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What You Need to Know About the Employment Tax Audit Process – IRS Audit Group Beverly Hills

If you are facing an Employment Tax Audit from the Internal Revenue Service (IRS) then you should be prepared to provide information regarding your state employment tax obligations. The California Unemployment Insurance Code (CUIC) and the Government Code authorize the Employment Development Department (EDD) to conduct payroll tax audits of businesses operating in California. The audit ensures that benefit coverage is provided for workers who are entitled to such coverage under the law.

Typically, the EDD audit will start with an entrance interview explaining the purpose of the audit and gather general information. It is a great time to ask questions and understand the process so you know what you are facing. They may request accounting records from the last three years. By reviewing your books and records, the goal is to verify business ownership, proper classification of employees, and reports of gross/taxable wages.

You can speed up the process with compiling the following documents and providing them to the auditor:

  • Check registers, check stubs, canceled checks, and bank statements
  • General ledger and general journal
  • Annual financial statements (income and expense
    statements, balance sheet, etc.)
  • Cash payments records (pay out slips and
    vouchers)
  • Ownership verification
    • City business license
    • Board of Equalization sales tax license
    • Any license required to operate your business,
      such as a liquor license, California State
      contractor’s license, etc.
    • Written agreements (for example, Partnership
      Agreement or Articles of Incorporation)
  • Federal/State income tax returns
  • Form 1099 series, federal information returns and
    worksheets

Keep in mind that the CUIC requires employers to keep payroll records that are updated regularly and checked for accuracy. It should account for all workers (employed, laid off, on a leave of absence, or an independent contractor) and all payments made. The type of system you use should meet the needs of your business and EDD requirements.

Once they’ve reviewed initial documents and all additional information that may have been requested by the auditor – they will conduct an exit interview to discuss findings. Results may include a no change audit (in which no differences are found), an overpayment (a credit or refund may be issued), an underpayment (differences will be assessed) or both over- and under-payment. In order to appeal – you must submit a petition for a hearing before an Administrative Law Judge.

We tried to breakdown and simplify the process for you, but it is much easier with a tax professional by your side. IRS Audit Group of Beverly Hills is eager to be your designated representative during this time. We can communicate with the IRS on your behalf and reduce the stress that comes along with an audit. While the process is nerve wrecking, it can be made a breeze if you have all documents sorted and ready at all times. IRS Audit Group can assist with all of you tax needs, from filing to facing a tax audit. Give us a call to learn more and check out IRS Audit Group Newport Beach as well!

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IRS Audit Group Newport Beach 5 Sales Tax Tips – IRS Audit Group Newport Beach

If you’re looking for sales tax help, then you have come to the right place. There are several precautions in order to safeguard your sales tax system – you should monitor the statutory rules, find ways to be efficient when collecting and be sure to remit the right sales. To develop sales and use tax system, we’ve outline some advice below:

1.Understand which products are taxable and which aren’t. Each state uses different definitions of what product belongs to which category so these may vary – utilities, personal services, business services, computer services, admissions/amusements, professional services, fabrication repair and installation are all different categories under which you may sell a product.

2. You cannot assume your sales tax process is working now because it worked before – as your business grows so will your tax obligations. Manage them correctly by adapting to compliance activities, rules and regulations.

3. Do not neglect the consumer use tax. This is a tax on tangible personal property (TPP). Remitting of this tax relies on the buyer and must be paid when businesses withdraw goods from inventory for its own use, The business must self-assess use tax that must be paid to the state and/or local tax authorities.

4. Be aware of nexus laws – your business must be registered in states where you have nexus and review related rules. Nexus, also called “sufficient physical presence,” is a legal term that refers to the requirement for companies doing business in a state to collect and pay tax on sales in that state. You might have created this presence unknowingly by contracting labor or attending conferences and trade shows out of your region.

5. Automate as much of the system as possible. Inventory management, sales and finance automation can give you much more flexibility when handling the sales tax process. It is also much more efficient for growing businesses who are trying to balance time and money.

