Generally, there are four methods of resolving an assessed federal tax liability: (1) full payment, (2) payment through installments under a written agreement, (3) an offer in compromise, and (4) bankruptcy. The IRS also has the authority to temporarily suspend collection or payment of federal taxes through placing an account in currently uncollectible status.
An Offer in Compromise (OIC) is an agreement between the taxpayer and the IRS that settles a tax liability for payment of less than the full amount owed. The IRS will generally accept an offer in compromise when it is unlikely ...
To minimize the risk of engaging in an excess benefit transaction related to compensation paid in connection with an organization exempt from income tax under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (an "Exempt Organization"), the compensation should be (1) approved by a committee of the board of directors composed of persons who have no conflict of interest with respect to the disqualified person; (2) determined and based upon specific data that establishes that the compensation is reasonable; and (3) documented in the committee's minutes. If these ...
Many of us have both the privilege and the responsibility of serving as a board member or as a trustee of a charitable organization. Many of these charitable groups are organizations exempt from income tax as organizations described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, (an "Exempt Organization"). Because these Exempt Organizations are exempt from tax and receive other income tax benefits, they are generally held to a higher standard of care and are subject to strict compliance rules in certain areas.
One example of this higher standard of care are the ...
South Carolina imposes various taxes and reporting requirements on purchasers transacting business in the state. A sales tax is imposed on the sale at retail of tangible personal property and certain services in the state. South Carolina imposes a sales tax of six (6) percent (plus an additional one (1) percent "local option" tax in certain counties) on the retail sale of tangible personal property between a purchaser and seller within the state. A seller or retailer is required to collect the sales tax from a purchaser and remit the tax to the South Carolina Department of Revenue ...
The IRS announced an important settlement program on September 21, 2011 where the IRS will now give many employers substantial tax relief for treating employees as "independent contractors". Details of the settlement program were provided in Announcement 2011-64, which will officially be published in the Internal Revenue Bulletin 2011-41, to be issued October 11, 2011.
Whether a worker is performing services as an employee or independent contractor depends on the facts and circumstances and is generally determined under a multiple factor common law test focusing on whether the ...
On August 15, 2011, the South Carolina Supreme Court ruled in Clarendon County v. TYKAT, Inc. (Op. 270252011, WL 3568536) that Section 12-37-950 of the Code of Laws of South Carolina, 1976, as amended (the "Code"), subjected a leasehold interest in real estate to property taxation where the property was otherwise exempt from such taxation in the hands of the owner. The court's ruling in TYKAT affirmed the ruling of the South Carolina Administrative Law Court (the "ALC") below finding that TYKAT, Inc. ("TYKAT") was liable to Clarendon County for property taxes on the value of TYKAT's ...
In a case that will have far reaching implications for many estate and financial planners, the South Carolina Supreme Court reversed the South Carolina Administrative Law Court and concluded that real property owned by a single member limited liability company may qualify for favorable property treatment as a legal residenceCFRE, LLC v. Greenville County Assessor, Opinion No. 27032 (SC Supreme Court filed August 29, 2011).
In order to put this opinion in perspective, a brief review of South Carolina income and property taxation is helpful. Turning first to the income tax, South ...
Employers are generally required to withhold and pay employment taxes on wages paid to employees. Conversely, employers are generally not required to withhold and pay employment taxes on wages paid to independent contractors or nonemployees. If an employer incorrectly treats an employee as a nonemployee, the employer is potentially liable for the employment taxes which should have been withheld. The employer may often not learn of this liability for years, until an IRS notice appears in the mail.
Section 530 of the Revenue Act of 1978, as amended, provides relief for employers who ...
This post was co-authored by Adam Landy and Erik Doerring.
On July 5, 2011, the United States Tax Court abated penalties assessed by the IRS against a business taxpayer for failure to pay its employment taxes. The Tax Court agreed with the taxpayer that it had shown reasonable cause. In Custom Stairs & Trim Ltd. v. Commissioner, T.C. Memo 2011-155, the taxpayer, Custom Stairs and Trim Ltd. had a history of filing its IRS Form 941 timely and making timely employment tax deposits. Beginning in 2005 and continuing through 2008, however, Custom Stairs began experiencing financial hardship ...
When spouses file a joint income tax return each is jointly and severally liable not only for the reported tax liability, but also for any additional taxes, penalties and interest later claimed by the IRS as due. A spouse can request relief from this joint liability by filing a request for innocent spouse relief with the Internal Revenue Service.
The IRS states that an innocent spouse request must be filed within two years after the date initial collection activities for the unpaid taxes have begun. The United States Tax Court has repeatedly disagreed with the IRS, however, ruling in ...