Tax fraud is a serious crime that carries severe penalties, including substantial fines and imprisonment. But what happens when a criminal court finds that the conduct in question does not rise to the level of tax fraud, yet a civil court later determines that it does? This was the dilemma faced in Maciel v. Commissioner,…
Category: IRS Penalties
IRS Penalties
Monetary sanctions imposed by the IRS for various tax-related violations. Give us a call to see how we can help, (713) 909-4906.
Strategy for Paying Employment Taxes Late
Employers are generally required to withhold employment taxes from employee wages. The employer then remits these withheld employment taxes to the IRS. These are referred to as trust fund taxes, as they are held in trust pending payment to the IRS. Employers are also required to pay employment taxes for employees based on the wages…
IRS Clarifies Real Estate Broker 1099 Filing Requirements
The IRS relies on voluntary compliance from taxpayers, meaning that most people follow tax laws willingly. However, noncompliance can result in penalties, making it an incentive for individuals to comply. To help identify potentially taxable transactions, third parties are required to file information reporting forms with the IRS. For instance, real estate sales typically require…
The Improved Frivolous Return Penalty
The Tax Relief and Health Care Act of 2006 has brought significant changes to the frivolous income tax return penalty under Section 6702. Until now, the low penalty amount and limited reach of this penalty meant that taxpayers did not have to worry about the consequences of filing frivolous tax returns. However, with the changes…
No Tax Penalties for Obscure Tax Forms
The adage ‘Bad facts can create bad law’ applies to IRS penalties, where the agency typically removes penalties for most taxpayers with strong factual support at the administrative level. Court cases lacking strong facts often result in litigation, leading to numerous court cases where the government prevails. While it is uncommon for taxpayers to succeed…
Comparison: U.S. and France’s Approach to Small Business Taxes
In recent years, governments worldwide have been exploring new ways to address tax-related issues. For example, the French government, which reported a budget deficit of approximately 3% of its GDP, has proposed using the surplus tax revenues to exempt minimum wage employees working for small businesses from payroll taxes. This approach contrasts with the United…
Colorado Tax Penalty Only Applies to Compliance Employees
The state tax authorities can be more aggressive than their federal counterparts when assessing and collecting taxes, particularly in collections. It is often advised to pay state taxes while haggling with the IRS about federal taxes. This does not necessarily mean that the state will always prevail, as there are cases where they do not,…
Missing Form 1099 May Establish Reasonable Cause
In general, if you do not receive a Form 1099 to report income to you and you omit it from your tax return, you may still be liable for penalties if the IRS later notices the issue and makes an adjustment. This is because taxpayers have a responsibility to report all their income, regardless of…
Drug Addiction Excuse for Filing Tax Return Late?
Drug addiction is a medical condition. It can be a very serious and life-altering medical condition. This begs the question as to whether drug addiction or migraines be an excuse for filing a tax return late or for abating late filing penalties. The court addresses this in Jordan v. Commissioner, T.C. Memo. 2005-266, for a…
Better than a Soap Opera? Trust Fund Tax Disputes
One of the most important financial responsibilities for any business is the timely payment of taxes, including payroll taxes. Payroll taxes are the taxes that employers withhold from their employees’ paychecks and then submit to the government on their behalf. They also include the employer’s portion of the tax. While some businesses may be tempted…