Laura has finally returned to her job as an accountant at Megatron

Entreprises, a small family-run hardware supplies chain, after a year

extended maternity break. She has returned at an important time in the

fiscal year: the tax season. As she reviews the books for the period she

was gone, she notice a little anomalies which suggest that Megatron

reporting much less income than they have actually made in the last two

years.

Troubled by this, Laura approaches the company owner, Joseph, who

comes clean and explains that he has been altering the books because of

the personal financial slump that he fell into because of gambling

problem. Joseph promises that from now on, that Laura is back, he will no

longer attempt to reduce his tax liability because he and the company are

in better place now. However, he also makes clear to Laura that he cannot

afford to pay the back taxes and their penalties.

If Laura reports the fraud to the tax authorities, the company may

close. If it comes out that she did not report, she will definitely lose her

license. What should Laura do?

 
A company is a separate business entity which acts like an artificial person and its owners are
responsible for its growth but owner Joseph was using the money of the company for gambling
means personally he can’t and shouldn’t use the money of the company for his personal
preference which he only benefits and not the company. Laura on the other hand, cannot report
this to the tax authorities because the company she works for may close but she will definitely
lose her license if it comes out that she didn’t report. As an alternative solution to this case,
Laura may file a report voluntarily about the taxes the company didn’t pay and asks to pay for
the taxes, penalties or fine the company should pay as it was imposed by the IRS when
businesses or taxpayers fail to pay at all. Based on the case of Joseph where  has been altering
the books because of the personal financial slump that he has been into because of Gambling
problem, that is called Tax Avoidance which is clearly legal as he alter books so that he can
reduce his tax liability and not to clearly avoid the tax payment which is illegally as it was Tax
Evasion.  In terms of paying back the taxes and penalties which Joseph clearly states to Laura
that they cannot afford to pay back, Laura can ask  for an  Installment Agreement Request to set
up installment payments with the IRS. They can complete the installment agreement online too.
Completing the form online can reduce their installment payment user fee, which is the fee the
IRS charges to set up a payment plan. In this way they can pay back the taxes and the penalties
in installment basis as well as the company wouldn’t close due to tax fraud neither Laura will
lose her license.