Posted on April 23, 2021 in Small Business Taxes

Whether you are a landlord or a tenant, you will want to make sure you fully understand the terms of your lease agreement. Commercial and residential leases address a wide variety of issues that affect landlords and tenants, and if the language in a lease is not carefully drafted, this can lead to disputes that could result in financial losses or other legal issues. Before signing a lease, it is important to have an attorney review the agreement and identify any language that may need to be revised or other issues that could lead to problems in the future.

Terms to Address in a Residential or Commercial Lease

Some of the terms that should be reviewed before signing a lease include:

• Severability - This clause states that if one or more terms in a lease are found to be invalid, this will not affect any other provisions in the lease. If this clause is not included or is not worded properly, an entire lease agreement could be found to be invalid based on a single error.

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 Posted on April 15, 2021 in Tax Audits

When a married couple files a joint tax return, “joint and several liability” will apply to any tax debts related to that return. This means that if the Internal Revenue Service (IRS) conducts a tax audit and determines that the couple owes taxes due to erroneous information on their joint tax return, the spouses will be equally liable for paying these tax debts. This can sometimes come as a surprise, especially if a couple has gotten divorced since filing the joint tax return in question. Even if a divorce decree addressed tax issues and states that one spouse will be responsible for paying joint tax debts, the IRS can still pursue repayment from both spouses. However in some cases, a person may receive innocent spouse relief if they were not responsible for the tax debts.

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 Posted on March 30, 2021 in Taxation Law

The use of virtual currencies has become more and more widespread in recent years, especially in the Silicon Valley area. Many people and businesses invest in and trade cryptocurrencies and use them to make purchases or pay employees. As financial activity in this area continues to increase, the IRS has taken note, and it is taking steps to make sure taxpayers properly report these transactions and pay applicable taxes on the income they earn and the gains of their investments. Some recent developments have shown that those who own virtual currencies will want to make sure they are meeting the requirements under the tax laws.

IRS Clarifies Reporting Requirements for Virtual Currency

Those who have begun to file their tax returns for 2020 may have noticed that a new question has been added to Form 1040 asking “At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?” This indicates that the IRS will be monitoring these transactions and taking action to collect taxes that are owed. However, taxpayers have faced some uncertainty about exactly what types of transactions need to be reported. Recently, the IRS offered some clarification by stating that those who purchased cryptocurrencies using “real” currencies do not need to answer “yes” to this question. 

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 Posted on March 22, 2021 in Taxation Law

Compliance with tax laws is a requirement for people and businesses in the United States, but some taxpayers may struggle to pay the taxes they owe. A person who has unpaid taxes may worry that they will be subject to collection actions by the Internal Revenue Service (IRS) such as wage garnishment or tax liens. Currently, this is a major concern for those who have experienced financial difficulties due to the COVID-19 pandemic. As part of its ongoing efforts to address these issues, the IRS has given taxpayers more options for paying the taxes they owe through installment agreements.

Installment Agreements Under the Taxpayer Relief Initiative

Taxpayers with outstanding tax liabilities have the option to pay off the amount they owe over time by making regular payments to the IRS. To qualify for an installment agreement, a taxpayer will need to have filed all required tax returns and tax forms. To address the financial issues that many people have experienced due to the COVID-19 crisis, the IRS has created a Taxpayer Relief Initiative that has expanded people’s ability to use installment agreements. The changes made under this program include:

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 Posted on March 11, 2021 in Tax Audits

Taxes are a reality that most U.S. citizens and residents need to deal with, and understanding the various tax laws that apply to a person or business can often be a complicated matter. If a taxpayer makes mistakes or oversights when filing tax returns or other tax documents, they could face penalties from the Internal Revenue Service (IRS). Being contacted by the IRS may cause taxpayers to worry that they will be subject to these types of penalties. However, not every piece of communication from the IRS will result in penalties, and taxpayers will want to understand the different types of notices that the IRS may send and their options for responding and addressing or correcting tax issues.