If you have negative audit findings or have paid fees for sales tax-related issues then you should contact our team at IRS Audit Group Newport Beach today! We can guide you to the best practices for addressing sales and use tax compliance. IRS Audit Group is a premier IRS tax resolution firm that strives to achieve results that exceed expectations through our commitment to our clients. Our tax attorneys handle all complex and sophisticated matters locally and nationally.

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Why You Should Choose IRS Audit Group of Beverly Hills

With the variety of tax preparers available at your service, choosing the right one is the essential step to financial stability. Thankfully, the IRS Audit Group of Beverly Hills includes certified public accountants, enrolled agents, and tax attorneys who are eager to provide professional tax service. We work with the Internal Revenue Service (IRS) on your behalf and handle all communications necessary to resolve any issues.

We want to make you feel comfortable, you are sharing a lot of personal information with us after all … from your income, family and work life and social security number. We don’t take this responsibility lightly. At IRS Audit Group in Beverly Hills, CA we strive to develop a long-term relationship so you can count on us to do more than just crunch numbers. IRS Audit Group is honest, reliable and capable of handling everything from individual returns to complicated tax disputes and corporate matters.

As professionals, we welcome your questions – we offer a free consultation to help get initial concerns out on the table prior to working on your account. Our firm is committed to helping taxpayers and relieving their stresses over taxes. Whether you found us through a simple “IRS Audit Group Beverly Hills” search or asked around for referrals, we guarantee the same great service to each of our clients.

With a variety of services that help you understand tax processes and avoid confusion, we are experts at handling event the most frustrating issues with the IRS. While we specialize in audits, there is nothing we can’t handle – from avoiding problems in the future to finally putting ongoing ones to rest.

We have over a decade worth of experience, here at IRS Audit Group, closing countless cases from tax preparations to audits and everything in between. It is hard to beat our level of skill, education and expertise. Give us a call or visit our office in Beverly Hills for a consultation. We look forward to hearing from you and helping you out of a difficult situation.

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IAG Tax Season

Upcoming Tax Extension Deadlines – Friendly Reminder From IRS Audit Group

If you are one of the many taxpayers who requested an extension from the Internal Revenue Service (IRS) on filing their taxes earlier this year then your time is almost up. A filing extension is an exemption made to both individual taxpayers and businesses that are unable to file a tax return by the due date (approx. every April 15th). Individuals must have completed and filed IRS Form 4868 by the regular date of their return, however, for an automatic six-month extension.

If you filed your return over 60 days after the due date or extended due date, the minimum penalty is about $135 or 100 percent of the unpaid tax. If you can show reasonable cause, you don’t have to pay a late-filing or late-payment penalty. In case you don’t have it highlighted on your calendar, we’re here to remind you of the following tax extension deadlines:

September 17, 2018

  • Third-quarter estimated tax payments due for 2017.
  • Final extension deadline to file S-corporation tax returns for 2017 (Forms 1120, 1120A, 1120S)

October 15, 2018*

  • Final deadline to file individual tax returns for 2017 (Forms 1040, 1040A, 1040EZ).
  • Final deadline to file C-Corporation tax returns for 2017.
  • Final deadline to partnership tax returns for 2017.

*Keep in mind that after Oct. 15, the IRS will no longer accept an electronically filed tax return. After this deadline, you must mail in your tax return in order for it to be processed.

We are hoping this gives you enough advance notice so you can get started on necessary preparation to meet these deadlines, don’t panic if you missed any of them or aren’t on track to get everything in order by then … simply contact our team at IRS Audit Group for immediate assistance. Schedule a free consultation to review your documents and determine the quickest solution to be sure you take action and resolve any outstanding matters.

While your chances of going to jail or facing an audit are slim, the IRS always prefers immediate action, whether you haven’t filed yet or still owe taxes. You may face financial penalties, however, including interest, but this can all be taken care of with an installment agreement. So if you’re worried about paying a lump sum in one sitting, the IRS offers alternative options that work for your budget, as long as you qualify.

Contact us if you are having any other issues with the IRS. We can help with countless services that involve tax problems throughout the country. With offices in Newport Beach and Beverly Hills, IRS Audit Group professionals are knowledgeable and experienced in assisting those who need additional guidance when filing taxes.

