Dec 072012
 
What's all the noise about the "Fiscal Cliff?"

While politicians are wrestling with the details of new tax laws that will prevent America from going over the “fiscal cliff,” many are left wondering what this fiscal cliff is all about. Coined by Chairman of the Federal Reserve Ben Bernanke, the fiscal cliff is looming with big financial consequences on the American economy, if it goes unresolved. At midnight, December 31, 2012, laws are set to change concerning several areas including payroll taxes; business taxes, meaning the end of some breaks for businesses; increases in federal income tax, long-term capital gains and dividends; and the implementation of the health More…

Jul 252012
 

The IRS is continuing to go after taxpayers who attempt to use S corporations to avoid payroll taxes.  Generally speaking, a wage-earning taxpayer is subject to a variety of payroll taxes, which can include income, Social Security, Medicare, and unemployment taxes.   Sometimes, business owners reach the conclusion that they can pay themselves very little in terms of salary and then call the rest of the company’s earnings a distribution, in order to escape payroll taxes. The problem with this strategy is that the IRS will aggressively pursue taxpayers whom they feel are paying themselves an “unreasonably” low salary in an More…

May 072012
 
Victims Of Identity Theft Must Still Satisfy Their Obligations To The IRS

Since we have previously established that the IRS is willing to make taxpayers wait a substantial period of time for their refunds while they sort out identity theft issues, we are now focusing on whether the IRS will wait for the taxpayer while the issue sorts itself out.  Not surprisingly, the answer is a resounding no. A recent article in the Florida Sun Sentinel highlights the plight of one Florida business owner who was a victim of identity theft.  The business owner had directed that a portion of his $3,562 refund  go toward paying his first 2012 quarterly estimated tax More…

Oct 052011
 
IRS Rules Against Medical Marijuana Dispensaries

The IRS has ruled that dispensaries of medicinal marijuana cannot deduct standard business expenses such as payroll, security, or rent.  In a ruling against Harborside Health Center of Oakland California, one of the nation’s largest medical marijuana dispensaries and one that is considered a model for the industry, the IRS held that the company owed $2.5 million in back taxes for the years 2007 and 2008. The basis for the IRS ruling was Section 280E of the Internal Revenue Code, which was originally enacted to target drug kingpins and cartels, and bans any tax deductions related to “trafficking in controlled More…

Sep 272011
 
IRS Launches Voluntary Compliance Settlement Program In An Effort To Resolve Past Worker Classification Issues

The IRS has recently announced the launch of its new Voluntary Compliance Settlement Program (VCSP); an effort to enable employers to resolve past worker classification issues by paying a reduced tax in exchange for reclassification of independent contractors as employees in the future.  According to IRS Commissioner Doug Shulman, “this settlement program provides certainty and relief to employers in an important area.  This is part of a wider effort to help taxpayers and businesses to help give them a fresh start with their tax obligations.” The proper classification of a worker as either an independent contractor or employee is an More…

Sep 082011
 
IRS Debt Settlement: Offer In Compromise

If an individual has a sizable tax debt, minimum assets and income prospects, and can fulfill the right circumstances, the IRS may accept an Offer in Compromise (OIC) to settle unpaid tax accounts for less than the full balance due. This applies to all taxes, including any interest, penalties, or other additional amounts arising under the Internal Revenue laws. The OIC program is an option only for those taxpayers who are unable to pay their tax account in a lump sum or through an installment agreement and have exhausted their search for other payment arrangements.  The IRS may legally compromise More…

Aug 222011
 
Payroll Taxes And The Trust Fund Recovery Penalty

If you own a business and have employees then you likely familiar with the requirement to remit payroll tax to the IRS.  When an employer pays compensation to their employees, they are required to withhold certain taxes and remit these taxes to the IRS.  When the employees file their tax returns, the IRS is required by law to give those employees the benefit of all taxes withheld by their employers whether or not such taxes were remitted to the government.  If an employee is given a W-2 that reflects withholding, they can file their tax returns and receive a refund More…