The top business-related tax issues
Toews Law Group, Inc., tax attorneys in San Luis Obispo, California provide expert tax services to individuals, business owners, accountants and other tax professionals ranging from answering simple questions about how taxes work for a given situation to representing parties before the IRS appeals board or tax court. Although the firm does not prepare tax returns (with the exception of gift or estate tax returns), the attorneys at Toews Law Group, Inc. do provide advise clients on tax relates mattes as they relate to business transactions, business mergers and acquisitions, gifts, charities, non-profits, and estate planning.
Planning and keeping detailed records are two assurances for trouble-free tax filing. Another very important assurance for trouble-free tax filing is to be sure a business, corporation, estate, trust, or nonprofit is established correctly at the outset, and that the tax and tax reporting obligations are thoroughly adhered to.
Even in the best of circumstances, a bookkeeping mistake or an over-zealous tax agent can be the root of a tax matter that winds up in an audit or before a Tax Court.
Here are some of the most common tax issues that wind up in litigation, and some tips to help avoid problems in the first place.
- Underpaying taxes. The Internal Revenue Service (IRS) and California Franchise Tax Board (FTB) impose penalties and interest for underpaid taxes. Accurately reporting business income and paying quarterly estimated taxes are two ways to avoid prolonged, expensive tax issues. Working with a skilled and knowledgeable tax professional who should provide you with accurate information about what is considered income, what are reasonable deductions and the best way to keep records may be imperative.
- Deductible expenses. Just because you report it as a deductible expenses does not mean the IRS or FTB will agree it is deductible. The costs of operating a business can be deductible as are expenses incurred in the course of administering an estate or trust. However, in order to deduct it, you first must have a record – failure to keep good records will cost you if the IRS or FTB or conducts an audit. If you contest their denial of a deduction, the lack of a receipt or some other record will lead to a deduction being denied. Enough suspicious or contested deductions might trigger an audit. Charitable deductions can be subjected to the same scrutiny as business deductions.
- Failure to file and failure to pay. File and pay taxes on time and keep copies of all tax returns. File an extension if more time is needed – but note that the taxes were due on the original filing deadline and need to be paid at the time the extension is filed. Keep your tax professional informed so that an extension can be filed in a timely manner.
- Summons enforcement. The IRS or FTB is allowed to examine the records of any business, estate, trust or nonprofit for tax-related matters. The IRS or FTB can request records by subpoena or summons from anyone who might possess the relevant information related to your tax matter. Do not ignore the request and immediately contact Toews Law Group, Inc., tax attorneys in San Luis Obispo, who can assist clients with matters throughout California. Delaying or ignoring the request only complicates matters. An experienced tax attorney can help get the matter resolved.
When a taxpayer refuses or neglects to pay taxes, the IRS or FTB may file a tax lien against the taxpayer’s personal or business property. The FTB can suspend corporations from doing business in California for unpaid taxes. Every business entity has tax filing requirements, even if they are tax-exempt. Every entity with employees must pay payroll taxes and certain other taxes.
The San Luis Obispo tax attorneys at Toews Law Group, Inc. can advise you about tax obligations for your corporation, business, estate, trust, and nonprofit and give you referrals to tax professionals to help with accounting and tax filings.
As mentioned above, one of the best ways to avoid tax issues is to be sure you understand the tax obligations for your business, trust, estate or nonprofit. Toews Law Group, Inc. can review your business entity, estate or trust and make recommendations for the best structure to optimize your tax benefits. Contact the law firm to make an appointment.