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Orange County Tax Law Blog

3 Tips for finding a qualified tax preparer

The largest tax code changes in the past 30 years are now fully in effect. This has led to more questions and caused some confusion this tax season. For many who may have done their own taxes in the past – especially small business owners – it is a good year to seek professional assistance.

One thing that has remained the same is that unscrupulous tax preparers continue to sell schemes to unlawfully reduce tax bills. From manufactured or inflated business deductions to incorrect application of the 20 percent flow through rules, these issues can even amount to fraud. You can avoid these problems by following several tips.

Senators call on IRS to crackdown on tax crimes

A group of senators recently released a letter to the Internal Revenue Service (IRS) calling on the agency to adjust its practices and conduct more efficient audits. The Senators behind the letter include U.S. Senator Dick Durbine (D-IL), Elizabeth Warren (D-MA) and Bernie Sanders (I-VT).

Tax filing deadline looms — what if your business can’t make it?

The Internal Revenue Service (IRS) requires businesses to file tax returns by March 15, 2019. A failure to file on time can result in penalties. The easiest way to avoid the penalty is to file on time. If your business is unable to meet the March 15 deadline, consider requesting an extension.

Businesses that fail to file on time or get an extension will likely face a financial penalty.

Surprise tax bill after divorce? Innocent spouse relief may help

Divorce thinking often begins years before service of a divorce petition. Spouses can be known to get creative with schemes to hide income as well as financial mistakes.

How can this affect your tax obligation? When a soon-to-be-ex spouse fails to disclose income or overstates deductions, an audit could lead to a large tax assessment with penalties and interest. Applying for innocent spouse tax relief could relieve you of joint and individual responsibility for the tax bill.

IRS may ramp up tax audits for gig economy

When people hear about the Internal Revenue Service (IRS), they often think of taxes and audits. Occasionally, it is not the taxpayers that get audited. Occasionally, the IRS gets audited.

Why would the IRS get audited? A separate government agency recently audited the IRS to determine whether or not the agency was ensuring taxpayers meet their tax obligations. The Treasury Inspector General for Tax Administration (TIGTA) conducted the audit and focused specifically on how the IRS handled self-employed taxpayers. Ultimately the agency found the IRS had room for improvement.

Slower start to 2019 tax season

The IRS did a commendable job of starting the 2019 tax season on time. Generally, one of the peaks in the season occurs right away with those expecting refunds wasting no time to get their money back.

This year, the number of returns filed in the first full week was down 12 percent from 2018 (16,035,000 from 18,302,000). Even with fewer filings, processing times were taking longer. Twenty-five percent fewer returns were processed in the first week when compared year over year.

How did the shutdown hurt taxpayers?

Imagine needing to talk to an actual person at the IRS to stop the pending seizure of your savings. For roughly three weeks, no one answered the phones. The Service was, however, still working tax collection cases.

If you start working on your taxes in the next couple weeks and have a question, consider this: Only 48 percent of people who called reached a live person. This is drastic change considering that 86 percent of people who called for assistance during the 2018 tax season got it.

State-and-local tax deductibility: an update on the new cap

If you are a Californian with a high income, the $10,000 cap placed by the federal tax overhaul on state-and-local tax deductibility is about to hit you for the first time.

Here are three important things to know about the status of the change.

Online retailers will soon need to collect California sales taxes

On April 1, 2019, a new California Department of Tax and Fee Administration (CDTFA) rule will go into effect. It requires out-of-state online retailers who have annual California transactions of 200 or more or generate more than $100,000 in sales from Californians to collect and remit sales taxes.

This closes a loophole that allowed some to buy merchandise online from out-of-state firms and avoid paying state sales tax (7.25 percent) and local sales taxes (which vary based on the county and city, for example totaling 7.75 percent in Irvine versus 10.25 percent in Santa Monica). As many as 27,000 companies could be affected.

Franchise Tax Board makes SCOTUS arguments in residency case

If you live or work in more than one state, how does that affect your state taxes?

There are of course numerous aspects to this broad question. For example, the question of whether you have to file a California tax return does not depend entirely on residency; it also depends on income.

In this post, we'll update you on a long-running dispute about residency and state taxes that California and Nevada have been litigating for years.