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In Arizona, custom-built homes or other improved real estate may be subject to the state’s speculative builder tax. Sellers will fall under the tax when they either improve the property themselves or contract out for renovation or building services.

The speculative builder tax applies to the sale of improved properties in Arizona. Arizona exempts the sale of primary and vacation residences that meet certain criteria. 

Form 8300 deals with reporting cash payments that are over $10,000. The IRS requires that all businesses that receive over $10,000 in cash during a tax year must report it to the IRS.  

Section 163(j) limits deductions on business interest expenses. This limitation applies to all businesses with the exception of some small businesses.

During the pandemic, the federal government passed the Employee Retention Credit (ERC) program. Fraud and invalid claims forced the IRS to suspend the program in September 2023. A business can appeal a denial from the IRS.

Section 1202, or the Qualified Small Business Stock Exclusion (QSBS), allows shareholders of eligible businesses to realize capital gains without paying tax. The goal of this law is to increase and encourage investment in small businesses. There are certain criteria that the shareholder and business must meet to qualify under Section 1202.

Taxpayers can apply for Offers in Compromise (OIC) when they are unable to pay the full amount of their unpaid taxes. Taxpayers should be aware of tax scams such as "OIC Mills", which mislead taxpayers into thinking the companies can either make a debt disappear or are able to resolve a tax debt inexpensively.

Businesses must pay the transaction privilege tax (TPT) is they wish to do business in Arizona. Membership fees may or may not qualify as being subject to the TPT.

Debt forgiveness may wipe out a financial obligation to a creditor, but may create a tax liability. In general, the IRS views the debt forgiven as taxable income. There are debt income exceptions.

Form 5005, known as the Contractor's Certificate, relates to Arizona’s transaction privilege tax. Subcontractors must have this form for their records to show they aren’t liable for any tax.

The Taxpayer Advocate Service (TAS) an independent organization wit the IRS, helps taxpayers move along their IRS matters. Their report highlights the issues within the IRS processes.

AZ Form 285 is Arizona's general disclosure/authorization form for representative to communicate with the Arizona Department of Revenue on your behalf.

The truth is that the IRS doesn't currently have an explicit policy on how it uses taxpayers' public social media accounts, but they could still review social media accounts.

Taxpayers who are direct or indirect shareholders PFICs must file IRS Form 8621. A PFIC is a foreign company with mostly passive income or assets and Form 8621 is required when receiving PFIC distributions, selling PFIC stock, making certain elections, or filing annual reports under specific IRS sections. Indirect shareholders include those with significant ownership in companies that hold PFIC stock or pass-through entities with PFIC investments. Failure to file correctly can lead to penalties.

Employee Stock Ownership Plans (ESOPs) allow employees to own shares in their company, but they come with several risks and tax considerations. ESOPs can lose value during bear markets, and since employees' investments are tied to one company’s stock, they lack diversification, increasing financial risk. Administering an ESOP is costly, involving legal, accounting, and compliance expenses. Additionally, shares in an ESOP may be bought back at lower-than-market value. Regarding taxes, ESOPs are typically tax-deferred, meaning taxes are paid when funds are withdrawn. However, early withdrawals before age 59½ can incur a 10% penalty. Employees leaving the company may need to wait for the company to buy back their shares.

An Employee Stock Ownership Plan (ESOP) is a retirement plan that gives employees ownership in their company through stock. It’s company-funded, tax-deferred, and can increase employee engagement and satisfaction. Employees typically earn more stock over time based on tenure or milestones. While beneficial for both employees and companies, ESOPs come with certain drawbacks and tax implications, which will be discussed in part 2.

Businesses that sell a product or provide services must obtain a state-level TPT license. In addition to a state-level TPT license, businesses may also need a license from any and all cities in which they do business. There are several factors that determine if a business will need multiple state-level TPT licenses.

The challenge with form JT-1 (Arizona Joint Tax Application) is not missing any of the details. This can include knowing the difference between types of taxes, filing requirements, and where a business operates. This form also covers multiple types of taxes at local, county, and state levels.

So you want to purchase a vacation home with funds from their retirement accounts? That is possible, however, there are some rules to know before accessing those funds.

Beneficial ownership information (BOI) is the identifying information for any individuals who either directly or indirectly own or control a company.

If you're an employer responsible for employment tax deposits, it's crucial to make those payments on time to avoid penalties.

Arizona requires all contractors to be licensed through the state. There are some exceptions to this rule, however, including the owner-builder exemption.

 The IRS allows individuals to revise some payment plans to include current-year tax balances. Offers in Compromise (OIC), however, cannot be amended to include the current tax year’s tax.

In Arizona, businesses pay for the privilege of working in the state through the transaction privilege tax (TPT). Determining the requirement to apply for a TPT license is not always easy as different factors are considered to determine the requirements.

New AI research tools are assisting the IR in identifying high-income taxpayers who may not be current on their bills.