There are many information forms associated with international taxes and we are not sugar-coating this — they are complicated. To add to the angst, failure to file these forms or not file them on time can incur hefty penalties.
If you are a foreign business or person that does business with the U.S., then you are subject to U.S. income taxes. Some examples would be if your business has an office that generates income located in the U.S. or if a company owns rental property in the U.S. from which it derives income.
During the summer of 2020, California’s political machinery continued to whine and hum. As its populace sheltered in place with COVID-19, two tax bills were introduced on the state’s Assembly floor.
The people who administer state tax laws generally show up in the news only when a newsworthy case is reported, typically one involving tax evasion, a “big fish” going to jail for not paying taxes.
In an earlier chapter, we touched on wage garnishment as a means for the FTB to collect unpaid taxes. However, the other side of the fence can be if you are an employer and are called upon by the FTB to garnish wages of any of your employees.
There are certain types of people that will go to great lengths to save money. I’m not talking about eating a strict diet of ramen noodles and taking the bus when you could afford to drive – I’m talking about tax avoidance.
Under 26 U.S. Code §1041, you typically have a 6-year window of time from the date your divorce is finalized to make a transfer that is not subject to taxation. Once you go beyond 6 years, you are looking at two individuals that are divorced, transfer assets between each other could be considered a gift subject to different rules. Unless there is a valid reason that is beyond your control, the sooner you complete the transfer the better off you will be. Because the code specifies that the tax-free transfer must be incident to divorce, it may also help to include what the other spouse will receive under the divorce agreement.
Internally, we have developed the following list of issues based on our experience in past EDD payroll tax audits. Although not an exhaustive list, it will give you an idea of some of the mistakes that we have seen in preparing for audits and things to generally look out for.
What usually happens in a payroll tax audit is that the auditor will send you a laundry list of documents that they want to examine. Of the different types of audits, payroll tax audits are usually the ones that have the most flexibility because in a payroll tax audit they are basically running tests.
California Tax Evasion Penalties Generally
Generally, penalties for fraud or intent to evade are imposed only when tax deficiency determinations are made by the CDTFA and CDTFA must prove evasion to impose tax evasion penalty. The RTC sections that impose evasion penalties are as follows: