Posted on September 15, 2017 in Small Business Taxes

If you are setting up a new business or restructuring an existing one, you might consider electing to be taxed as an S Corporation, which means you are electing to have your entity taxed under Subchapter S of the federal tax code. Such entities will also be considered as an S corporation for California tax purposes.

Provided that the business qualifies, it may be beneficial from a tax perspective for an entity to be considered an S corporation as the business will be able to avoid federal double taxation because there is no corporate federal income tax on the profits of the company. All profits and losses are passed on to the entity’s shareholders.

Structure of an S Corporation

An S corporation must meet certain requirements and has certain benefits, including:

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 Posted on September 08, 2017 in Taxation Law

Limited liability companies (LLCs) are often touted for their tax flexibility. In fact, that is one of the reasons why people choose to set up their business as an LLC.

LLCs are commonly called pass-through tax entities for federal income tax purposes. This is because the LLC will not be responsible for these taxes. Instead, the LLC’s individual members will pay the federal income taxes.

However, LLCs must comply with certain filing requirements and possibly pay a state minimum tax in California and may need to pay a California LLC fee. The proper forms and amount of taxes and fees will be determined by the setup of the LLC and also by certain elections made.

California follows the federal check-the-box regulations. Accordingly, LLCs are classified as follows:

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 Posted on August 31, 2017 in Taxation Law

If you have a delinquent tax debt, the Internal Revenue Service (IRS), California Franchise Tax Board (FTB), or California Board of Equalization (BOE) may have the power to take your property. This power to seize, or levy, your assets is why you should seek to remedy the delinquency as soon as possible through an installment agreement or other means.

The levy process is meant to satisfy your tax debt. The IRS, FTB, or BOE may seize your property and sell it, if necessary, and apply the proceeds to your delinquent taxes. The cost of the sale may also have to be paid by the taxpayer through the levied property.

The following property is subject to seizure:

• Wages, salary, or commission. Dividends and payments on promissory notes are also subject to seizure. Your wages can be levied continually until your tax obligation is paid in full.

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 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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