Posted on August 18, 2017 in Taxation Law

You may not be a millionaire celebrity or a huge corporation, but that does not mean you cannot be guilty of tax evasion. Even though these are the types of people and entities typically associated with tax evasion, any person who files tax returns could find himself or herself under investigation for this serious crime.

According to the Internal Revenue Code § 7201, tax evasion involves “[a]ny person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof.”

Thus, this law sets forth two kinds of tax evasion:

1. The willful attempt to evade or defeat the assessment of a tax; and

2. The willful attempt to evade or defeat tax payment.

For example, if the taxpayer transfers assets to prevent the IRS from determining his or her tax liability, he or she could be found guilty of evasion of assessment. If the assets were transferred after a tax liability is due, he or she could be found guilty of payment evasion.

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 Posted on August 09, 2017 in Tax Audits

When you learn that your business’ sales tax records are being audited, there are certain steps you can take to make the process go smoothly and to handle the tax audit properly. There will be many times during the sales tax audit process that you have questions, and it is best to seek assistance of a sales tax lawyer who can advise you of your obligations under the law as well as what options are most strategic for you and your business.

Understanding Audit Purposes

The California State Board of Equalization administers the sales tax audit. The audit’s purpose is to determine if you have paid the proper amount of sales tax.

The auditor will review a number of documents to determine:

• If all gross receipts from sales of tangible personal property and taxable labor and services have been reported;

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 Posted on July 28, 2017 in IRS Scams

Every year scammers posing as the IRS attempt to scare taxpayers into handing over money that they do not owe or money that will never go to reduce their tax obligations. Recently, the IRS warned the public of the newest twist on a common tax scam. It is important to understand how to identify a tax scam to help prevent yourself from being taken advantage.

Details of This IRS Scam

According to the IRS, a fraudster will contact a taxpayer, identify himself or herself as an IRS employee, and demand to be paid immediately. The scammer will only accept payment through a prepaid debit card, which the scammer claims is connected to the Electronic Federal Tax Payment System (or EFTPS).

In reality, the prepaid cards are not connected to the official system. The scammer will be able to pocket the money paid.

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 Posted on July 25, 2017 in Taxation Law

The IRS recently announced that it will begin contacting people regarding back taxes through private debt collection agencies. However, these private collection agencies will only be used for limited types of cases. However, with any entity that tells you it is working on behalf of the IRS, it is still wise to question the contact's validity—many people claim they are “working on behalf of the IRS” as part of an IRS scam.

Still, with this new change, there are ways to protect yourself if you are contacted by a legitimate private debt collector.

Details of the Initiative Using Private Debt Collectors 

There are four private collection agencies that are authorized by the IRS to contact taxpayers when money is owed but the IRS is no longer actively working the account. These include accounts that are older and when the IRS does not have the resources to work on them.

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 Posted on July 12, 2017 in Taxation Law

Bitcoin, a digital currency, has gained popularity and utility in the last few years. Released in 2009, Bitcoin has been lauded as a superior currency accepted throughout the world and able to be transferred more efficiently than traditional denominations.

Bitcoin and other digital currencies like Ethereum are based on a technology called the blockchain. The blockchain is a digital ledger that keeps track of economic transactions. The blockchain has recorded every Bitcoin transaction that has ever occurred, for example.

The blockchain is considered incorruptible because it is publicly available and not stored in a central location. Instead, copies of the ledger are constantly being updated and reconciled on millions of computers across the world. Without this technology, cryptocurrencies would not maintain their integrity.

While cryptocurrencies rely on the blockchain, it is widely thought that the blockchain has other uses, such as the recording of deeds or the formation of contracts. In whatever context, such transactions are usually still regulated and taxed by the IRS. Those involved in this emerging market could be subject to fines, penalties, and interest if they do not understand and comply with these tax obligations.

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 Posted on June 21, 2017 in Property Taxes

If you do not pay your property taxes on your home, you risk having your home sold at a tax sale. However, this consequence does not happen immediately, and the government must take multiple steps in order for your home to be sold.

There are a number of actions you can take if you have fallen behind on your property taxes, including speaking with a knowledgeable California property tax attorney.

The most important factor to keep in mind is that your home cannot be sold within five years of the delinquency. You have five years to pay the back amount or enter into a payment plan.

Property Taxes and Liens Against Your Home

If you do not pay your property taxes, a lien will be placed on your home. The lien will not just be the amount of back taxes that you owe. It will also include any amounts of interest, penalties, and costs stemming from the failure or late payment of taxes.

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 Posted on June 15, 2017 in Taxation Law

Raising money through crowdfunding has become more popular in recent years and its popularity shows no signs of slowing. Kickstarter and Go Fund Me are two popular platforms used to crowdfund.

At its inception, crowdfunding was mostly used by artists like musicians and filmmakers to support projects that were unlikely to be profitable. However, crowdfunding has been used increasingly as an alternative to venture capital fundraising. With people finding new uses for crowdfunding, new questions arise about whether such money is taxable.

Types of Crowdfunding

Crowdfunding campaigns may offer one or several types of considerations (or rewards) in exchange for a contribution. Some campaigns do not offer anything in return, simply the satisfaction of helping a cause.

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 Posted on June 07, 2017 in Small Business Taxes

When a business wraps up due to closure, merger, sale, or reorganization, California requires that certain measures be taken to alert the state that the business is no longer operating in the state.

These steps, as simple as they may be, can be overlooked. In fact, many business owners have faced serious repercussions by not following them. Failure to take these steps can result in future tax liability, including penalties and interest.

Step 1: Inform the Franchise Tax Board of the Entity’s Final Tax Year

The first step a business winding down must take is to tell the Franchise Tax Board (FTB) that the final return filed by the business will, in fact, be the last one. This is an easy step to complete; however, it is also easy to overlook.

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 Posted on May 29, 2017 in Taxation Law

“You are being audited” are words no person or business wants to hear. Tax audits induce stress and tax professionals are usually needed. Often, taxpayers are concerned that they will discover a large tax obligation or that an audit will take up valuable time.

One of the most important steps you can take in the instance of being audited is to have all supporting documentation on hand. This requires keeping documents for the recommended period of time as well as having an organizational system for these records.

How Long Should I Keep Records?

Records supporting your tax returns should be kept until the period of limitations for that tax return expires. This includes support for any income, deduction, or credit claimed on your taxes.

The period of limitations refers to the timeframe you have to amend a tax return and the timeframe the IRS can determine you owe additional taxes.

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 Posted on May 22, 2017 in Taxation Law

Tax returns and all taxes owed for 2016 were due on April 18, 2017. If you failed to file your tax return and make payment of any taxes due, there will be repercussions. 

The best way to minimize the fallout for late filing and paying is to take care of both matters as soon as possible. Penalties and interest will start to accrue immediately, leaving you with an even bigger bill. 

Often, people who do not file on time do so because they have a complicated tax situation. They may have questions that they cannot answer, or they may be worried about a situation because they do not understand it. 

In these cases, contacting a tax professional, such as a tax lawyer, can speed up the process and give you the confidence of knowing that your tax matters are being handled properly and with the most benefit to you.

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