Worker Reclassification: Degree of Control

The Groundhog Day movie from the 90’s starring Bill Murray portrays a news anchorman who lives the same day over and over again. He is stuck in a loop. Each day starts the same way. Bill tries to alter his conduct and he interacts with different people throughout the movie. The other characters act and…Continue readingWorker Reclassification: Degree of Control

Does an Author Pay Self-Employment Tax on Royalties?

Taxpayers are free to structure payments for services rather than for something other than services. This can save self-employment taxes. But can a taxpayer carve out part of their service income by asserting that some part of the income is not from a business? The Slaughter v. Commissioner, T.C. Memo. 2019-65, case addresses this in…Continue readingDoes an Author Pay Self-Employment Tax on Royalties?

What if the IRS Violates the Law?

What happens if the IRS violates the law? Specifically, what if the IRS assesses a penalty and attempts to collect it without first issuing the proper notice to the taxpayer? The court addresses this in Romano-Murphy v. Commissioner, 152 T.C. 62, in the context of a trust fund recovery penalty. Facts & Procedural History The…Continue readingWhat if the IRS Violates the Law?

LLC Cannot Use Crewman’s Exemption for Employment Taxes

Can a U.S. citizen who owns and operates a vessel outside of the U.S. avoid paying U.S. employment taxes for its crewmen by using a foreign legal entity? The court considered this issue in DAF Charters LLC v. Commissioner, 152 T.C. 14, for a single member LLC formed in the U.S. that was owned by…Continue readingLLC Cannot Use Crewman’s Exemption for Employment Taxes

Credit for Employment Taxes Reported in Error for Another Entity

If employment taxes are paid by one legal entity but incorrectly reported to the IRS for another legal entity, can the entity that paid the taxes get credit for the payment? The IRS said ‘no;’ the U.S. Tax Court said ‘yes.’ The case is E.C.C.B.A. v. Commissioner, T.C. Memo. 2018-55. Facts & Procedural History The case…Continue readingCredit for Employment Taxes Reported in Error for Another Entity

Court Says Employer Entitled to Worker’s IRS Records

When the IRS determines that independent contractors are taxed as employees, it is up to the employer to show that the IRS determination is incorrect. One way to do this is to show that the workers paid tax even though the employer did not withhold the tax. In Mescalero Apache Tribe v. Commissioner, 148 T.C.…Continue readingCourt Says Employer Entitled to Worker’s IRS Records

The Disqualified Employment Tax Levy

The IRS is generally required to give taxpayers notice of its intent to levy (or take) their property prior to it actually levying on the property.  Congress recently amended the Code to provide the IRS with a new type of tax levy.  This new levy is referred to as a “disqualified employment tax levy” and…Continue readingThe Disqualified Employment Tax Levy

Taxes & Limited Liability Companies

The Limited Liability Company or LLC is a legal entity formed with the state. Once formed, taxpayers have the ability to determine how the LLC is taxed for Federal income tax purposes. This presents a number of issues that have to be considered for LLC owners. Income Taxes & LLCs The IRS regards a single…Continue readingTaxes & Limited Liability Companies