,
an online resource for tax and business issues for small
business owners.
"But if you rely on information from the Internet to
research your tax questions or use web-based tax preparation and
filing and it doesn’t turn out as expected, the IRS is going
to be a lot harder to contend with than your nephew," said
Bush.
So what should small business owners keep in mind before
logging on to the Internet to tackle their taxes?
Finding the Answers: Know Your Source
Among the most important criteria for conducting online
research for tax information are making certain you’re using
reliable sources and that these sources are keeping their online
information up to date.
While the Internet offers small businesses a powerful
research tool to find out more about their tax situation and tax
obligations, the information found is only as reliable as the
source from which it came. For example, users of CCH know that
the site is developed and maintained by CCH, a reliable tax
information publisher that has been in business since 1913.
"However, the only qualifications for putting up a site
on taxes is the desire to say something on the topic and the
ability to build a web site," said Bush. "As a result,
it benefits you to take some time to first check out who’s
behind the site and their qualifications in providing this type
of information."
At the very least, this includes seeing what information the
site posts about the company and its professionals, how long
they’ve been providing tax information, in what forms other
than online that they provide this information and what are the
professional qualifications of the site’s contributors.
Another tactic is to use sites whose names you’re familiar with
through other reliable sources. If you’re still unsure, ask
your accountant or someone else you trust who’s knowledgeable
about taxes.
And, if the information posted on a site looks too good to be
true, it probably is. So, if you come across sites that try to
lure you in with statements like "pay no income tax"
or that promote taking advantage of "secret"
loopholes, your best bet is to hit the back-button on your
browser and get out of that site.
Ensure Data Is Current
A great advantage of the Internet is the ability to
disseminate information nearly instantaneously. One of the
greatest disadvantages is that information can stick around
forever, making it very difficult for visitors to figure out if
the information was posted today, last month or last year. And,
when it comes to taxes and tax laws having the most current
information can mean the difference of being in compliance or
being socked with a penalty.
"Laws, regulations and court rulings create changes in
the federal and state tax laws almost every day of the
week," said Bush. "For a company like CCH, that means
we’re updating our web information every day. However, many
sites can’t guarantee the most current information, forms and
data are available on their site."
As a result, look for dates on the information posted and
visit the site regularly to make certain that information is
being updated frequently. But, don’t be surprised if even some
major sources of information are behind in updating online
content. For example, the Internal Revenue Service posts a copy
of the Internal Revenue Code that is several years out of date
on its popular web site. Forms on this site, however, are
generally up to date.
Special Electronic Filing Considerations
During the 1998 tax season, more than 500,000 returns were
filed using Internet-based software. And this number is expected
to rise by 50 percent each year over the next few years. But
before you become one of these new-era filers, there are a few
considerations you should keep in mind when deciding which
online software to use.
- Find the right, secure online tax software
Since the software tool you choose should take you from the
very early stages of preparing your tax data all the way
through actually filing with the IRS or the state revenue
departments, reliability and currency of information are
absolutely essential.
Just as you’d be hesitant to provide your credit card
information across an unsecured site, you should be wary of
transmitting any of your tax-related information unsecured.
Ensure the online tax service encrypts data to and from you
using recognized Internet security standards.
Key benefits of filing electronically are supposed to be
that it’s easier and faster. But, it’s only easier and
faster if the tool you’re using makes it this way.
The tool should help you organize your information in a way
that’s orderly and easy to work with. It also should provide
a glossary and provide clearly written explanations of how to
handle various tax situations you may encounter. Technical
support also should be included with the service.
"Even with a well-organized program guiding you, you’re
likely to come across some terminology that you don’t
understand or a situation you’re unsure how to
report," said Bush. "Having built-in help means you’ll
get answers quicker and helps ensure you provide the correct
information to the IRS."
- Download features, check your work
If you’re like the typical taxpayer, you probably won’t
prepare and file your taxes in one sitting. As a result, you
may want to consider if it’s important to you that the
online filing service you select allows you to download the
program so that you can complete it at your own PC. This
option also can be reassuring to particularly
security-conscious filers, as the data will reside on your
computer, not that of the Internet filing service.
Once you’ve entered your tax information into the software, it’s calculated and you’ve produced your returns,
make certain the software or online service provides you with
the ability to review the forms before they're electronically
filed with the IRS or state revenue department. Also, if you like the
ease of using the software, but feel more comfortable
printing out the forms and mailing them yourself, check to see
that this is an available option.
- Know the limitations of the online tools, information
While the Internet offers a tremendous resource to help
many small businesses with their taxes, it's not a
substitute for professional, individualized help. Therefore,
if your small business tax situation is complicated, you
should seek the guidance of a CPA or tax attorney.
CCH INCORPORATED, founded in 1913, has served four
generations of business professionals and their clients. The
company offers more than 700 CD-ROM, print and online products,
including Internet, online and book products for small business
owners. CCH is a wholly owned subsidiary of Wolters Kluwer U.S.
The CCH web site can be accessed at www.cch.com.
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