It was a careless error on my part - can you give me any
> advice about how to proceed - or the name of a tax attorney
> I can retain for consultation?
>
> I am quite worried about this problem - and dearly need some
> advice.

You should seek a good tax professional in your area. They
can save you more money than they cost you.

Missy Doyle

<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Bill Brown on June 18, 2006, 11:29 pm
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anthonyzhe@gmail.com wrote:

> Now I fear I have underreported my income, and therefore
> underpaid my taxes for tax year 2005. The online business I
> started had gross sales of $39,000 from June of 2005 to June
> of 2006 - I am fearful of an audit and want to disclose this
> income to the irs - however I do not know how to proceed.
> It was a careless error on my part - can you give me any
> advice about how to proceed - or the name of a tax attorney
> I can retain for consultation?

Did you report this income on Schedule C of your federal
return? If not, you need to file amended federal and state
returns.

If you did include the income on your federal return all you
should need to do is file an amended state income tax
return.

The California tax enforcers make the IRS look like push
overs but you still shouldn't need a tax attorney. You might
benefit, however, from engaging the services of a tax
professional (CPA or EA) who specializes in small business
taxation. My guess is that misreporting your state income is
not the only error you made.

Good luck.

<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

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