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How to Manage State Tax Audit and Pay Right Amount – IRS Audit Group California

State Tax Audit

You feel like you are out of your mind when you’re busy at work and you got an email for tax audit.  Or a stone-faced man with a dark suit and a big briefcase appears in the doorway.  This is a terrible situation you exactly don’t have receipts for everything.  Instead of facing California State Tax Audit solo, hire a private audit expert like IRS Audit Group California for your help, they can guide you step by step how to recover yourself from California State tax audit.

The reality is that companies in California get audited for any number of reasons, but it’s valid to wonder what makes some businesses more likely to be audited than others?

What can business owners do to prevent a California State Tax Audit?

The following list identifies key activities the IRS actively looks for and outlines some ways your business can prevent an examination:

#1: Keep Personal and Business Expenses Separate

 Entrepreneurs attest that there’s a level of uncertainty when drawing the line between expenses, tax law where the IRS aggressively enforces that all business owners keep business and personal spending separate.  Even if you’re startup it’s essential to split up business expenses and personal expenses.

#2: Provide Proper Documentation for Tax Credits

 While providing documents for the tax credit you may need the help of a tax audit experts like IRS Audit Group California to claim tax credits, as claiming tax credits is a detailed process involving meticulous record keeping and complex calculations.

This is one more reason to have a certified tax professional (IRS Audit Group California) on your side.  Even if you are 100% eligible for these credits, calculating the actual reduction to your tax liability can be tricky.  The IRS is used to finding errors in calculations, making them likely to scrutinize each claim even more thoroughly.

 

#3: File Your Payroll Tax Returns:

The IRS is particularly harsh in enforcing fines for late payroll tax reporting.

You must file payroll tax returns for all compensation to employees.  The amount reported as your total compensation expense for income tax returns should then match the amount reported for the payroll tax.  Consultants like IRS Audit Group California help you in this regard.

#4: Follow the Filing Rules in Every Place You Do Business

If your business (property, payroll, or sales) has a presence in a state, you should look at the filing requirements for that state.

While 100% of your income is included on your federal return, if you have sales, locations, or employees in multiple states, apportionment of your income is required to determine your liability in each one.

#5: File forms 5471 or 5472 for foreign business

 If your business has foreign activities or shareholders, you should be aware of the required forms based on your type of business (forms 5471 or 5472).  Failing to file or filing late can result in a $10,000 penalty perform, per year! IRS Audit Group California provides service in this regard.

#6: Make Charitable Contributions in Cash Instead of Property

The IRS requires proof for most charitable donations, whether in the form of cash or property.  While cash donations are easily documented by a check or receipt; non-cash items like furniture or equipment require documentation of fair market value and tax basis.

#7: Proofread, proofread, proofread

 Be careful about wrong or missing social security numbers, math mistakes, errors in figuring credits or deductions and forms that are not signed or dated.

If your business does get audited.  Remain calm and don’t forget to hire external tax audit professionals like IRS Audit Group California, as claiming your own tax audit by own is a kind of invite the tax audit to your home.  The reality of being audited is that it happens to the best of us and it does not need to mean the end of your business.

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How to Approach Sales Tax Audit – Tips from IRS Audit Group Newport Beach

Tax

To deal with budget shortfalls, state governments revenue agencies continue stepping up their efforts in raising revenue through sales tax audits.

You never ask for it, but you have been selected for and will be notified of a sales tax audit. At that point in time you may get confused – What should you do and what you should not? Most companies are not regularly audited by the state for sales and use tax purposes, so it is unlikely you have previously handled an audit. While the requested lists of records and documents that will be reviewed appear straightforward, there is much more to handling a sales tax audit. There are a lot of potential pitfalls during the interaction with auditors that may occur as you address the questions they typically ask.

Here are a few tips to Manage Your Sales and Use Tax Audit from IRS Audit Group Newport Beach. The best practices as listed below need to be considered in such situation.

