Many self-employed professionals and small business owners believe that, as long as they have a tax advisor or file their taxes, everything is properly managed. However, according to tax advisor José Manuel Orta, the reality is often very different.
“There are people who are paying enormous sums for tax errors they don’t even know how to identify,” he explains. Orta recounts the recent case of a young man who had opened a bar in the Aljarafe and who came to his office after starting to receive levies.
“The guy was doing things right. He submitted all the information correctly and trusted that his tax situation was under control,” he notes. However, the problem appeared when they reviewed the Corporate Income Tax return filed by the previous advisory firm.
“They had doubled his revenues and reported profits that actually did not exist. The result was that the tax authority was demanding a huge sum of money when the business had not actually generated real profits,” he explains.
Garnishments and the feeling of having nowhere to turn
According to Orta, the young man tried to seek a solution with his prior advisor, but he was told there was no room to fix the situation. Meanwhile, the garnishments began arriving. “When he came to the firm with his father, the sense of genuine despair,” he notes.
After reviewing the case, the team filed an amended return with the Internal Revenue Service (IRS). This week, the IRS sided with the client, freeing him from paying roughly $20,000 more and opening the possibility of refunds of overpayments in other areas, such as a state sales tax or the quarterly payments for Corporate Income Tax that are due in October, December and April.
According to Orta, these kinds of situations occur more frequently than many people imagine.
“There are errors that a normal client doesn’t have to detect. Many people sign or submit documents thinking everything is correct because they trust the professional in front of them,” he says.
Therefore, he stresses the importance of having solid tax advice, especially for the self-employed, small businesses, inheritances or complex filings. “Many times it’s not just about paying fewer taxes. It’s about avoiding problems that can seriously affect a person’s financial stability,” he concludes.
