New York City CPA Jonathan Medows specializes in helping small business owners and freelancers cope with the economic crisis.
One such problem is taxes, which can be particularly difficult for the self-employed to deal with on a quarterly basis. Many self-employed people and small businesses fall behind on their taxes. New York State, like several other states, offers a Voluntary Disclosure and Compliance Program that encourages taxpayers who havent paid their taxes to come forward on their own and pay what they owe. New Yorks program also includes privacy provisions that protect compliance by not sharing the disclosed information with other law enforcement agencies.
Medows often helps small businesses deal with voluntary self-disclosure. As a CPA in the states of New York and Maryland, he has worked as a staff accountant for Arthur Andersen and as a senior consultant in the restructuring group of KPMG. For the past five years, he has been engaged in private practice and is the managing member of Medows CPA, PLLC (www.medowscpa.com ).
He received his bachelor of science, magna cum laude, in economics and accounting, and his MBA in finance from the Stern School of Business at New York University. Medows has also earned a master of arts in Judaic studies and rabbinic diploma from the Jewish Theological Seminary of America.
About how many clients do you have who are taking advantage of the Voluntary Disclosure Program?
So far, I have had about 20 clients take advantage of this program.
What kinds of businesses are they in?
They tend to be self-employed individuals in service-based businesses, LLCs usually consisting of no more than five members and multi-member S corporations.
Is this program only available in New York or across the country?
Most states offer the Voluntary Disclosure Program; however, I would recommend checking with your states revenue department Web site to confirm, or verify with your CPA to see if your state offers the program.
What are the advantages of the program for you and your clients?
For my clients this program saves them significant sums of money. For outstanding liabilities, the penalties could be equal to or exceed the interest outstanding. The ability not to have to pay the penalty and only interest is tremendous.
What do you see as the disadvantages?
The biggest problem I have faced is having clients overcome their anxieties and deal with something they have been avoiding. In terms of dealing with the state, I do not foresee any disadvantages.
Have you found that the tax authorities don't penalize clients if they voluntarily step forward?
Yes, tax authorities dont penalize people if they voluntarily step forward. However, the state will still charge interest and the base tax.
What is involved in submitting a claim?
To participate, a taxpayer needs to declare the money they owe, enter an agreement to pay what they owe, and continue to pay their taxes in the future. Its quite simple. They prepare the tax returns outstanding and file an application.
Does the program help someone who is already in trouble with the IRS, or the state or city of New York?
No, if someone is under audit from the state, the program would not help. It helps someone if they are having problems with the IRS and the state but the various tax agencies share information. Therefore, the solution is to go to the state before they get information from the other tax authorities.
Is the accountant subject to any liability under the program?
The accountant is held to the same standard as in preparing tax returns.