Hire an external representative tax expert. IRS Audit Group Newport Beach has a pool of experts specializing in State Sales Tax matter. Once you are identified for audit, it is better to initiate communication with experts. They can discuss the audit process with you, provide some background on various sampling methods, and provide insights on specific industry issues targeted by the state. Also, make them aware of the initial schedules vs. revised schedules.
Ask your tax expert from if it is appropriate to perform a refund study or reverse audit at the same time to identify potential opportunities for refunds. IRS Audit Group Newport Beach can provide immediate solutions to such questions.
Do not engage in contingent fee arrangements on questioned items by the auditor unless you have already made the first pass. Otherwise, you may be paying them on reductions for errors made by the auditor or obvious exempt transactions.
If sales state tax auditors are doing a refund study/reverse audit, their fee should not be based on savings in periods outside the audit period. Their fee should always be based on offsets actually granted by the state. Payment should be made at the end of the audit, or a provision should be included to reverse any offsets not allowed.
A sales tax audit is not an ordinary occurrence. Therefore, you need to invest the proper efforts internally or with external assistance from experts like IRS Audit Group Newport Beach.

Lastly, be ready to play defence. Do not assume all questioned sales and purchases are taxable. Familiarize yourself with the regulations of your state with the help of expert advice from IRS Audit Group Newport Beach. Once you are convinced that questioned item should not be assessed, go ahead and challenge it. Also, understand any sampling techniques employed by the auditor, and be sure samples used are representative of your operations. If you have not experienced a sales tax audit before, and unfamiliar with your state’s regulations, or you have identified significant problem areas in your self-review, you may want to consider engaging a tax advisor to assist in your defence.

IRS Audit Group Newport Beach professionals are knowledgeable and experienced in assisting companies undergoing state sales and use tax audits as well as conducting overpayment reviews. Let IRS Audit Group Newport Beach help you navigate the audit landscape.

 

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Defending State Tax Audits – IRS Audit Group Beverly Hills

State Tax Audits

Getting an audit notice from the state department of taxation used to be a scary experience. The IRS isn’t the only government agency that can send you a notice about your taxes. Agencies such as the California State Tax Audit, and the Board of Equalization can also inquire about the taxes you filed. The law places the burden on you to demonstrate that your state income tax return information is correct.

It is always unpredictable when it comes to getting an audit notice or an examination by the IRS. However, plenty of help is available by contacting experienced tax relief attorney like IRS Audit Group Beverly Hills to deal with the taxation authorities on your behalf.

How the State Taxation determines and What State Taxation Authority looking for in a Tax Audit?

State Income tax audits are done primarily as office audits. State taxation authorities use tax audits to determine if you properly reported your income, deductions, exemptions, and credits in your income tax filing. They may request you to provide supporting records in person, on phone, or by mail to prove that your filing is correct.

Auditors cross-match state and federal return data verify that all income reported on information returns has been included on the state return, that deductions taken on the state return are valid, adjust based on audits conducted by the Internal Revenue Service, and conduct domicile investigations.

State Tax Audit Defence Lawyer from IRS Audit Group Beverly Hills
Being selected for a state tax audit is not necessarily an indication of any tax fraud. Even if you don’t have any unfiled tax returns, and are certain that all information you have provided to the state taxation authority is correct, still you may get audited. The state tax auditor seeks to uncover honest record-keeping mistakes, as well as possible tax fraud. It is important to understand that any information you provide to the state tax examiner can and will be used against you.

It is always a good idea to be represented by a tax lawyer provided by from IRS Audit Group Beverly Hills, who understands how to deal with the state taxation authorities in a tax audit.
As an experienced tax attorney from IRS Audit Group, Beverly Hills will explain the standard procedure in a state tax and also elaborate their process to verify the accuracy of a taxpayer’s returns.

Hence, protect your rights by being represented by a tax attorney from IRS Audit Group Beverly Hills, who understands your situation, as well as state and federal tax code. The first and the best thing you can do in the event of a state tax audit is to invoke your right to legal counsel before answering any questions or providing any documentation regarding your case.

