General

May

22

IRS Major Announcement

General / Tax Settlement  Posted by / 0 comments

Today the IRS made a major announcement to help more middle class Americans.  They are going to expand their federal tax forgiveness program.  Traditionally, if one owes back taxes to the federal government, you either pay the full amount all at once, through a payment plan or by negotiating a reduction of the debt through what is commonly called an “offer in compromise”.

To qualify for an offer in compromise, you need to show doubt towards the collectability of the debt, whether because you lack the funds or more importantly that there is some dispute about the legitimacy of the debt.

It is said that through today’s announcement, the IRS is going to relax some of their criteria for the qualification of the Offer In Compromise procedures.  We are going to have to wait to see if this truly helps people or not.  If this is true then some people will be able to pay off their back taxes and pay off their local state taxes as well.

May

09

Classification Settlement Program

General / Tax Audits / Tax Settlement  Posted by / 0 comments

If you are a small business owner and you misclassified your workers an independent contractors instead of regular employees and you got caught by the IRS, you got some options.  Under the Classification Settlement Program (“CSP”), the IRS will allow you to come clean with your mistake and work out a deal to save back taxes and penalties.

To qualify for CSP, you must satisfy the following requirements:

  1. You must be a business owner
  2. Have a open case with the IRS either in an audit or appeal
  3. You made a request for a CSP deal
  4. You are in compliance with Section 530 of the Revenue Act.

Revenue Act Section 530 states that the employer must file all tax returns including 1099 forms showing independent contractor payments, treated all similarly situated workers as independent contractors and had a reasonable basis for the misclassification (like relied on written IRS advice, court decision, past audit and etc).

Those small business that qualify will be offered one of three types of settlement: (1) no tax assessment; (2) pay the most recent year of taxes for the missed classified workers and ignore prior years; or (3) pay 25% of the latest audit year deficiency.

Which settlement offered will depend on the facts of your case.  If you didn’t classify all similar situated workers the same way then don’t try to qualified.  You can’t really argue that you accidentally missed classified if you have two workers in the same situation and you classified one as a general worker and the other as an independent contractor.

Apr

28

Payroll Tax Indemnification Agreement

General / Legal Concepts  Posted by / 0 comments

Many people are involved in a partnership or are shareholders of a corporation and their roles and duties in the company have nothing to do with the financial aspects of the business.  These people carry on their duties and let the other partners deal with the financial duties.

If this fits your duties in a business and your company has employees and your business is required to collect taxes and remit them to the government then you might want to consider entering into an agreement with your partners or the other owners of the business a payroll tax indemnification agreement.  The agreement will protect you and require the other partners to reimburse any payroll tax penalty that you might suffer personally if the IRS determines that company failed to fulfill its payroll tax remittance requirements.

Just so that you are clear, this agreement would only obligation them to pay you back what the IRS takes from you because you will still be personally liable for none remitted payroll tax.

The agreement can be as simple as stating that all the co-owners or shareholders agree to indemnify any of the other owners or shareholders that may be held liable for any unpaid payroll tax liabilities of the business that are proposed or assessed against them personally, plus legal cost in contesting the taxes.

Apr

17

Writing off business expenses

General / Tax Deductions  Posted by / 0 comments

As a business owner, you are constantly having to entertain people to draw up new business.  Sometimes your entertainment expenses are to maintain current business relationship.  When tax time comes around, you need to figure out which expenses are deductible to minimize your tax liability.

As a general rule, you can deduct entertainment expenses if the expense was use to entertain a client, customer, or employee if the expenses are directly related or associated to your trade or business.

If the entertainment took place in a business setting or the main purpose of the entertainment was to conduct business and you actually did some business and you had more than a general expectation of getting income or some business benefit from the activity then it is deductible.

Or if the entertainment is associated with your trade or business and the entertainment directly preceded or follows a substantial business discussion.

So how can you deduct?

You can deduct 50% of your business entertainment expenses.  The transportation cost to the entertainment location is fully 100% deductible.

Apr

15

Constructive Income

General / Legal Concepts  Posted by / 0 comments

“Constructive Income” is a form of income that should be declared on your tax income.  The IRS consider income to include constructive income.  Constructive income is define as income, for tax purposes, money or property that is available to you or is credited to your account.  The income is taxable as soon as it becomes available to you.

For example, say you were working hard and during work for a client for the entire year.  They finally pay you $20,000.00 for all the work that you did on December 15, 2012.  You had a particularly good year and if you deposit that check, your overall earned income will put you into a higher tax bracket.  This will cost you thousands of dollars in additional taxes.

So to avoid the additional taxes, you decide to deposit the check on January 5, 2013 so that the $20,000 can be reported on your 2013 taxes instead.  Under the tax code, the $20,000.00 was available to you on December 15, 2012, and should be listed as income in the 2012 tax year.

Apr

12

City of Houston

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Most people will agree that the city of Houston is stunning.  It has a combination of tall modern high rise buildings with lush green recreational areas. But some may not understand exactly how great Houston really is. There are so many facts about Houston that few know.  For example, Houston is the fourth largest city in the state of Texas. Houston was called the chief executive with the Republic of Arizona during the time of Jan Houston.

Huston has a population of about 2.2 million and is the sixth largest metropolitan in the United States. The metropolitan area of Houston-Sugar Land-Baytown is the economic center of the city.

The city is home to a large variety of industries and a large number of Fortune 500 companies. In fact, only the city of New York has more Fortune 500 companies than Houston. The large population of the city is also culturally diverse with many different ethnicities.

The economic climate of Houston continues to grow very fast in all sectors. The industries that define the bulk of the municipality’s economic climate are travel, power, production, aeronautics, and health-related services. Due to Houston’s varied market sectors, the city’s economic system is very productive.

Given that Houston is a diversify city, there are numerous activities that celebrate the city’s diversity. The Houston Delight Parade, the Houston Cows Present as well as the Rodeo, and the Houston Greek Festival are some examples.

If you are into the martial arts, there is the Theater Martial arts district located in downtown Houston that holds six efficiency halls as well as eight businesses. While the Memorial Region has several galleries and museums.

Apr

10

Welcome!

General  Posted by / 1 comments

Welcome to Houston Tax Attorney!  We have created this blog to help those in the Houston area needing a tax attorney.  Although we are not giving out specific legal advice to any individuals, we will be explaining how the law works in the tax area of law in the general sense.  We hope the information provided here will be of some help for those needing some tax information living in the city of Houston.