From juggling operations to managing employees, as a business owner you likely wear many hats. Are you also in charge of managing expenses and payroll, while staying on top of paying your taxes? What happens when there's a financial struggle? It can be tempting to dip into or "borrow" from the payroll taxes you withheld, and then replace the funds as business picks up.
Wells Fargo & Co. filed a federal case concerning refunds in interest payments from companies with which it had merged. The appeals court recently ruled on the case in a partial win for the banking company. What does this have to do with you?
We write frequently in this blog about employment taxes and the troubles with the IRS that failure to pay those taxes can cause. Sometimes, the troubles come despite the best of intentions. For example, when employers experience cash flow problems, temporarily tapping payroll tax funds can seem to make sense at the time.
Part of running a business in Southern California is meeting one's payroll tax obligations to the Internal Revenue Service. When times are tough, the money may not be there to satisfy one's tax bill, and that is when the IRS may take action. At first, the agency may assess penalties and interest against the debt owed, which can grow the balance substantially.
For most working Americans every penny counts -- especially during this economic recession where salaries are down but many daily expenses remain high. So for many Californians who earn a salary of $50,000 per year, an extra $20 per week actually does make a difference. That amounts to just over $1,000 per year.
The past few years have undoubtedly been difficult on a number of California small businesses. Owners and entrepreneurs have had to tighten their belts to meet the realities of an economy slow to embrace a lasting recovery. One popular strategy has been to hire independent contractors to perform work because a company can reduce the benefits it pays out while incurring lower payroll taxes.
It is not uncommon for an Orange County resident to be subjected to a tax lien or levy for unpaid taxes. A lien is type of security interest in property imposed due to a debt. A tax lien is often in the form of a wage or bank levy. A wage levy is essentially like having your wages garnished. When the IRS imposes a bank levy, it places a freeze on a taxpayer's bank account and reserves the right to use the bank account funds to pay a tax debt. Additionally the IRS may seize property or other assets that are equal in value to a tax debt.
This week we have covered an IRS ruling against one of California's biggest medical marijuana dispensaries which resulted in a $2 million tax debt from disallowed payroll taxes and other deductions. The CEO of Oakland's Harborside Medical Center said that the IRS' logic in disallowing his business deductions did not make sense in light of an allowed deduction for the actual purchase of pot.
Yesterday we discussed the huge payroll tax debt issues that many marijuana medical dispensaries potentially face after the IRS decided to disallow all deductions for these businesses. The IRS' decision is based on a provision in the tax code that bans deductions based on the trafficking of controlled substances such as marijuana.