Part 1 discussed the deferral of employment tax deposits and payments for the year 2020 (Deferral of employment tax deposits and payments through December 31, 2020 | Internal Revenue Service (irs.gov)). The Coronavirus, Aid, Relief and Economic Security Act (CARES Act) allows the employer to defer the employer’s share of the social security tax for the first quarter of 2020. What would have been the full amount of the employment tax liability due for that quarter, including the liability for which deposits would have been due on or after March 27, 2020, did not have to be paid. However, this presents a bookkeeping problem. There is now a discrepancy for the first quarter between the amount of the liability reported and the amount of deposits and payments for that liability. The Internal Revenue Service (IRS) will send a notice to these employers identifying the difference as an unresolved amount. This notice will also include additional information instructing the employer how to inform the IRS that it had deferred payment or deposit of the employer’s portion of the social security tax due after March 27, 2020, for the first quarter of that year under section 2302 of the CARES Act.This deferral applies to all businesses including those that deposit employment taxes annually. As long as the deposit amount relates to the tax imposed on wages paid on or after December 31, 2020, during the payroll tax deferral period, then the employer may defer this amount. If an employer had already deposited the amount with the IRS for employment taxes, he or she may receive a refund of Social Security tax already deposited. This is a result of paying the amount due but then receiving tax credits, such as the Research Payroll Tax Credit, the Families First Coronavirus Response Act (FFCRA) paid leave credits, and the employee retention credit (Employer Tax Credits | Internal Revenue Service (irs.gov)). Since this can be complicated in reporting, it is best to consult a tax professional for help with payroll taxes.
Monday, May 31, 2021
Friday, May 28, 2021
It is not necessary to say that this past year has been a particularly trying one. COVID has upended the entire world, especially the business one. Businesses long established as the foundation of the American economy have found themselves to being greatly diminished or have disappeared forever, such as Sears, Fry’s Electronics, and Soup!antation eatery. Likewise, many other small businesses have been forced to permanently close. The Federal and State governments tried to help with tax credits, but sometimes even that did not help. So now the focus is trying to get back to “normal” or to a new version of “normal”.COVID changed the way we do business, but like the saying goes: there is no escaping death and taxes. Both Federal and State Taxes (and local taxes) are still due, but perhaps in a diminished form. Congress passed the Coronavirus, Aid, Relief and Economic Security Act (CARES Act) to help with the economic havoc wrought by COVID (Deferral of employment tax deposits and payments through December 31, 2020 | Internal Revenue Service (irs.gov)). With the help of this Act, businesses were able to continue to pay their employees and stay in business. However, this Act also brought a different set of accounting for payroll taxes with it. A tax professional, such as the ones at Bullseye Tax Relief, can help you navigate these uncharted waters.
Tuesday, May 25, 2021
We will discuss the last two of the five business structures recognized by the Internal Revenue Service (IRS) (Business Structures | Internal Revenue Service (irs.gov)) in this blog. Corporations (Forming a Corporation | Internal Revenue Service (irs.gov)) and S-Corporations (S Corporations | Internal Revenue Service (irs.gov)) involve shareholders rather than owners that the first three business structures have.help with employment tax.
Sunday, May 23, 2021
As discussed in an earlier blog, there are five business structures recognized by the Internal Revenue Service (IRS) (Business Structures | Internal Revenue Service (irs.gov)). Partnerships and Limited Liability Companies have been previously discussed. Sole Proprietorships (Sole Proprietorships | Internal Revenue Service (irs.gov)) will be discussed in this blog.
