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Tax Law & Estate Planning Blog

Seek legal guidance if you did not file tax returns in the past

If you have unfiled tax returns as an individual or married couple, or on behalf of your business, you are not alone. Many people choose not to file their federal returns for a variety of reasons, some forget to do so and some do not understand the requirements. 

Talk to a tax lawyer right away 

The intersection of payment plan proposals and good faith

The IRS generally allows payment plan/installment agreement arrangements for taxpayers who've fallen behind on tax payments and are making a good faith effort to get things "square." As long as the negotiations are made in good faith and terms are reasonable (the taxpayer remains in contact with the agency during negotiations, the proposed payment is proportional to the amount due, etc.), chances are good that the request will be granted. The IRS fairly leniently authorizes these plans because, at the end of the day, installment agreements make it possible for taxes to be paid.

There are some instances, however, when the IRS won't agree to a payment plan. One recent tax court case (and subsequent appeal to the Ninth Circuit Court of Appeals) dealt with a denied payment plan request from a very high-profile taxpayer, actor and director Forest Whitaker.

Who is a responsible person for IRS payroll tax obligations?

Here at the Law Office of Stanton D. Goldberg, we advise small business owners and entrepreneurs in the greater Dallas area about their federal and state tax obligations, including those concerning payroll tax withholding. We have posted here about the Trust Fund Recovery Penalty that the IRS may assess against a responsible person when an employer fails to properly withhold, deposit and transfer payroll tax funds to the IRS. 

Responsible persons 

Raising funds through crowdsourcing? There are tax implications.

Popular crowdsourcing websites and applications like KickStarter, GoFundMe and others have become more widely used for a variety of fundraising needs. There have been funds established for medical bills, funeral expenses, business development and product development/invention. There was even a high-profile campaign to raise money to develop the perfect potato salad recipe.

These platforms are great options for both business and personal needs, because they are examples of how "microfinancing" can work in the real world. Instead of one lender, like a bank or a credit union, taking a chance on a project through a loan or line of credit, countless individuals and small business owners are able to provide small amounts that collectively make a huge difference in a person's life.

Running behind? Don't forget to ask the IRS for a tax extension.

As dogged as the IRS can be when it comes to collecting taxes owed by individuals and business owners across the country, even they understand that sometimes circumstances can prohibit someone from meeting the April tax filing deadline. In such situations, it is possible to apply for an extension that could give you up to six more months (five months for businesses) to get your proverbial tax-related ducks in a row and your return submitted.

Individual filers (even married ones) living in the U.S. can request an extension by submitting IRS Form 4868. This form can be submitted electronically for convenience, and there is no fee to request an automatic extension.

Congress extends the abilities of the IRS to collect taxes

The Internal Revenue Service (IRS) has a number of tools to help in collection of taxes. One of the more commonly used is the threat of fines, but a new tool provided by Congress is getting criticized not just by those who could be impacted, but by tax professionals as well.

The IRS' new, contentious tool: What is it? In December of 2015, Congress passed H.R. 22, also referred to as the FAST Act. Although on a quick glance the bill appears to deal with issues related to highway safety and roadway repairs, there is a provision deep within the language that addresses the IRS. More specifically, it gives the IRS the power to take away passports.

As the New Year dawns, resolve to become tax compliant in 2017

This year is finally coming to a close, and 2017 is right around the corner. This means, for many people, setting out the inevitable New Year's resolutions. They could be fairly standard, involving personal goals like working out more, losing weight, eating better or putting steps in place to secure a career achievement. Some people's goals aren't personal in nature, but are instead focused on financial matters. Common money-themed resolutions include contributing to a retirement fund, paying down debt or committing more income to savings.

A financial resolution for some people could be to become compliant and up-to-date with tax payments (including filing back taxes for years past or paying off tax bills). If you, for whatever reason, haven't filed your business or individual tax returns for a few years, or have missed years here and there, it's never too late to become compliant and get things back on track. Be aware, however, that the IRS won't pay out refunds after three years have passed, even if you would otherwise have been due one. For example, if you failed to file a tax return in 2012 but you would have received one had you filed, you are probably just out of luck. You could also lose out on important credits and deductions if you wait too long to file.

What happens if you use payroll taxes for other business expenses?"

As a small business owner, you know you are required to withhold payroll taxes from your employees' pay checks, hold onto the taxes and pay them to the government. But what happens when you have an unexpected business expense, and no money to cover it? You might consider "borrowing" the money from the withheld payroll taxes account, with every intention to pay it back. But what if business doesn't pick up as you'd hoped and you aren't able to cover the money you "borrowed" when it's time to pay the taxes to the federal government?

Are tax relief companies worth it or is the risk too great?

If you owe taxes to the IRS and are overwhelmed by the amount, chances are, you've considered using the services of a tax relief company. These companies often advertise that they can slash your tax bill, using phrases like "pennies on the dollar" and offering free consultations.

While there are some legitimate tax relief companies, many do not live up to their promises.

Getting back seized assets from IRS: It happened!

Recently, the IRS was brought before a congressional subcommittee where they discussed the standards for seizing the assets of small businesses. After the hearing, the IRS changed its policies. Why did congress feel they must investigate this policy?

More than 700 small businesses had their assets, totaling approximately $43 million, seized between 2009 and 2014 on suspicion of fraudulent business practices. However, after an investigation the IRS could not find any wrongdoing and yet, was stalling when it came to returning the funds to the taxpayers.

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