Austin Tax Defense Law Blog

Taxes are a topic that some people truly hate talking about. They can be stressful, and it can seem like all your hard work results in sending money to the government.

If you're sent a letter that the IRS is going to complete an audit, it's time to take steps to prepare. This is something you may want to include your attorney in, since protecting yourself against the Internal Revenue Service is important.

There are a number of intricacies when it comes to Internal Revenue Service (IRS) tax law. One of the bigger problems that businesses run into is misclassification of employees. While classifying an individual as an independent contractor rather than an employee can save a business on tax withholdings, thereby shifting that burden to the contractor, an improper classification can lead to owed back taxes and significant penalties.

If you're worried about whether workers have been misclassified, then you may want to look at the factors considered by the IRS when determining whether an individual is an employee or an independent contractor. There are three main factors that are considered in this determination, including behavioral control, financial control and the relationship between the parties. Although there is a form that can be utilized to determine how the IRS will classify a worker before making that determination on one's own, there may be relief even if the IRS swoops in, find misclassification has occurred, and levies penalties and back taxes.

Dealing with accounting and payroll taxes can be a nightmare, primarily thanks to the IRS. It's rules and regulations, as well as IRS tax law, dictate how these matters should be handled, and any misstep, even those that are seemingly minor, can have enormous ramifications. For this reason, businesses, business owners and others who are responsible for handling payroll taxes should think about seeking out legal assistance when accused of mishandling tax-related matters.

This may especially be the case when accused of being subjected to the trust fund recovery penalty. This penalty is imposed upon those who are responsible for withholding or collecting employment and/or income taxes but who fail to do so in accordance with the law. The penalty only comes into play when the party who bears this responsibility willfully fails to live up to it. There is no need for the government to prove intentional wrongdoing, though. In fact, so long as the IRS can show that a party knew or should have known of owed taxes and disregarded the requirement or was indifferent to it, then it can legally impose the trust fund recovery penalty.

Being married has its advantages. Amongst them are several tax benefits that can lessen your obligation to the IRS each year. Yet, there are instances where one spouse's actions or inaction has a significant effect on the family's tax liabilities, which may not arise until after an audit. When a family finds itself strapped with hefty tax liabilities, a spouse who feels like he or she shouldn't be on the hook for tax payments may take action in an attempt to protect themselves.

One step that can be taken is to seek innocent spouse relief. If granted, this type of relief removes all tax liability from an innocent spouse. In order to qualify, though, certain requirements must be met. For example, underreported income and improperly reported deductions and credits must be solely attributable to the other spouse. Additionally, the spouse who seeks relief must show that he or she was unaware of these errors at the time of signing the tax return. The IRS, or the court, must also find that, given all of the facts at hand, finding the innocent spouse liable for the tax liabilities would be unfair.