For audits, the IRS generally requires taxpayers to respond within a certain period of time, often 30 days. Taxpayers who fail to respond lose their audit by default, meaning they’re required to pay the amount the IRS believes is owed. They’re also responsible for paying any fines and penalties. Failing to respond in time isn’t always the end of the road for taxpayers. Taxpayers may be able to reopen an assessment via audit reconsideration.
Unpaid or underpaid payroll taxes are generally a civil matter. A taxpayer can resolve the problem by paying the unpaid taxes and any penalties and fines. Some situations may become criminal cases when the IRS believes or has evidence that unpaid payroll taxes indicate a federal felony.
The majority of IRS audits remain civil matters that are resolved via paying back taxes, fines, and penalties. A select few, however, raise red flags that transform a civil matter into a criminal investigation.
An IRS agent showing up at a taxpayer’s home or office is rarely good news. This is especially true when IRS Criminal Investigation (CI) Special Agents appear, because it means a taxpayer or someone they know is potentially facing criminal charges.
Taxpayers must file Form 8300 with the IRS within 15 days of receiving cash payments over $10,000. The reporting requirement covers not just cash but other types of payments, including some checks and money orders and sales of property such as cars and paintings.
Organizations and individuals form Series LLCs to limit liability and protect assets. Series LLCs have become increasingly popular as a way to silo different businesses or organizations while they remain under one central LLC umbrella.
The IRS allows businesses to deduct expenses that are an ordinary and necessary part of conducting a business. One common question is if and how businesses can deduct executive perks such as private flights, corporate housing, memberships, and personal security details.
The IRS taxes all forms of income, including money that comes from foreign sources. This includes inheritances and bequests made to a U.S. person by a foreign person.
For taxpayers facing criminal tax charges, a Kovel Accountant can be an important part of their defense strategy. Unlike traditional communications between a taxpayer and their attorney, these communications are protected. In other words, the IRS cannot access them.
When a business fails to pay payroll taxes, the IRS may hold certain individuals personally liable for the unpaid taxes. Known as the Trust Fund Recovery Penalty (TFRP), this penalty covers unpaid income and employment taxes, such as Social Security taxes.
The IRS allows taxpayers to request an audit reconsideration if they disagree with the outcome of an audit and have a reason for requesting reconsideration. Taxpayers may, for example, request a reconsideration if they have new information that the IRS hasn’t previously considered.
Structuring and cash hoarding are actions that can appear similar but have drastically different implications. For taxpayers, the similar appearance can potentially trigger issues with the IRS.
After receiving notice of the outcome of an audit, taxpayers may have the option to appeal the IRS’s decision. Taxpayers have multiple ways to challenge IRS audit findings, and the best option will depend on the details of their specific situation.
In Arizona, businesses are required to pay the transaction privilege tax (TPT). While commonly referred to as a sales tax, TPT is instead a tax on businesses for the privilege of conducting business in the state.
How losses are classified can have significant tax consequences. For real estate investors, knowing when and how they can use losses to offset income can have major implications for their taxes.
Qualifying as an S Corporation has significant advantages for shareholders. One of the biggest is avoiding double taxation on corporate income. These corporations pass all income, losses, deductions, and credits to their shareholders for federal tax purposes.
In recent years, the IRS has stepped up audits of high-net-worth (HNW) taxpayers. The agency’s Global High Wealth Industry Group (GHW Group) focuses exclusively on HNW taxpayers.
An increasing number of businesses rely on freelance workers and independent contractors. For businesses, the challenge is knowing the line between independent contractors and employees. The IRS classifies the two differently, and businesses can face audits and penalties for improperly classifying workers.
A recent change to the tax code means that some taxpayers may be able to take a deduction on qualified overtime compensation. The deduction covers the amount above and beyond a taxpayer’s normal rate of pay.
Like other agencies and businesses, the IRS increasingly relies on programs and technology to streamline its work. This includes using an algorithm to audit returns.
The IRS has the right to examine taxpayers’ returns. The agency cannot, however, repeatedly audit the same taxpayer for the same issue, and there was either no change or a minor change. The IRS refers to this practice as repetitive examinations.
Every year, taxpayers who have certain foreign financial accounts must report them. Individuals report by filing a Report of Foreign Bank and Financial Accounts (FBAR) on the Financial Crimes Enforcement Network (FinCEN) Form 114. Those who fail to file face steep penalties.
The months after losing a spouse can be stressful. In addition to managing grief, the loss of a partner often comes with significant paperwork and bureaucracy. That something may slip through the cracks isn’t surprising. If it relates to estate taxes, however, it can potentially have serious financial implications.
Taxpayers aren’t always able to pay their taxes on time. Failing to pay on time not only triggers interest payments but may also involve other financial penalties. In some cases, taxpayers may get relief from penalties if they can show reasonable cause for why they failed to file on time.
Receiving an IRS Summons can seem intimidating, and individuals may feel that it’s easier to simply hand over whatever the IRS wants. In cases when a taxpayer believes a summons is overly broad, the taxpayer has the right to challenge a summons.
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