Combine the Expertise of Tax Attorneys and CPAs
Taxpayers in the United States have an array of tax obligations that they must satisfy. They must satisfy their duty to file and pay taxes at the local, state, and federal levels. For taxpayers living in wealthy, prosperous cities and areas in California like Los Angeles and throughout Orange County, the importance of maintaining one’s tax compliance is particularly pronounced. This is largely because, like all agencies and businesses, the IRS must show a return on the money invested into tax audits and other tax enforcement actions. As such, the IRS is likely to target wealthy taxpayers, small businesses, and other taxpayers with characteristics that the agency believes are more likely to result in sufficient ROI.
The tax attorneys of the Tax Law Offices of David W. Klasing are proud to serve taxpayers regarding an array of state and federal tax concerns. We routinely handle an array of tax issues including income tax audits, litigation due to criminal tax charges, and also work to provide tax relief for our clients.
To schedule a reduced-rate consultation with an experienced tax attorney call 800-681-1295 today or contact us online.
The California state income tax is enforced and administered by the State of California Franchise Tax Board (FTB). FTB sets the minimum and maximum tax rates for individuals and businesses required to file income taxes in Los Angeles, Orange County, or anywhere else within the state. For the recent 2014 tax obligations, the maximum individual income tax rate has been set by FTB at 12.3 percent. The alternative minimum tax rate (AMT) is set at 7 percent for the year. Furthermore, for individuals with taxable income greater than $1 million, a Mental Health Services Tax at the rate of 1 percent applies.
In California, whether an individual has an income tax filing obligation is dependent upon filing status, age, and the number of dependents one can claim. An individual who is a sole filer or who files as head of household and under age 65 could earn $16,047 in California gross income ($12,838 in California adjusted gross income) before having to file state taxes. With one dependent, the same individual could earn $27,147 in gross income ($23,938 in adjusted gross income) before he or she must file. Typically married couples, senior citizens aged 65 or older, and individuals with increasing numbers of dependents can earn more gross income before they are required to file.Employment and Payroll Tax Obligations
In California, the Employment Development Division (EDD) is responsible for the administration of payroll tax obligations. In this state any person employing workers that have paid a minimum of $100 in wages to one or more employees in any quarter of the year. In the case of an employer who only has household employees, registration with California EDD is required after paying $750 in quarterly wages. Payroll taxes paid by residents and employers in California are:Unemployment insurance (UI) – UI is paid by the employer on the first $7,000 in wages for each employee in a calendar year. New employees are subject to a higher withholding rate. This tax is utilized to provided unemployment benefits in the state.State disability insurance (SDI) – SDI is paid by the worker through a payroll withholding by the employer or payroll processor. Currently applicable SDI rates are available on EDD’s website.Employment training tax (ETT) – Employers are responsible for paying this tax that covers employee training in the state. ETT is paid at the rate of .1 percent on the first $7,000 of wages paid to an employee.California personal income tax (PIT) – This is a tax paid by employees that are withheld by the employer as part of payroll taxes. The amount withheld is based on the employee’s W-4 or DE 4 filed with the employer. Employees receive credit for taxes withheld towards their income tax obligation.
Aside from the obligation to pay state payroll taxes, there is also a federal payroll tax obligation. Federal payroll taxes include federal income tax, Social Security and Medicare taxes (FICA), and unemployment taxes (FUTA). The failure to account for, hold, and pay over employment tax obligations can create major tax problems for the business, employees, and responsible parties. Managers, bookkeepers, owners and other responsible parties can be held personally liable for compliance failures in this area.Failure to File or Pay Taxes
One’s federal income tax obligation is actually made up of two requirements. First, there is the obligation of most taxpayers to file taxes. Most taxpayers are required to make an income tax report or file for an automatic extension by April 15 or the relevant tax deadline for that year. In fact, for the 2016 tax year, an individual filing with single status was required to file taxes after earning only $10,150 in gross income. Second, there is the obligation to pay any taxes that are due and owing. Thus, as there are two obligations to satisfy, there are penalties that are responsive to the failure to satisfy either or both obligations. That is, there are separate penalties that can be imposed for a failure to satisfy one’s tax reporting and those who fail to pay all or some tax that is due and owing by the due date.
While the penalties for one’s inadvertent or mistaken failure to file taxes can result in significant penalties, taxpayers that intentionally or voluntarily endeavor to avoid or defeat tax can face even more serious penalties that include federal prison time. For instance, under Section 7203 of the tax code — Willful failure to file a return, supply information, or pay tax – a taxpayer who is found to have willfully violated their tax filing, payment, or record-keeping duties can face serious additional penalties. If charged as a felony, Section 7203 can result in up to a five-year federal prison sentence. If charged as a misdemeanor, a conviction could result in up to one year in federal prison. The experienced counsel of a diligent dual licensed Tax Attorney & CPA can be critical in avoiding such a disastrous outcome.Real California Tax Relief is Available
Taxpayers who fail to satisfy their tax obligations can face significant penalties. For inadvertent mistakes, the penalties are harsh but typically financial in nature. However, when conduct is believed to be willful, penalties can include lengthy state or federal prison sentences.
In some cases, following an audit you could be facing a large tax bill compounded by interest and penalties. This tax debt may seem to be insurmountable. However, our experienced Los Angeles dual licensed Tax Attorneys & CPAs uncover that there are several strategies and options available to reduce or eliminate your tax burden.
You have the right to appeal an audit that unfairly assesses additional tax, penalties, and interest. To begin your appeal, you must often file a tax court petition that makes clear your intent to appeal. In your written petition, you must identify the audit determinations you disagree with, and the legal or factual basis for your appeal and any other relevant information. Our qualified & experienced dual licensed Tax Attorneys & CPAs can help you determine if a legal basis exists to appeal and then gather & organize the evidence necessary for you to prevail. We can also file the tax court petition on your behalf so that you avoid missing any of the dispositive deadlines or complying with the procedural requirements that may otherwise preclude you from successfully appealing your tax issues.
Aside from a tax appeal, one can also make an offer in compromise to the IRS. An offer in compromise is a lump sum payment, a payment plan, or both where you offer to settle the tax debt for less than the full amount. If the IRS rejects your offer in compromise, you may appeal the rejection within 30 days of the dated letter informing you of the IRS’ decision.Tax Attorney vs. CPA
There is a clear difference in the focus and skillset of an attorney vis-à-vis the focus and skillset of an attorney. On one hand, an accountant is focused on ensuring that, based on the information and documents received from the taxpayer, that computations and calculations are accurate. Thus, working with an accountant is frequently most appropriate when preparing your taxes or when one needs to reconstruct certain aspects of one’s tax records.