Posted on August 25, 2020 in Taxation Law

Many Americans have spent years saving money in a retirement account such as a 401(k) or IRA while planning to use this money to support themselves later in life. Retirement accounts can offer certain tax benefits, but they also provide restrictions on when these funds can be withdrawn. In times of economic hardship, account holders may wonder about their options for using these funds. Fortunately, the Coronavirus Aid, Relief, and Economic Security (CARES) Act has given those who have been affected by the COVID-19 crisis the ability to use funds in a retirement account while avoiding some of the penalties for early withdrawal.

Withdrawals and Loans from Retirement Accounts Under the CARES Act

Typically, account holders will face a 10 percent penalty (on top of any taxes that would normally apply) if they withdraw funds from a retirement account before reaching the age of 59 ½. The CARES Act has waived this tax for withdrawals of up to $100,000 made before December 31, 2020, by people who qualify for relief due to being impacted by the coronavirus pandemic. Qualifying accounts and retirement plans include 401(k)s, IRAs, 403(b)s, and profit-sharing plans.

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 Posted on August 19, 2020 in Taxation Law

U.S. taxpayers are required to report all of the income they earn and pay applicable taxes, including income earned from foreign investments and offshore accounts. The requirements related to these types of accounts can often be complex. Taxpayers who are not compliant may be audited, and they could face penalties that include civil fines or criminal prosecution. 

Foreign tax compliance has become more difficult since the end of the Offshore Voluntary Disclosure Program (OVDP). This program, which was discontinued in September 2018, allowed taxpayers to avoid penalties by disclosing their foreign assets and paying taxes due. Since the end of the OVDP, some taxpayers who had previously been compliant may be facing additional scrutiny and potential penalties from the IRS. The IRS’s Streamlined Domestic Offshore Procedures (SDOP) and Streamlined Foreign Offshore Procedures (SFOP) programs are still available for taxpayers able to make sworn nonwillfulness statements and file the required forms and make the required payment.

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 Posted on August 04, 2020 in Employment Taxes

Since the beginning of March, it is an understatement to say that COVID-19 has greatly impacted business owners, employees, and the workplace nationwide. Most businesses have either gone remote, closed temporarily, or shut their doors for the last time. Not only are the businesses themselves leaving many people without work, but those who become infected with COVID-19 or are required to self-quarantine may be unable to work even if they are employed. In order to address the financial impact of coronavirus, the Internal Revenue Service (IRS) has implemented two new employer tax credits to help U.S. employees who have been affected by the global pandemic.

Sick and Family Leave

There are multiple credits tied to requests for medical leave since you may not necessarily be requesting this absence from work for your own self. The following are the employer credits to which you may be entitled:

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 Posted on May 13, 2020 in Taxation Law

For the past few months, the coronavirus pandemic has affected states across the country. Some states with larger populations, such as California and New York, have experienced a much larger infected population and have consequently placed restrictions on businesses and individuals in an effort to slow the spread of the virus. Nonessential businesses were ordered to shut down brick-and-mortar operations and work from home, if possible. Even though not all businesses were affected equally by the pandemic, many businesses are still struggling to stay afloat during this time. In response to the struggles that many businesses are feeling, California Governor Gavin Newsom issued an executive order allowing businesses affected by COVID-19 to request an extension to file payroll reports and taxes to the state.

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 Posted on April 30, 2020 in Taxation Law

COVID-19 has completely transformed most people’s day-to-day lives. You may be working from home or unable to work until the quarantine period is over. You may have been laid off from your job and now must survive with no income. Even if you are able to continue working, you may be left without childcare or other necessary services. These issues can quickly create serious financial hardship. You may struggle to pay your bills or even to put food on the table. During hard times like these, paying tax debts may simply not be possible. Fortunately, an “offer in compromise” offers many struggling taxpayers the opportunity to settle their tax liability for a reduced amount.

