You've been feeling uneasy (perhaps even guilty) because you've failed to report your under the table business income. Perhaps you've never filed a tax return, even though you know you owe money. Finally, you contact an accountant to resolve the situation.
Although it is commendable that you are trying to correct matters, hiring an accountant to do these delinquent returns could be a big mistake. The reason why is because tax evasion is a criminal offence or felony. You might also be subject to civil action.
Would you hire an accountant to defend you in a criminal proceeding? Not likely. You would be wise to hire a qualified attorney.
First of all, lawyers have something called solicitor-client privilege (also known as attorney-client privilege or legal advice privilege). This basically means that things you tell your lawyer when seeking legal advice are confidential and can't be used against you. Even written records can be covered by this privilege.
On the other hand, your accountant can be compelled to testify against you and all records in his possession can be demanded by the authorities.
Second, your lawyer can prepare a legally binding agreement that can protect you. In return for your coming clean, the tax authorities may agree not to charge you criminally and, in some cases, even reduce penalties or tax liability.
If your accountant tried to do the same thing, they could demand all information about you. Your accountant would not be protected by solicitor-client privilege.
If, say, your accountant filed your tax return from ten years ago on your behalf, the tax authorities could still charge you with tax evasion, despite the fact that you are obviously trying to rectify matters (albeit a bit late).
It is even possible that your accountant could get into trouble for failing to report your delinquency. On the other hand, your lawyer can't be compelled to testify against you, being protected by solicitor-client privilege. Your lawyer may also have his own in-house accountant in order to protect you.
Your lawyer (specializing in criminal and tax law) will likely negotiate an agreement with the tax authorities before filing any tax returns.
Therefore, if there is a good chance you could be charged criminally for your failure to file tax returns or properly report income or expenses, don't see your accountant. Instead, consult a lawyer specializing in such matters before you file or amend any returns.
RESOURCE BOX:
J. Stephen Pope, President of Pope Consulting Inc., has been helping clients to earn maximum business profits for over twenty-five years.
For profitable Work at Home Small Business Ideas, visit http://www.yenommarketinginc.com/
To learn more about income taxes, visit http://www.yenommarketinginc.com/
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