IRS Letters and Notices

Communications from the IRS can generally be grouped into one of the following categories:

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 Posted on February 27, 2021 in Taxation Law

U.S. taxpayers are required to comply with a wide variety of tax laws, but understanding these complex requirements can sometimes be difficult, especially for those who own international assets or earn income from foreign sources. Taxpayers may be required to file multiple different types of forms related to foreign assets, accounts, and income, and those who have not met their foreign investment reporting requirements may be concerned about the possibility that they may face a tax audit and be subject to penalties. Fortunately, the IRS has provided procedures that taxpayers can follow to file delinquent international tax returns.

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 Posted on February 26, 2021 in Taxation Law

Those who live in the United States may choose to leave the country and live elsewhere, but if this will be a permanent change, they should be aware that they may face certain tax consequences. Expatriation occurs when a U.S. citizen chooses to relinquish their citizenship. Expatriation will also apply to a lawful permanent resident who holds a “Green Card” if their immigration status is revoked or abandoned or if they notify the IRS that they will be commencing residence in a country that has a tax treaty with the United States. Expatriates may be required to pay an exit tax, and they will want to understand how the tax laws will apply to their situation.

Who Is Subject to the Exit Tax?

The exit tax (also known as the expatriation tax) is a form of income tax that applies to the potential gains a person would earn by selling or disposing of the assets they own. While capital gains taxes typically apply to the profits a person earns when selling assets, a taxpayer may not actually realize these gains until years or decades after they leave the United States. Exit taxes ensure that the IRS can apply the proper taxes to the gains a person earned while they resided in the United States.

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 Posted on February 09, 2021 in Tax Appeals

Many taxpayers are understandably concerned when they receive a notification from the IRS stating that they owe taxes. If a taxpayer does not respond to a Statutory Notice of Deficiency, the IRS may perform a tax assessment and take action to collect the amount owed. A taxpayer may appeal the tax deficiency by filing a petition in Tax Court, but in some cases, a petition may not be received in time, resulting in a premature tax assessment.

Time Limits for Tax Assessments

After receiving a Notice of Deficiency, a taxpayer has 90 days to file a petition in Tax Court. After the end of this 90-day period, the IRS has 60 days to perform a tax assessment. The IRS may then take a number of different types of actions to collect the amount owed by the taxpayer, including issuing levies to seize a taxpayer’s assets or garnish his/her wages, placing tax liens on a taxpayer’s property, or offsetting a taxpayer’s tax refunds. 

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 Posted on January 14, 2021 in Small Business Taxes

The United States economy has changed significantly over the past decade. More and more workers are participating in what is known as the “gig economy” or “sharing economy,” allowing them to set their own schedules while completing tasks such as transporting passengers or making deliveries. While these types of arrangements have benefited many workers and those who use their services, questions have been raised about worker classification and whether certain types of gig workers should be considered independent contractors or employees. While several states, including California, have implemented laws to address this issue, the federal government has also weighed in on the topic. A recent rule change from the Department of Labor created a test that should be used to determine whether a worker is self-employed or is dependent on an employer.

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 Posted on January 08, 2021 in Small Business Taxes

The COVID-19 pandemic has led to struggles for many people and businesses. While the rollout of vaccines in 2021 will eventually allow for a return to normal activities, many businesses will continue to experience a loss of revenue due to requirements to close, scale back operations, or lay off employees. Fortunately, the federal government has implemented programs meant to provide relief to businesses and taxpayers who have been affected by the pandemic. The Coronavirus Response and Relief Supplemental Appropriations Act of 2021 (CRRSAA), which was signed into law on December 27, 2020, made a number of changes that may benefit both small businesses and individual taxpayers. These include:

• Additional PPP loans - The Paycheck Protection Program, which was implemented as part of the CARES Act of 2020, provided loans for businesses, and these loans were forgivable so long as a business could show that a certain percentage of the loan was used for payroll purposes. Under the CRRSAA, businesses that had previously received a PPP loan will be able to receive an additional loan, although to qualify, a business must not be publicly owned, it must employ fewer than 300 people, and it must be able to show that its gross receipts in any quarter of 2020 were 25% less than in the same quarter in 2019. First-time loans will also be available to businesses that had not previously taken a PPP loan, and eligible businesses include self-employed individuals, independent contractors, and sole proprietors.

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