Addressing Outstanding Tax Debt Through an Offer in Compromise

Having an unpaid tax liability can be a very distressing burden to bear. If you currently owe the IRS money, you may be worried that you will be visited by an IRS agent or even face criminal charges for failure to pay. Fortunately, the IRS is much more interested in collecting unpaid taxes than punishing taxpayers who have an unfulfilled tax obligation. The agency offers several options that can help taxpayers who are experiencing financial struggles to fulfill their tax obligations and become compliant with the law.

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 Posted on April 28, 2020 in Small Business Taxes

The COVID-19 virus has impacted every facet of our lives. Schools across the country have been canceled and replaced by online classes, employees have been laid off from their jobs, and business owners have lost valuable income. From restaurants to doctor’s offices, business owners are suffering. If you are a small business owner, you may be extremely concerned about the effect “shelter-in-place” directives are having on your business. You may even wonder whether or not your business will survive. One option that may be beneficial is business interruption insurance.

What Is Business Interruption Insurance?

Business interruption insurance covers business losses caused by a disaster. It is an optional form of coverage that may be included in a business owners’ policy or a comprehensive multi-peril commercial policy, or it can be issued on a standalone basis. This insurance is intended to protect against losses resulting from disruptions to normal business operations. In addition to replacing lost income, business interruption insurance may also cover:

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 Posted on April 15, 2020 in Taxation Law

The coronavirus has dramatically impacted people’s lives in the United States and across the globe. Many individuals have been temporarily or even permanently laid off from work or have been forced to reduce their work hours significantly. The financial consequences of the virus itself and the attempts to curb the spread of the virus have left many families wondering how they will pay their bills. In a move to provide financial relief to struggling taxpayers in the United States, the Internal Revenue Service (IRS) has implemented a new program called the “People First Initiative.” The program provides relief for individuals and businesses through extended filing deadlines, postponed payments, and limited enforcement actions. The deadline for filing federal tax returns has been extended to July 15 and many states, including California, are also offering extensions for state tax returns.

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 Posted on March 31, 2020 in Employment Taxes

In 2018, the California Supreme Court made a decision that would radically change how workers are classified in California. In the groundbreaking decision regarding Dynamex Operations West, Inc. v. Superior Court of Los Angeles, a new “ABC test” for determining worker classification was announced. According to the test, workers are presumed to be employees unless the hiring agency can establish that the worker is free from the agency’s direct control, he or she performs work that is outside the hiring agency’s normal business, and the worker is involved in an independently established job or business of the same nature as the work he or she performs for the hiring entity. 

California Assembly Bill 5 codified these criteria into law. Now, the California legislature is considering a number of bills that are intended to modify what many people consider to be the overly strict worker classification rules set forth in AB 5. One such amendment is Senate Bill 1039, or “The Independent Worker Rights Act of 2020.”

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 Posted on March 25, 2020 in Employment Taxes

By now, you have probably already heard about the massive changes being instituted by California Assembly Bill 5 (AB 5). The legislation codifies California Supreme Court case Dynamex Operations West, Inc. v. Superior Court into law. In this landmark case, the court held that the majority of California workers should be classified as employees and therefore are entitled to receive all of the benefits and protections associated with employee classification. Employers must classify all workers as employees unless the worker meets certain criteria. A number of industries have criticized the new bill, stating that the strict rules will damage businesses as well as current independent contractors’ ability to make a living. California Assembly Bill 1925, which is currently being considered by the state legislature, includes a modification of the current California Labor Code that may provide relief from the strict regulations to certain businesses.

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 Posted on March 17, 2020 in Taxation Law

The more complex a person’s assets and debts, the more complex his or her tax return will typically be. Non-U.S. trusts and trusts involving gifts from people outside the United States require especially specific tax documentation. Taxpayers who fail to file the applicable tax documents or make errors on trust-related tax forms are subject to significant penalties imposed by the Internal Revenue Service (IRS). Determining which tax forms are needed and accurately completing these forms is increasingly time-consuming and stressful for many taxpayers. Fortunately, a qualified tax attorney can help. If you are required to file tax Form 3520 or 3520-A this tax season, it is crucial that you complete this paperwork promptly and accurately.

Form 3520 and 3520-A Errors Can Cost You

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