What Happens if the State Tax Auditor Uncovers Items which you Cannot Substantiate?
Even if the state tax auditor determines that you owe back taxes (plus any interest payments or penalties that may have accrued), there are several avenues that your tax attorney from IRS Audit Group Beverly Hills can help you. Depending on the situation, your attorney can help you to set up a tax payment plan, negotiate an offer in compromise, seek a penalty abatement or currently not collectible status, or file a state tax appeal.

If you have received notice of examination or documentation from the state taxation authority informing you of your rights during the state appeals process, you should act quickly to obtain legal tax representation. Contact RS Audit Group Beverly Hills California for a free initial consultation today at 1-888-300-6670.

 

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Top Seven Warning Signs That Can Initiate a Tax Audit by IRS

IRS Audit Tips

In general, no one really wants to be audited by the Internal Revenue Service (IRS) and to be frank, it’s a problem. There are chances of getting audited as the income level increases as well. It is better to play safe to avoid the burden and stress of an IRS audit.

Here is a summary of the reasons for getting audited

– Annual income
– Exclusion of income while filing returns
– Deductions claimed based on total income

In order to stay out of this IRS auditing, it is prudent to look into a few red flags (warning signs) which you take note of as follows;

Earning income from multiple sources

When you have multiple sources of income, say you are a freelancer, it may turn out for you hard to maintain all of the income year earned, and the much more likely you’re to leave out a payment. Any organization you work for is required to send the IRS copies of all 1099s and W-2 forms you receive. If the income you record doesn’t line up with those forms, that mismatch IRS will trigger at least a letter audit.
Unreported Income
Unreported income is a huge deal to the IRS. According to a recent IRS report, U.S loses hundreds of billions per year in taxes due to unreported income. So if you fail to showcase those earnings, the IRS will ask explanations.

Running own business

The IRS always have an impression that they can find more the unpaid tax from those who run own business. It’s always better to keep a good track of records if you are running own business. It is advisable to maintain in-depth reports, which consists of business associated receipts regarding purchase etc. in a good categorized manner is a must when filing the returns.

Foreign Accounts & Assets

If you keep the overseas account, it could certainly raise questions in the minds of IRS specialists. Also, the IRS is intensely focused on any individuals who hold an offshore bank or any kind of security accounts. Also, the residents and citizens of U.S who hold any foreign assets are required to report it to the IRS on form 8938.

Involving in huge money transactions

The IRS obtains many reports concerning the excess amount of currency transactions via bank deposits and withdrawals, casino visits etc. Even many banks also fill out an IRS reporting form for cash transactions of over $5,000. It is advisable to take note of these transactions and be prepared to give an explanation in the case asked for.

Hiding the taxable income

If you file a return which doesn’t match up with the records sent to the IRS by your employer, you are most likely to be called into account as the IRS gets all the copies such as 1098’s, 1099’s and W-2’s. Hence, it’s always better to file a return on all your taxable income.

Corporate deductions and Personal expenditures

It is always better to keep corporate and personal expenditures at a distance as much as possible because the IRS experts will have all the particulars regarding your family members and are greatly skilled to check the significant purchases made immediately prior to birth dates or anniversaries.

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Why it is Important to Pay Taxes

 

IRS Tax

Source: Pexels

Tax is a compulsory payment or contribution made by citizens of a country to the government for the general benefit of the society in which they live.  We pay taxes at different level viz., federal, corporate, state, and municipal/local governments enact tax laws.

Why taxes are important for economic growth

It is a fact that governments need sustainable funding for social programs, and public investments to promote economic growth and development.  Such programs provide health, education, infrastructure, and other amenities which are important to achieve the common goal of a prosperous, functional and orderly society. Moreover, there is an obligation on the part of the government to maintain the stable economy. Generally, wild fluctuations in prices are harmful to the economy of a country.   Declining prices for example, as witnessed during the Global Financial Crisis, causes depression which leads to a fall in company profits, saving, investments, employment and the Gross Nation Product (GDP).  Conversely, constant rising price creates problems of discouraging savings and further weakens incentives to improve efficiency on the part of entrepreneurs.   In order to support the government program, there is a need to raise revenues from potential sources, and Internal Revenue Service (IRS) is one such agency to manage tax collection.  IRS is the revenue service agency of the federal government and is part of the Bureau of the Department of the Treasury.

