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california business taxes, San Jose tax lawyerThe California State Board of Equalization (BOE) has changed sales and use tax Regulation 1702.5. This regulation governs when a responsible party must personally pay taxes owed by a business entity that is closed or abandoned. These changes could alter your tax obligation, and so it is important to understand the new regulation and seek counsel to determine if it modifies your circumstances. These changes could prohibit the BOE from seizing your personal assets. The amendments to the law will be effective on April 1, 2017.

Amendments to Business Tax Regulation 1702.5 

The current regulation is defined by the following: “Any responsible person who willfully fails to pay or to cause to be paid... any taxes due from a [business entity] shall be personally liable for any unpaid taxes and interest and penalties on those taxes not so paid upon termination, dissolution, or abandonment of the business...” (Emphasis added.)

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The IRS has implemented a new policy relating to the means its agents must use to initiate contact with taxpayers. Effective immediately, when an IRS agent contacts you for the first time, that contact must be via a mailed notice.

Although a follow-up contact may be made by telephone (but not any sooner than 14 days after the initial letter is sent), it is required that any taxpayer selected for an examination (also known as an audit) be notified of this fact via mailed letter.

This action has been taken by the IRS, at least in part, due to the proliferation of telephone scams wherein scammers pretending to be IRS agents contact unsuspecting taxpayers and attempt to obtain personal information, financial information, and even payments.

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As a small business owner, you are required to understand and adhere to the myriad of laws that affect your business, including both federal and state tax laws.

Even when you are confident that you are in compliance with all applicable regulations and requirements, finding out that your business is being audited is unnerving. Know that the fact your business was selected for an audit does not necessarily mean your filings have been flagged by the IRS, state or local tax authorities; you may have just won the tax audit random selection lottery (which is, unfortunately, not nearly as fun as winning the powerball.)

If you are selected for an audit, know that you have a number of rights during the audit process, including the right to professional and courteous treatment, the right to privacy and confidentiality, the right to know why certain information is requested, the right to appeal, and the right to representation.

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Are you concerned that a recent decision by California Governor Jerry Brown may impact your taxliabilities? A.B. 99 was a bill written to bring California into compliance with federal rules regardingcancellation of debt income (CODI) related to mortgage debt forgiveness. Though the bill was approvedby state legislators, Governor Brown cited the need for California's continued tax revenue as the reasonhe is not granting this tax relief. Many tax payers anticipated the governor's signing of the bill. Manymay not have accounted for the mortgage debt relief to be counted as income. This may createincreased tax responsibilities. If you believed that A.B. 99 was going to be signed into law and you havenot made appropriate tax payments to the California Franchise Tax Board, you may need a California taxattorney.

Currently, California tax law does not conform to federal exclusions for income from the discharge ofqualified principal residence indebtedness occurring after 2013. California taxpayers with cancellation ofdebt income who anticipated the implementation of A.B. 99 may not have made their payments beforethe due date of the return. This may lead to penalties for the 2014 tax year.To get answers about California's A.B. 99 and how its veto might impact your tax responsibilities,contact California Tax Attorney John D. Teter.

One of the challenges that independent contractors who work for themselves have is to file taxes accurately. Typically an independent contractor may be required to file taxes using a 1099-MISC form. In other cases, they file taxes using a 1099-K form. The bottom line is however, is that if you are earning an income as an independent contractor, you will have to file taxes.

However, it can become confusing to classify the kind of work that you do. Tax filing for an independent contractor may not be as cut and dry, as filing for taxes when you are an employee of a company. For instance, how do you classify the kind of work that you do? Is it a business, or are you engaged in a hobby, that occasionally earns you an income?

Filing properly is very important because it determines the kind of tax that you pay, and the exemptions and deductions that are deducted. For example, if you earn an income via a hobby that you are currently engaged in, you may be able to use deductions to offset the income, but those deductions cannot be higher than your income, because there is no concept of suffering a loss in a hobby. Things can be dramatically different when you're engaged in a business, however. Businesses do involve profit and loss, and in fact, in the early stages of a business, it's fairly normal to not be making any profit at all.

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