Fighting the IRS (and the California Employment Development Department) in Worker Classification Disputes
What do you do when the IRS (or the California EDD) shows up and wants to audit your payroll tax returns to determine if the people you are paying as independent contractors should be treated as employees for payroll tax purposes? While you may be tempted to handle the audit yourself, that could get you into lots of trouble.
Federal Agency Targets Individuals who Purchase Real Estate through a Shell Company
On July 22, 2016, the Financial Crimes Enforcement Network (FinCEN) announced an expanded Geographical Targeting Order (GTO) aimed at identifying individuals who purchase residential real estate property through a shell company. FinCEN is a bureau of the U.S. Department of Treasury. FinCEN’s mission is to safeguard the financial system from illicit use, combat money laundering, and promote nation security through the collection, analysis, and dissemination of financial intelligence. FinCEN carries out its mission by receiving, maintaining, analyzing, and disseminating financial transaction data. This includes the processing of Form 8300, a Form that is required to be filled out when businesses receive more than $10,000 in cash in one transaction or in two or more related transactions. Form 8300 must also be filed in specified special situations, such as when a GTO is in force.
This GTO is in effect from now through February 23, 2017. The new GTO is aimed at the following metropolitan areas: (1) Los Angeles County; (2) San Diego County; (3) San Francisco (including San Mateo and Santa Clara); (4) New York City (all boroughs); (5) Miami-Date County; and (6) San Antonio, Texas (Bexar County).
2017 Annual Income Tax Seminar – June 23, 2017
Join our firm members at the 2017 Annual Income Tax Seminar, scheduled for Friday, June 23, 2017, at Whittier Law School, in Costa Mesa, California.
This all-day event features presentations by leading tax experts, and topics include:
It’s a Shame to Not Pay Your Taxes
Pursuant to California Revenue and Taxation Code Section 19195, the Franchise Tax Board must publish, twice a year, a list of the top 500 taxpayers (individuals and corporations) who owe the FTB more than $100,000 in tax. The legislative intent is to close the tax gap but to the lay person the purpose of the list is apparent – shame those taxpayers into paying. But does it work?
First, the FTB must send notification by certified mail to taxpayers who are vetted for the list 30 days prior to posting their information. This is to allow the taxpayer an opportunity to resolve their tax account before being published on the wall of shame. How does a taxpayer resolve an account to avoid publication? The FTB considers the following as resolution of a delinquent tax account for purposes of avoiding inclusion in the list:
FTB Upgrades Online Access
As of January 4, 2016, the FTB started rolling out the new and improved MyFTB. This is the online access to taxpayer accounts which will now provide more detailed information to those of us who represent taxpayers. Individuals may still sign up for access to their own individual or business account.
A major change that has been implemented is the submission and processing of power of attorney forms. The FTB will no longer accept faxed powers of attorney. Instead, taxpayers who hire professionals to represent them before the FTB should use the online option to submit a power of attorney. A representative can input the information online for the taxpayer, however it will not be processed until the taxpayer logs in to their “MyFTB” account and approves or rejects the power of attorney, or the intended representative submits a signed Form 3520 with their online application. The online process will be a faster process overall and it will provide immediate feedback on potential errors. Alternatively, a power of attorney form can be mailed to the FTB. The problem with snail mail is the processing time is estimated to be approximately 90 days. Clearly the state is leaning green.
- Internal Revenue Service
- Franchise Tax Board
- Employment Development Department
- State Board of Equalization
- California Secretary of State
Related Court Links
- United States Tax Court
- US Court of Federal Claims
- United States District Court (Central District of California)
- United States Bankruptcy Court (Central District of California)
- Ninth Circuit Court of Appeals
- Supreme Court of the United States
Related Tax Links
The following are helpful tax related links.
- Tax Professor Blog: www.taxprof.typepad.com
- Federal Tax Crimes: http://www.federaltaxcrimes.blogspot.com/
- Joint Committee on Taxation: www.jct.gov
- US Senate Committee on Finance: www.finance.senate.gov
- Tax Bill Tracker: ria.thomsonreuters.com