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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 Posted on February 28,2020 in Tax Audits

Paying taxes is an important responsibility that, if ignored, can cause a person serious financial and legal trouble. Individuals of all income levels are expected to fully and honestly fulfill their tax obligations, and the IRS is especially focused on bringing high-income individuals into compliance. The agency recently reported that agents will be increasing the number of in-person visits to taxpayers at high-income levels who have not filed tax returns or who have other compliance issues.

Commonly, a taxpayer incurs a tax liability not because they willfully refuse to pay taxes but because they have made a mistake or miscalculation and underpaid the IRS. Taxpayers may also struggle to resolve tax debt due to a job loss, major increases in expenses, unexpected medical problems, or other issues that cause financial hardship. If you have tax-related problems, do not wait for the IRS to visit you before taking action. Speak with an experienced tax law attorney and get the legal guidance you need to resolve these issues.  

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 Posted on February 21,2020 in Tax Audits

Paying taxes is an important and often complicated responsibility. If a taxpayer does not adequately fulfill his or her tax obligations, the Internal Revenue Service (IRS) can take several actions. In some situations, the IRS may even seize some of the taxpayer’s personal wealth and property to satisfy his or her tax debt. If you have been contacted by the IRS about a tax liability-related concern, you should speak to an experienced tax attorney to get the legal guidance and help you need.  

What Is an IRS Levy?

Many people do not realize that the federal government is permitted to seize some of an individual’s assets if he or she does not pay his or her taxes. If you have an unresolved tax debt, the IRS may eventually use a levy to collect the delinquent tax. Before the IRS issues a levy, it will send you a “Notice and Demand for Payment.” If you do not respond, you will then receive a “Final Notice of Intent to Levy and Notice of Your Right to a Hearing.” If you still do not resolve the debt or make an arrangement with the IRS for settling the debt, the IRS may be permitted to take ownership of your property.

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 Posted on February 14,2020 in Tax Audits

Taxpayers often make errors on their tax returns that are due to simple miscalculations or misidentification of assets and income. These mistakes rarely lead to criminal charges, and they can typically be rectified with help from a qualified tax lawyer. However, when a taxpayer or business makes a deliberate effort to avoid tax liability, this may constitute illegal tax evasion. Tax evasion is a serious crime punishable by up to 5 years’ incarceration and fines up to $250,000 for an individual or $500,000 for a corporation. In recent years, the Internal Revenue Service has dramatically increased enforcement of income compliance with regard to offshore accounts. The United States, however, is not the only country that is concerned about the increasingly common crime of offshore tax evasion. Recently, the U.S. was joined by several other countries in a “day of action” against offshore tax evasion schemes.

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 Posted on January 27,2020 in Taxation Law

Many people have strong feelings about the inheritance they plan to leave to loved ones when they pass away. After working hard to acquire assets throughout your life, you do not want the value of these assets to be reduced through estate tax or gift tax. If this is something you are concerned about, you may be interested to learn about an estate preservation tool called the unlimited marital deduction.

The Unlimited Marital Deduction Allows Married Couples to Be Treated as One Economic Entity

The unlimited marital deduction lets an individual leave money or property to his or her spouse without incurring immediate federal taxes or penalties. The value of the property that you can transfer is unlimited, and this transfer can take place during your lifetime or upon your death. In 1982, the unlimited marital deduction took effect, eliminating the federal gift and estate tax for property transfers involving spouses. This provision changed the law so that married spouses are now treated as one financial unit when it comes to property transfers.

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 Posted on January 22,2020 in Employment Taxes

Perhaps no other piece of California legislation has caused as much of a stir in recent years as Assembly Bill 5 (AB5). The bill was signed into law in September 2019 and went into effect on January 1, 2020. AB5, nicknamed the “gig worker bill,” significantly limits when employers can classify workers as independent contractors. Many companies that rely heavily on independent contractors are concerned about how the legislation will affect their ability to stay in business. The trucking industry has been one of the most vocal critics of the bill, and some recent developments may affect how these companies will operate going forward.

California Trucking Association’s Lawsuit Regarding AB5

Assembly Bill 5 instituted an “ABC test” for determining whether a worker can be classified as an independent contractor. According to AB5, all workers must be considered employees unless the following three criteria are met:

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 Posted on January 16,2020 in Tax Audits

Most people know that paying taxes is not optional. However, sometimes something as simple as a mistake or miscalculation on a tax return can result in a tax compliance issue. When the Internal Revenue Service (IRS) discovers a problem with an individual’s tax return, the first method for contacting the taxpayer is typically a letter through the mail. If the issue is not resolved through the mail, an IRS officer may sit down with the taxpayer in a face-to-face meeting to discuss the compliance concerns. If you have been contacted by the IRS because you have not adequately met your tax obligations, an experienced tax lawyer can help you understand your options and protect your rights.

Make Sure That it Is Actually the IRS Who Is Contacting You

In recent years, there has been an uptick in the number of scammers pretending to be IRS agents. A scammer will typically make a phone call to an unsuspecting taxpayer and impersonate an IRS agent for the purposes of gaining access to personal identifying information or stealing the individual’s money. The IRS very rarely makes phone calls regarding tax issues. If an IRS worker does call you, he or she will not demand immediate payment or ask for credit card details over the phone. According to the IRS’s official website, anyone who receives a suspicious phone call from someone claiming to be with the IRS should hang up and call the IRS directly to discuss any potential compliance issues.

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