Whether on purpose or by mistake, taxpayers sometimes find themselves years behind on filing their tax returns. Sometimes people are lucky and decide on their own to file past due tax returns and move on with their life. Others have the decision made for them when an IRS agent knocks on their door. Regardless, when you are significantly behind on your tax return filings, you should seek professional help to ensure you can minimize penalties and, hopefully, reduce the taxes you need to pay. Continue reading “Didn’t File Tax Returns? The IRS Offers Solutions for Nonfilers”
Despite common belief, taxes can be discharged sometimes through either a Chapter 7 or Chapter 13 bankruptcy. In fact, bankruptcy is often the best option for many with tax debts. A tax attorney will typically be familiar with both the tax law and non-tax law options available to you and should be able to point you toward the best solution. Continue reading “Taxes and Bankruptcy in Maryland”
A divorce comes with many difficult challenges, but those involved also need to consider the tax consequences of the divorce. Tax issues can result from a number of areas. Of course, the parties will no longer be able to use their married status for their tax returns, but the divorce property settlement itself can cause problems if the tax consequences of the settlement are ignored. Continue reading “Maryland Divorce & Tax Issues”
If you are unable to pay the Internal Revenue Service for taxes you owe, you may be able to qualify for a tax payment plan. The IRS calls such payment plans an Installment Agreement. Your state, including Maryland, also may offer similar tax payment plans.
While most would prefer to obtain an offer in compromise, which reduces the total tax debt, many will not qualify because either their income is too high (by IRS standards) or the taxpayer has too many assets, which includes home equity. Thus, that taxpayer’s only option may only be to request a payment plan. Continue reading “Tax Installment Agreements – Payment Plans”
Choosing an entity for your business can be a difficult decision. There are many types of entities available, and you are not limited to forming an entity in your state. Further, the entity you choose does not necessarily determine how the entity will be taxed. For instance, you may choose to form a Maryland LLC but also choose to have it taxed as an s-corporation. The decision depends upon many factors including: the business purpose, the property to be owned, expectations to terminate or sell the business, the owner’s estate planning concerns, and, of course, taxes. There is no universal “best entity”, and choosing the proper entity requires every business to be individually analyzed.
Most states, including Maryland, provide you with the following popular state entity choices: the sole proprietorship, the general partnership, the limited liability company, and the corporation. Other entities for more specialized purposes also exist, such as the limited partnership and the professional association (a P.A. or P.C.).
With Maryland tax audits increasing, you should ensure your company is prepared. An ongoing, organized approach to preserving necessary documents will streamline a sales tax audit and may even lead to tax refunds. First, beware, a state auditor visiting your office for a sales tax audit isn’t required to keep the focus solely upon sales taxes. A typical audit may cover other area such as your payroll taxes, and information obtained through the audit can lead to income tax adjustments as well. So, while a sales tax deficiency may only cause a minor sales tax adjustment, the revenue and expense information obtained can lead to sizable state income tax adjustments. Further, since states share their income tax adjustments with the IRS, you may trigger a federal income tax audit and adjustment as well. Continue reading “Maryland Sales Tax Audit Defense”
Your company may need a sales tax matrix or taxability guide to ensure employees know how to fullfill their sales and use tax duties. Sales and use taxes are inherently complex, in part, because each state’s rules vary. This leaves many tax departments ill-equipped to adequately maintain every tax and accounting responsibility. Sales and use tax requirements do not only concern tax departments as accurate reporting can require the efforts of any employee with the ability to pay a bill or issue an invoice. Continue reading “Sales Tax Matrices and Taxability Guides”
Many companies discover they did not file required state tax returns, but they do not know how to address the issue. States understand that taxpayers often do not uncover income tax or sales tax filing obligations until a potentially large tax bill makes coming forward difficult, if not impossible. Most states provide voluntary disclosure programs to bring these reluctant, but otherwise law-abiding, taxpayers back into the flock. The voluntary disclosure programs forgive all but the most recent tax years and reduce or eliminate penalties and interest. Continue reading “Voluntary Disclosure Agreements”
All states are becoming more aggressive in locating non-filing businesses, particularly those operating largely outside their state. Unfortunately, many businesses first realize their filing obligation to another state when visited by the state’s auditor. An analysis of your company’s connections, or “nexus”, to the states it touches, directly and indirectly, will be beneficial regardless of whether your business is a start-up or established, expanding or contracting.
Each state’s laws for determining whether your company has a filing obligation vary, but all states are limited by the “minimum contacts” standards established under the U.S. Constitution. Adding to many companies’ confusion, there are separate standards applied for sales and use tax nexus and income tax nexus. For instance, a company with a representative in a state may not have an income tax filing obligation but may have a sales tax obligation. Continue reading “State Tax Nexus Reviews & Studies”
Companies can manage risks, lower use taxes, and reduce tax administrative burdens by using managed compliance and effective tax rate agreements. In an effort to streamline the tax compliance process, most states now allow companies to automate their sales and use tax compliance through tax agreements. These agreements operate on a prospective basis whereby “effective rates” can be assigned to the company’s expense accounts.
The states use numerous names for such agreements, including: managed compliance agreements, formulary sales and use tax agreements, single use tax compliance agreement, negotiated rate agreements, alternative use tax payment methods, simplified procedure agreements, or, as known here in Maryland, effective rate agreements. Regardless of the chosen name, the states use similar processes to form the agreements and the companies often realize fantastic results. Continue reading “Managed Compliance & Effective Tax Rate Agreements”