Brotman Law 
We previously discussed how the Board of Equalization handles tax liens. For this post in our series, we would like to talk about how the California Franchise Tax Board addresses the use of liens. There are differences between the way the various California tax agencies and the IRS use tax liens about which you need to take note to stay out of hot water.
In our continuing series about tax liens, we would like to talk about how the California Board of Equalization handles them. While there are similarities between how the IRS and the various California tax agencies pursue, impose, and release tax liens, there are some important differences that every tax payer should be aware of.
In Part 1, you learned what a lien is, how taxpayers are notified of a lien, and what elements are required for a valid lien. In Part 2, you will read how a lien can impact your credit report, who has access to a list of those with liens, and what happens during bankruptcy and other financial events if a lien is involved.
The tax community is a house somewhat divided over the effectiveness of liens. On the one hand, the government needs to protect their interests in regards to taxes owed them. On the other hand, tax liens are filed against taxpayers with few or no assets to file a lien against.
On Tuesday, California voters passed historic legislation by voting to allow the recreational use of marijuana in California. Regardless of your opinion about marijuana use, the legislation will have a huge impact on the state of California and its citizens and will bring a large source of new taxable revenue into the state. Because of the complexity surrounding the tax laws surrounding the new measure, I have put together a rough guide of issues for marijuana businesses and California citizens to be aware of.
Taxpayers often confuse the terms tax lien and tax levy and do not understand the difference in actions represented by these concepts. While liens and levies can both be filed by the IRS and the California Franchise Tax Board (FTB) and there are many similarities to when they are issued and how they can be removed, liens and levies are terms for very different actions.
October 17, 2016, was the last day you can file California State or Federal income tax returns if you were granted the six-month extension in April. It is not the time to panic, but it is definitely time to move quickly if you have not completed your 2015 tax return and payment.
As long as you did so by October 17, you will be allowed to file electronically. However, if you are planning to file an amended return, you must mail it; neither the state nor the IRS allows electronic filing of amended returns.
Keep in mind that any unpaid taxes from 2015 have been accruing penalties and interest since April 18, 2016. You cannot file for another extension; you must file a return.
What does the employment classification of workers have to do with payroll tax audits?
Everything.
When the Employment Development Department of the State of California decides to audit, the classification of your workers is the auditor’s sole concern. Additionally, the IRS often adopts the results of the EDD audit to use in assessing federal penalties.
For this reason, it is critical to classify your workers properly and supply only the information the auditor asks for, nothing more.
In a previous post, we talked about the difference between independent contractors and employees. One of the biggest differences, and one that often drives intentional worker misclassification, is that employers must withhold and pay payroll taxes for employees whereas they do not for independent contractors.
You have hired someone to do work for you. Is that person an employee or an independent contractor?
The answer is important because misclassifying an employee as an independent contractor, whether intentionally or through ignorance, can land you in court and in debt for payroll taxes.
There are several tests from a variety of regulatory agencies that are used to try to determine employment status and occasionally changes are made to the standards. Even if you classified certain of your workers correctly before, you might need to revisit the question to ensure you remain in compliance.