Those who open their own business likely know that they must be more than fluent with the service or product they intend to provide—they must also know how to navigate basic business matters. This can include negotiating a lease for commercial or office space, putting together employment contracts, and even navigating tax matters. Although all come with their hurdles, few are more complex to navigate than tax matters. Business owners must comply with various regulations and t

Although the Internal Revenue Service might send an audit letter to a California resident’s home, that does not necessarily mean the taxpayer did anything wrong. The IRS could request proof to substantiate deductions, and the taxpayer may present receipts. Most taxpayers would likely wish to avoid an audit, so it could be helpful to avoid making mistakes that raise audit red flags. Common red flags Six red flags often draw attention to a tax return and could trigger an audit.

Complying with tax laws is a complicated task, and errors can be made. Due to slowdowns and disruptions in processing tax returns in recent years, both the IRS and the California Franchise Tax Board have increased collection and enforcement actions to catch up with their backlogs. People or businesses receiving notices about unpaid taxes or failure to file returns need to explore all of their options for correcting errors or paying their taxes. Otherwise, they can lose their

The IRS conducts tax audits in California and all around the United States. On average, the IRS audits four out of every 1000 taxpayers. If you’re chosen for an audit, you might get an IRS field audit. Here are a few things to keep in mind. The basics of an IRS field audit A field audit is a tax audit that can occur in several different locations. The IRS might conduct the audit in your home or place of business. If you have an accountant, the audit might take place in the ac

The Inflation Protection Act has set aside a whopping 45.6 billion dollars to hire a slew of new IRS agents. How will this affect companies and organizations in California? Some believe the most impactful change this legislation will bring is to drastically increase audits. Potential Issues One grave concern regarding this new law is the level of audit inexperience new IRS agents will have. If you are one of the lucky companies to receive a tax audit, you could spend a pretty

In a previous blog post we discussed whether high-income and high-asset individuals really face a greater audit risk than taxpayers of normal means. We concluded that individuals reporting eight-figure incomes and greater actually face the highest risk of a tax audit. However, individuals reporting income in the single-digit millions or high six-figures also face a more pronounced audit risk. Unfortunately, wealthy taxpayers not only face a higher likelihood of an audit, but

For an array of reasons, some taxpayers have not filed taxes in years. Motivations for this approach to taxes vary, but some taxpayers will fail to file because they don’t think they earn enough money for the IRS or California Franchise Tax Board to notice. Other taxpayers, in particular self-employed individuals, may have failed to realize that their income was subject to additional taxes and therefore did not have the funds available to pay all or some tax obligations. A

When taxpayers begin to suspect that they may have made simple or complex tax errors on past tax returns, one of the first things they want to know is whether the full range of their mistakes can be audited by the IRS, the California Franchise Tax Board, or other tax agencies. Taxpayers who realize that the IRS can look back several years — and in some cases, many years or indefinitely – are probably less likely to make mistakes in the first place. Furthermore, because they

For investors, entrepreneurs, and other business-minded individuals the Wall Street Journal is the gold standard for business and financial news. Thus, when the Wall Street Journal warns investors about potential civil or criminal exposure in any investment or asset protection context, it is important for all impacted or associated parties to take notice, perform a compliance review, and take any necessary corrective or remedial action. Recently, the Wall Street Journal warne

At NewPoint Law Group, LLP, we recognize that there are often significant misconceptions about the tax system and the tax agencies’ enforcement of laws. People may take comfort or even find horror in the stories spread among family and friends. However, people are often surprisingly hesitant to ask questions about the truth of widely-held beliefs regarding tax enforcement. The attorneys of NewPoint Law Group, LLP have prepared this post to address the popular belief that weal

For weeks you stressed over getting your income tax and report of foreign accounts in order. You spent time tracking down W-2s, various 1099s, and other statements of income. You also spent time ensuring that the tax positions you or your accountant staked out were compliant with tax law and well-supported by your books and records. You filed your taxes by April 18, 2017, and believe that you have the right to avoid thinking about taxes for another year. Then, one day you rec

Taxpayers who receive a letter from the IRS are often distressed and anxious about the possibility of having to pay additional taxes, interest, and penalties on that unreported or unpaid tax. Thus, as most people in today’s world frequently do when they are seeking information, the taxpayer may decide to Google the issue identified by the IRS. Providing the right information to a Sacramento tax lawyer can be a helpful first step in assessing the situation you face. However, t

In California, the state income tax obligation is administered by the California Franchise Tax Board (FTB). Essentially, the California FTB is the state-based counterpart to the IRS. While the IRS handles your federal income tax and other tax obligations, the California FTB handles similar responsibilities at the state level. The failure to satisfy either state or federal tax obligations can result in selection for an audit, fines, penalties, and even criminal tax prosecution

For taxpayers holding significant investments and offshore accounts, it is no secret that the IRS and U.S. government have used significant resources towards identifying and prosecuting those who commit tax evasion and other tax crimes. Starting around 2008, federal prosecutors began enforcing the longstanding obligation to file FBAR (Report of Foreign Bank Accounts). In 2010, FATCA (Foreign Account Tax Compliance Act) was passed by Congress. In the years following, the U.S.

Most people probably assume that wealthy individuals are priority number one on the IRS’s radar. There is some truth to this characterization, as audit rates for high-income filers are much greater than the audit rates experienced by the general population. However, the Treasury Inspector General (TIGTA) — a government watchdog responsible for identifying and eliminating waste, fraud, or corruption in government – has identified problems with the IRS’s already reasonably aggr

Most taxpayers are highly aware that an audit launched by the IRS can begin a painful process where your finances and tax compliance are placed under the microscope. Even if your audit is launched “randomly” or if you simply fall within the top percentage of annual income, huge mistakes and noncompliance can be uncovered during the audit. These errors can result in significant liability for unpaid taxes, penalties, and interest. If the non-compliance appears intentional or vo

If you’ve fallen significantly behind on your debts, you may engage in negotiation with creditors to reduce or eliminate certain parts of your debt burden. In certain situations, the potential for bankruptcy and the possibility of an overworked creditor may encourage them to forgive a certain portion of the debt. Other times the creditor may simply realize that the collection costs will exceed any amount that can be recovered. While having debt forgiven or cancelled is certai

You’ve been contacted by the IRS through letter or notice. While you hoped that the notice would state that the IRS had taken some action in your favor, your worst fears played out: the IRS is seeking additional information regarding a recent tax return. Of course facing an audit is not an enviable position, but it does not have to be a catastrophic situation. Taxpayers who precede meticulously and methodically can often avoid potential worst-case scenarios. Still, dealing wi

You filed your taxes on time and didn’t expect to face any issues. In fact, you were looking forward to putting them out of your mind altogether until the next tax filing season. At NewPoint Law Group, LLP we provide year-round tax support and guidance, but we understand why taxpayers would prefer to think about more appealing topics. In any case, you were expecting at least several months respite from thinking about tax filing duties and obligations. Then it happened. You re

For many Americans, filing taxes is both a matter of duty and a function of fearing the consequences of what will happen should he or she fail to file. The fact of the matter is that most Americans have a duty to file taxes because the income threshold that triggers a filing obligation is rather modest. In any case, for the people who are unsure if they have an obligation to file taxes, it is probably better to take the conservative approach and file taxes. For one, the only