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Atlanta Tax Law Blog

Can a corporation be an individual for tax purposes?

The debate over whether a corporate entity can be considered an individual can be considered a taxpayer has garnered a great deal of debate. Generally, speaking, corporations are not individuals for tax purposes. While there may be worthy circumstances for an exception to this rule, corporate entities routinely lose such arguments.

A recent example was chronicled in an report. The IRS issued a tax levy onto a small Oklahoma nursing home for failing to pay its quarterly taxes. The nursing home was located in a rural community of less than 3,000 residents and had a limited operating budget. It contested the levy, claiming that it would create economic hardship given that it was already experiencing substantial financial difficulty. 

Discharging tax debt from late filed returns: a quick look at some recent cases

Previously, we began looking at the topic of discharging tax debt in bankruptcy. As we noted last time, certain types of tax debt are dischargeable in bankruptcy, while others are not. Speaking generally, older tax debt is dischargeable in bankruptcy, while “fresh” tax debts are not. What, though, about tax returns that are filed late?

Two recent federal cases dealt with this issue. In one, it was decided that late filed tax returns do not satisfy the definition of “returns” under federal law. The basis for that decision was that late filed tax forms do not fulfill the requirement of being an honest or reasonable attempt to comply with tax law. 

Can I discharge tax debt in bankruptcy?

Bankruptcy is an important safety valve recognized by the legal system which gives individuals strapped with unmanageable debt the opportunity to either catch up on that debt by reorganizing themselves financially or by liquidating assets and paying off creditors. Whether bankruptcy proceedings involve a business or an individual debtor, one of the most important aspects of the process is discharge.

Discharge works differently in different forms of bankruptcy, but it refers to the ability of bankruptcy courts to remove a debtor’s legal obligation to pay any debts that are discharged. Not every type of debt may be discharged in bankruptcy, and some types of debt may be dischargeable under certain conditions. 

Business deductions can pose problems for small businesses

Tax filing issues are often problematic for small business owners. This is often due to the simple fact that they have not kept up to date on current tax laws. One issue that can be particularly troublesome is business deductions.

Business deductions must be valid, and they must be properly recorded and the receipts made available in the event the business is subjected to an Internal Revenue Service audit. There is, however, one other issue concerning deductions, and it has to do with fraud.

Tax Court decision opens up way for employers to challenge payroll tax obligations

Previously, we began looking at the issue of worker classification and the costs employers can face when they make mistakes in this area. As we noted, employers who misclassify workers may end up having to pay taxes twice if they are unable to provide proof that an employee paid the required taxes.

In many cases where an employer is faced with additional costs due to worker misclassification, the employer chooses to settle with the IRS for reduced tax rate. Challenging the IRS is possible, but it is often too costly and time-consuming. That being said, a recent tax case may make it a bit easier for employees to pursue a case in court if they are willing to foot those costs. 

Worker misclassification and employment, payroll taxes: when the IRS finds a mistake

Worker classification is an important issue for employers as there are tax implications that have to be considered. For workers classified as employees, there are income taxes that must be withheld or paid, including payroll taxes for Social Security and Medicare. Employers who fail to withhold payroll and income taxes for employees can face issues with the IRS, but there is no such requirement for independent contractors.

One problem in this area is that the difference between employees and independent contractors is not always clear, and is highly dependent on the facts and circumstances surrounding the work performed. Generally speaking, the key factors are the degree of control exercised by the employer and the amount of independence exercised by the worker. The more control the employer has over the worker, the more likely it is that the worker should be classified as an employee. 

Corporations: work with an experienced attorney in IRS audits

For businesses, correct and timely filing of taxes is an important, ongoing task. Different businesses are, of course, taxed different ways, and it important for every business to establish policies and procedures for documenting tax-related matters and for correctly completing filings on time.

Tax issues can come up with any businesses, and can involve not only the tax obligations of the business itself, but also of the individual owners. When mistakes are made, tax authorities will initiate an audit, which may lead to further investigation, particularly if the case is referred for criminal prosecution. 

4 common mistakes to avoid when it comes to your personal taxes

A common saying is that the only two things you can count on in life are death and taxes. While this is true, you should not pay more than the law requires when it comes to your personal taxes. Many filers miss exemptions and deductions because tax law is so complicated, and they end up paying more than they should.

From miscalculations to misspelled names, even the smallest mistake can cost you money that you should not have to pay. To help keep money in your pocket, there are four mistakes you should avoid when filing your personal taxes.

Tax credits to help rural GA communities signed into law

Earlier this week, Governor Nathan Deal signed into law a measure that, according to supporters, will provide significant tax relief to rural communities. The bill, which passed by a narrow margin, provides $60 million in tax credits to companies that invest in businesses in rural Georgia communities. The law, it is hoped, will provide incentive for businesses to put money into rural communities, many of which are struggling with high unemployment and slow economic growth.

Despite its passage, the measure is a controversial one, with opponents saying it is likely only to benefit several national capital companies. Supporters point out that the measure would impose financial penalties on companies that fail to create new jobs, but it isn’t clear how effective this will be. 

“The Jersey Shore” actor faces new tax fraud charges, pleads not guilty

Mike “The Situation” Sorrentino, known for his time on the MTV series “The Jersey Shore,” is currently in the midst of a tax case involving charges of fraud. According to federal tax authorities, Sorrentino and his brother set up two businesses to capitalize on his fame from his time on reality television.

Those companies were allegedly used to mix business and personal funds, and Sorrentino is accused of failing to pay income taxes for two years, failing to file a return at all for one year, and filing a false return for one of the businesses. His brother is accused of falsifying business records that had been subpoenaed by a grand jury. 

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Located in Atlanta, The Peck Group, LC, represents clients nationwide. Regionally, we are committed to serving clients in Fulton County and throughout the state of Georgia.