Thursday, May 20, 2021
All businesses must pay taxes. However, not all business taxes are the same for every business. The type, amount and form used in paying taxes is dependent upon the type of business entity. When someone starts a business, he or she must decide what business structure the business is to have. There are five business structures (Business Structures | Internal Revenue Service (irs.gov)), each with advantages and disadvantages. They are:
Tuesday, May 18, 2021
As stated in earlier blogs, the Internal Revenue Service (IRS) is not perfect. They can, and do, make mistakes. They can miscalculate tax amounts owed or even overlook deductions. Fortunately, for taxpayers there is a process that can reverse or stop an IRS’ decision or action that is unfair or incorrect. An Administrative appeal gives you a second chance that may lead to a more favorable outcome with your tax problem. Help is available without going to court.An Administrative Appeal process can apply to any appeal filed regarding a decision and/or action taken by the IRS. This can include decisions made during audits or for collecting a tax debt. The IRS allows any taxpayer who feels that the IRS was unfair or incorrect regarding a tax situation, to appeal without legal action through their Office of Appeals. This entity is separate from the IRS themselves so that decisions are objective.
Sunday, May 16, 2021
Is the Internal Revenue Service (IRS) always correct when assessing taxpayers’ tax returns? Of course not. Since IRS agents are human, they can make incorrect decisions or mathematical mistakes. How do you reverse their mistakes? A Collection Appeal allows taxpayers to challenge IRS’s actions regarding the collection of past taxes which may include the placement of liens and/or levies against taxpayer’ properties for the purpose of collecting said taxes. This challenge will stop or reverse any collection process and relieves the taxpayer of any collection actions in many cases.
Once you fall behind on your tax obligations, the IRS will begin the collection process on any outstanding balances. The IRS is permitted to place liens and levies on properties and assets to ensure the collection of taxes owed. The collection process begins with collection notices from the IRS outlining their intent to collect. Like any other entity, the IRS can be wrong in assessing taxes, penalties, interest or even that you owe money in the first place. Luckily, any wrongful actions can be reversed.
Thursday, May 13, 2021
Just what exactly is a Statute of Limitations? Why is it important to me? These two questions are answered in this blog. The Statute of Limitations can determine whether the Internal Revenue Service (IRS) can claim any taxes, penalties, and interest against you for past tax debts. The Statute of Limitations is the time frame mandated by law for the IRS to review, assess and/or resolve any tax related issue against you. Once this time passes, the IRS forfeits any claim for taxes, interest, penalties, and collection actions. On the flip side, the taxpayer forfeits any claim to past refunds if the Statute of Limitations expires.
Tuesday, May 11, 2021
Sometimes an individual underreports his or her income to the Internal Revenue Service (IRS). Whenever the IRS discovers that this has occurred, it will investigate all parties involved, including spouses if the two have filed a joint tax return. If a spouse can prove to the IRS that he or she did not deliberately act in the underreporting of income, that individual may apply for Innocent Spouse Relief.Innocent Spouse Relief relieves that individual from paying any taxes, penalties and interest on misreported or underreport items on the tax return for which his or her spouse is ultimately responsible for. It applies if your spouse or former spouse omitted or improperly reported items on the joint tax return without your knowledge. The IRS will determine whether you will be relieved of the responsibility for all or a portion of the amount after they approve your request for relief. You must file the form for Innocent Spouse Relief (IRS Form 8857). Per the IRS, Innocent Spouse Relief only applies to individual or self-employment taxes. It does not apply to business taxes, household employment taxes, individual shared responsibility payments or trust fund recovery penalty employment taxes.
Thursday, May 6, 2021
As stated in earlier blogs, the Internal Revenue Service (IRS) has several different tools for collecting a tax debt. Another tool is the Bank Levy. Here, the IRS freezes your bank account and collects whatever money is being held in that bank account. If you do not have enough money to pay your tax debt in full, the IRS will resort to another collection tool, such as garnishing your wages or earnings or attaching a lien to one or more of your properties. There is no escaping death and taxes!Wait a minute. Actually, there are a couple or tax resolutions available to you. You can request a Bank Levy Release that will free your bank account from the IRS so that they cannot seize the money held there. First, after several letters from them, you will receive a Final Notice of Intent to Levy. If you do not respond and attempt to pay your tax debt via install agreement or payment in full, the IRS will place bank levy on your bank account(s). You have only 30 days to respond to the Final Notice of Intent to Levy before the IRS seizes the money. The IRS can levy all checking accounts and saving accounts attached to your name at any bank.
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