Louisiana: Tax Amnesty Program Enacted

The Louisiana Tax Delinquency Amnesty Act of 2009, which requires the Department of Revenue () to develop and implement a tax amnesty program to be effective for a period not to exceed two consecutive calendar months between July 1, 2009, and June 30, 2010, at the discretion of the secretary, is enacted.

The tax amnesty program will apply to all taxes administered by the DOR except for motor fuel taxes and penalties for failure to submit information reports that are not based on an underpayment of tax.

Top Seven Tips for Taxpayers Starting a New Business

IRS Summertime Tax Tip 2009-02

Anyone starting a new business this summer should be aware of their federal tax responsibilities. Here are the top seven things the IRS wants you to know if you plan on opening a new business this year.

1. First, you must decide what type of business entity you are going to establish. The type your business takes will determine which tax form you have to file. The most common types of business are the sole proprietorship, partnership, corporation and S corporation.

Construction Industry Tax Issues

Accumulated Earnings Tax

Closely held C corporations are more likely to accumulate earnings and profits beyond the reasonable needs of the business in order to avoid income taxes on its shareholders than are large C corporations. Each accumulated earnings case is unique. No pro forma guide for calculating a taxpayer’s reasonable needs can be prepared. Reasonable needs that would usually be considered in any accumulated earnings case are the need for sufficient net liquid assets to pay reasonably anticipated, normal operating costs through one business cycle and sufficient net liquid assets to pay reasonably anticipated, extraordinary expenses and capital improvement financing.

In addition, the following represents a non-exclusive list of specific items that should be considered for construction contractors:

(Sacramento) – The Franchise Tax Board (FTB) announced it accepts California registered warrants (IOUs) as payment of current and past due personal and corporate tax obligations.
To pay a tax liability with an IOU, endorse the IOU on the reverse side with the phrase “Pay to the order of Franchise Tax Board” and your signature then mail it with the tax bill or estimated tax voucher. By law, FTB cannot deposit the IOU until it is payable, but FTB will credit the taxpayer’s account on the date the IOU is received to stop the accrual of interest. If the IOU is not sufficient to pay the outstanding balance, taxpayers should send an additional payment for the difference. Otherwise, the taxpayer will receive a bill reflecting the new balance due.

IRS Did Not Fail to Properly Credit Checks Against Married Couple’s Tax Liability (Kovacevich, TCM)

The IRS properly credited five checks toward the outstanding tax liability of a law firm and not the individual tax liability of an attorney and his wife. For the tax year at issue, the taxpayer/husband was improperly characterized as an independent contractor rather than an employee of his law firm and the IRS determined that the couple failed to report income and improperly claimed deduction. The taxpayers requested a collection due process (CDP) hearing after the IRS sent a notice of intent to levy. Although one of the disputed checks was not presented to the Appeals Officer, the Tax Court could consider it because the Tax Court did not follow the record rule, and therefore, could consider evidence not produced at the CDP hearing as long as it was relevant. Since the IRS did not make an evidentiary objection to the check at trial, any objection for relevance was waived. Because the taxpayers received a notice of deficiency, their underlying tax liability could not be challenged in the CDP hearing. Questions about whether a particular check could be credited to a taxpayer’s account for a particular tax year, however, were not challenges to the taxpayer’s underlying tax liability. The Appeal’s officer’s determination to the contrary was a harmless error of law and not an abuse of discretion because the IRS did correctly credit the checks against liabilities other than the taxpayers’ unpaid individual tax liability for the tax year at issue. The taxpayers payments were voluntary and so their designations controlled. Designations on the checks, such as the employer identification number of the law firm that was liable for the employment taxes with respect to the taxpayer, supported a conclusion that the payments were meant to pay the law firm’s tax debt, not the taxpayers’ individual tax debt. Although one check arguably could have been for the payment of trust fund recovery penalty against the taxpayer as a responsible person for his law firm, the liability was for a tax year outside of the CDP hearing and the Tax Court lacked jurisdiction over those taxes.

The taxpayers failed to present evidence that the employment taxes were overpaid prior to the year at issue and that the overpayment should be credited toward their individual deficiency. The taxpayers presented no evidence of their income from earlier years nor stated how the amounts should be credited or how the credits reduced the deficiency. Finally, the Appeals officer did not abuse her discretion in refusing to send the Social Security Administration information about the taxpayer’s additional income. The issue was not related to an unpaid tax or levy and so was an issue that could not be raised at a CDP hearing.

CA New Home Tax Credit Going Fast

Sacramento – The Franchise Tax Board (FTB) announced today that the $100 million allocated by the state in new home tax credits will soon be gone.

As of June 17, 2009, FTB had received more than 9,800 applications claiming nearly $95 million. Because some of these applications are duplicates, revisions, or invalid, FTB plans to accept 12,000 applications. This will ensure enough valid applications will be available to allocate the full $100 million credit. However, FTB will only issue approved credit certificates until the $100 million is exhausted.

Enrolled Agent vs. Tax Attorney / Tax Lawyer

Dealing with tax problems entails a good amount of hard work and stress, which is why it is not advisable to deal with such problems on your own. It requires that you have a fair understanding not only of the taxation process but also of how the IRS operates. Trying to gain such understanding is quite stressful in itself; much more is attempting to apply it to resolve your tax issues with the Internal Revenue Service and get tax relief. The sheer complexity involved in taxation and tax problems is what drives a lot of individual taxpayers and businessmen to approach a tax lawyer for assistance. While it is commendable that these people accept the need to seek assistance with their tax problems, they don’t always ask for help from the right tax relief professional. A tax attorney is not always the best person to seek assistance from when it comes to tax problems. Since it’s not a legal problem, but a tax problem, the IRS and State simply wants to know when your delinquent tax returns are going to be filed and when & how your taxes are going to be paid. What you need is a professional advocate who has the knowledge of the enforcement and collection procedures of the IRS, the State Franchise Tax Board and who has the specialized experience to effectively resolve these tax issues in your best interest.

Profile of the tax attorney

Trucking Tax & Accounting: Back Taxes – Unfiled delinquent tax returns – IRS & State audits – Messy books / accounting

In face of tighter enforcement measures that the IRS is expected to use to strengthen its tax collection and monitoring policies, tax problems have become, if possibly, more stressful to deal with. Among truck drivers, in particular, the need to immediately address tax problems such as back taxes, unfiled delinquent tax returns, is more pressing than it has been in previous years. However, given the present economic climate, dealing with tax problems can prove hard for truckers, truck drivers. This is where tax relief for truck drivers plays an integral role. The IRS provides tax relief for truckers, provided that they certain law mandated qualifications and criteria.

It is very important for real estate professionals to act on tax problems like excessive tax debt, unfiled returns, back taxes, and self employment tax before these aggravate into expensive and potentially damaging problems. Tax problems the likes of those enumerated above can seriously hurt an individual or a company’s reputation and record, especially with the Internal Revenue Service or IRS. So before these tax problems turn to costly taxing nightmares, it is essential that you seek tax relief allotted for realtors, real estate professionals, mortgage brokers, and loan officers.

The real estate industry and the IRS

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