Although a favorite saying of IRS revenue officers is that “The IRS is not a bank” and takes collection of taxes owed seriously, the IRS is prevented from collecting assets that a person needs to survive and meet their basic living requirements. The IRS does not have the best reputation of cutting delinquent taxpayers much slack, so that is why I wrote this article for you.
The consequences of running from the IRS are specific to federal tax laws that govern the ability of the agency to pursue and recover tax funds as well as those tax laws that govern your response to notices of tax deficiency.
The California Franchise Tax Board (FTB) has authority to settle administrative civil tax disputes. The civil tax disputes include those that arise out of protests, appeals or refund claims filed by taxpayers.
During an appeal, the taxpayer should prepare and file a pre-trial brief or memorandum of points and authorities, in which he or she describes the relevant law and its application to his or her case in support of of it.
The taxpayer may want to locate and interview helpful witnesses, including workers previously interviewed by EDD, principals of the business and its management employees.
It is important to note that according to Unemployment Insurance Code (“UIC”) Section 1735, an officer, owner or any person in charge of affairs of any corporation, LLC or LLP, is personally liable for the amount of the contributions, withholdings, penalties, and interest unpaid by said business entity, if business entity willfully fails to pay the amount.
Assessments become delinquent if not paid before they become final, and subject to a penalty of 10%. UIC Section 1135, Sections 1222 and 1224 provide that assessments become final (and delinquent) after 30 days from an assessment date, or the taxpayer petitions or appeals assessment, within 30 days of an administrative law judge or appeals board decision date.
Therefore, filing an appeal generally extends the amount of time the taxpayer has to pay.
In California, state income taxes are generally among the highest in the country, but the burden is spread among different segments of the population. The rate of California income tax is arranged on something of a sliding scale, separated by income tax brackets.
Taxes may be certain, but they are not immune to change. As you age, your tax situation will alter. Understanding the myriad rules around senior deductions, eligibility for various credits and the ways in which pensions and investments are taxed can be daunting, but a little knowledge goes a long way to ensuring that your golden years are comfortable and financially secure.
The Franchise Tax Board administers California’s business income taxes: the $800 minimum franchise tax, the 1.5% S corporation tax, and the 8.84% corporate rate. It is also one of the most patient collectors in American tax — the FTB generally has 20 years to collect an assessed balance, twice the IRS’s ten.
California can be an expensive state in which to do business, and it’s not getting any cheaper. Small businesses in the state are particularly hard hit under the state tax laws.
California has a higher than average state income tax imposed on business and personal income, plus it engages in double-taxation when it comes to business entities structured so that the income passes through to the owner.
The Franchise Tax Board is the agency responsible for administering personal and business income tax in the State of California. While the state generally follows the lead of the IRS in setting policy, it does not do so in every instance, as we shall see.
The first “Tax Master Class,” masterminded and hosted by Sam Brotman, took place on Thursday, April 29, 2021. Due to the current COVID-19 climate, the event was on Zoom, but for those who missed it, a recording will be made available.
Brotman’s message was aimed at business owners owing more than $100K in taxes. Although the IRS is systematic he warned that with its new influx of money and pressure from the U.S. Treasury to fill the widening $441 billion tax gap, it is far less likely to let the “big whales,“ slip through their nets .