Tax collection or payment is not merely a payment against availing public and services.  It is a key ingredient of the social contract between citizens and the country.  By paying tax you are contributing to nation building as well you are creating a record about your financial activities.  This will help you to improve your creditworthiness in order to process your request for financial assistance/loan from public agencies.

Here is a quick glance over how tax payment plan of federal, state, and local governments utilized.

Federal

  • Largest national expense is payments to seniors for Social Security.
  • The next largest service is defense. That includes support agencies like Homeland Security and the Veterans Administration.
  • The third largest service is Medicare. Payroll taxes only cover 60% of these expenses.  Like Social Security, you are paying for services you’ll receive after you turn 65.
  • Medicaid is the fourth largest service. You only receive this if your income falls below a certain level.
  • Other welfare and government retirement programs.
  • All other government agencies include Health and Human Services, Education, and NASA.

State

  • The largest state expenditure was for social services, including Medicaid, welfare, and public housing.
  • Most of this was for employee retirement, education, transportation, and health and hospitals.

Local

  • The largest local expenditure for education and libraries.
  • Water and sewer services cost Administration toward retirement, but many cities are underfunded.
  • Local government paid police and fire services, transportation, and health and hospitals.
  • Welfare and public housing cost and parks.

Conclusion

Taxes ensure that government can build and maintain the necessary infrastructure – education, healthcare, transportation systems – to attract investment and businesses, and thrive in a competitive global economy and allow citizens, residents and businesses to do things together that we could never do on our own.

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Reporting Requirements for Foreign Assets (FBAR)

The “offshore accounts” is usually referred to those account holders who are trying to dodge tax responsibilities. Especially after the Panama Papers, many observers are quick to assume the worst when someone holds assets outside of the United States.

Clearing the FBAR
For a U.S. citizen or resident having a financial interest in a non-U.S. bank or securities account, he or she must report it on FinCEN Form 114, also known as the FBAR. The only exception is for that account where the aggregate value of their foreign accounts doesn’t exceed $10,000 during one year. This rule also applies to U.S. entities, partnerships, corporations, estates, limited liability companies and trusts. If someone maintained foreign financial accounts, which are than $10,000 at any time in the calendar year, he must mention this fact on Form 1040, Schedule B of his income tax return.

Failing to file a Foreign Bank Account Report (FBAR) can carry a civil penalty of $10,000 for each non-willful violation. If violation is found to be willful, the penalty is the greater of $100,000 or 50 percent of the amount in the account.

There are precise terms that must be fulfilled to file FBAR’s.

General
Any U.S. person, whether citizen or resident foreigner, should file an FBAR if:
1. The U.S. taxpayer has a financial interest over at least one foreign account.
2. This foreign account is more than $10,000 at any time during the calendar year.

1. Delinquent FBAR Submission.
U.S. taxpayers who:
(i) Have not been communicated by the IRS about non-submission,
(ii) Are not under criminal analysis by the IRS.
(iii) Have not consulted the IRS about their inability of submission.

2. Streamlined Offshore Procedure
This Procedure contains two subcategories domestic and foreign.
To be eligible the taxpayer:
(i) Must be a citizen or permanent resident of the United States.
(ii) Must meet the non-residence requirement.

3. Offshore Voluntary Disclosure Program.
The program is planned to assist taxpayers resolve penalty obligations and defend them from criminal charge. If a taxpayer joins this program, the IRS will recommend that the taxpayer not be subjected to criminal trial. Taxpayers must voluntarily disclose the most recent 8 years period of delinquent filing.

Specified Foreign Assets
U.S. citizens and residents who hold specified foreign assets must mention them to the IRS on Form 8938. Nonresident aliens must also file Form 8938 if they hold specified foreign assets.

Transfers and Transactions
If a U.S. person or entity transfers property to a foreign corporation, the transferor must file Form 926, “Return by a U.S. Transferor of Property to a Foreign Corporation.”

If the transaction is with a foreign trust, one must report any transfers, whether he is donor or recipient. In this case, he will use Form 3520, “Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts.”

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