Storm victims in 4 states facing expiration of IRS tax relief: File and pay by July 31; parts of Arkansas, Indiana, Mississippi and Tennessee.

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Individuals and businesses in parts of four states where Federal Disaster Relief was announced are facing a deadline of July 31, 2023 to file their 2022 federal income tax returns and make tax payments.  You can file an extension to get additional time to October 16, 2023 to file your tax returns but it does not extend the time to pay.

Areas With July 31, 2023 Deadlines:

The IRS announced on April 3, 2023 that March 31 Storm victims in parts of Arkansas now have until July 31, 2023 to file various federal individual and business tax returns and make tax payments.

The IRS announced on April 18, 2023 that March 31/April 1 Storm victims in parts of Indiana now have until July 31, 2023 to file various federal individual and business tax returns and make tax payments.

The IRS announced on March 28, 2023 that March 24 and 25 Storm victims in parts of Mississippi now have until July 31, 2023 to file various federal individual and business tax returns and make tax payments.

The IRS announced on April 10, 2023 that March 31 Storm victims in parts of Tennessee now have until July 31, 2023 to file various federal individual and business tax returns and make tax payments.

Other Areas Having Extended Deadlines:

The IRS announced on January 10, 2023 that California storm victims have until May 15, 2023 to file various federal individual and business tax returns and make tax payments. Subsequently on January 13, 2023 the California Franchise Tax Board (“FTB”) announced that California storm victims also have until May 15, 2023 to file various California individual and business tax returns and make tax payments.  Then on February 24, 2023 the IRS announced that their extended deadline for eligible California storm victims would now be extended to October 16, 2023.

IRS Tax Relief Details

The IRS is offering this relief to any area designated by the Federal Emergency Management Agency (FEMA), as qualifying for individual assistance.

For Arkansas – Currently, relief is available to affected taxpayers who live or have a business anywhere in Cross, Lonoke and Pulaski counties in Arkansas.

For Indiana – Currently, relief is available to affected taxpayers who live or have a business anywhere in Allen, Benton, Clinton, Grant, Howard, Johnson, Lake, Monroe, Morgan, Owen, Sullivan and White counties in Indiana.

For Mississippi – Currently, relief is available to affected taxpayers who live or have a business anywhere in Carroll, Humphreys, Monroe and Sharkey counties in Mississippi.

For Tennessee – Currently, relief is available to affected taxpayers who live or have a business anywhere in Cannon, Hardeman, Hardin, Haywood, Lewis, Macon, McNairy, Rutherford, Tipton and Wayne counties in Tennessee.

For California – Currently, relief is available to affected taxpayers who live or have a business anywhere in Colusa, El Dorado, Glenn, Humboldt, Los Angeles, Marin, Mariposa, Mendocino, Merced, Monterey, Napa, Orange, Placer, Riverside, Sacramento, San Bernardino, San Diego, San Joaquin, San Luis Obispo, San Mateo, Santa Barbara, Santa Clara, Santa Cruz, Solano, Sonoma, Stanislaus, Sutter, Tehama, Ventura, Yolo, and Yuba counties.

The current list of eligible localities is always available on the disaster relief page on IRS.gov.  The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area.

The additional relief postpones until October 16, 2023 (California) or July 31, 2023 (Mississippi, Arkansas, Tennessee and Indiana), various tax filing and payment deadlines, including those for most calendar-year 2022 individual and business returns. This includes: individual income tax returns, originally due on April 18, 2023 (May 15, 2023 per the previous IRS announcement); various business returns, normally due on March 15th and April 18th of 2023; and returns of tax-exempt organizations, normally due on May 15, 2023.

Among other things, this means that eligible taxpayers will also have until October 16, 2023 (California) or July 31, 2023 (Mississippi, Arkansas, Tennessee and Indiana) to make 2022 contributions to their IRAs and health savings accounts.

In addition, farmers who choose to forgo making estimated tax payments and normally file their returns by March 1, 2023 (May 15, 2023 per the previous IRS announcement) will now have until October 16, 2023 (California) or July 31, 2023 (Mississippi, Arkansas, Tennessee and Indiana), to file their 2022 return and pay any tax due.

The October 16, 2023 (California) or July 31, 2023 (Mississippi, Arkansas, Tennessee and Indiana) deadline also applies to the estimated tax payment for the fourth quarter of 2022, originally due on January 17, 2023. This means that taxpayers can skip making this payment and instead include it with the 2022 return they file, on or before October 16, 2023 (California).

The October 16, 2023 (California) or July 31, 2023 (Mississippi, Arkansas, Tennessee and Indiana) deadline also applies to 2023 estimated tax payments, normally due on April 18th, June 15th and September 15th of 2023. It also applies to the quarterly payroll and excise tax returns normally due on January 31st, April 30th and July 31st of 2023.

FTB Tax Relief Details

On March 10, 2023 the FTB announced that it too would follow IRS allowing taxpayers impacted by 2022-23 winter storms to have an extension to October 16, 2023 to file individual and business tax returns and make certain tax payments.  This includes:

  • Individuals whose tax returns and payments are due on April 18, 2023.
  • Quarterly estimated tax payments due January 17, 2023, March 15, 2023, April 18, 2023, June 15, 2023, and September 15, 2023.
  • Business entities whose tax returns are normally due on March 15 and April 18.
  • Pass-through entity (PTE) elective tax payments due on March 15, 2023 and June 15, 2023.

However, the postponement of time to file and pay does not apply to residents and businesses located in the following 5 counties: Imperial, Kern, Lassen, Plumas, and Sierra. Additionally, if your principal residence or place of business is in Modoc or Shasta counties, income tax filing and payment deadlines that fall between February 21, 2023, and August 15, 2023, are due August 15, 2023.

Residents and businesses located in the above 5 non-qualifying counties must file and pay by the normal established deadlines. This includes:

  • Individuals whose tax returns and payments are due on April 18, 2023.
  • Quarterly estimated tax payments due January 17, 2023, March 15, 2023, April 18, 2023, June 15, 2023, and September 15, 2023.
  • Business entities whose tax returns are normally due on March 15 and April 18.
  • PTE elective Tax payments due on March 15, 2023, and June 15, 2023.

Tax Planning Tip

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2023 return normally filed next year), or the return for the current year (2022).

Be sure to write the FEMA declaration number on any return claiming a loss.  That number being: “FEMA-3591-DR” for California or “4697-DR” for Mississippi or “4698-DR” for Arkansas or “4701-DR” for Tennessee or “4704-DR” for Indiana.

When filing a California return claiming a loss, be sure to write the name of the disaster in blue or black ink at the top of your tax return to alert FTB.

Importance To Preserve Records

Keep in mind that the IRS has up to three years to select a tax return for audit. The FTB has up to four years to select a tax return for audit. In some cases this period is extended to six years. When a taxpayer is selected for audit, the taxpayer has the burden of proof to show that expenses claimed are properly deductible. Having the evidence handy and organized makes meeting this burden of proof much easier.

Essential Records to Have for a Tax Audit

If you are getting ready for a tax audit, one of the most important things to do is gather and organize your tax records and receipts. There’s a good chance that you have a large amount of documents and receipts in your possession. No matter how organized you are, it can be a daunting task to collect the right pieces and make sure that you have them organized and handy for the audit conference.

We have seen many tax audits that hinge on whether or not the taxpayer can provide proper documentation for their previous tax filings. A tax lawyer in Orange County or elsewhere can make sure that the documentation is complete and proper.  By submitting this to your tax attorney in advance of the audit, your tax attorney can review your documentation and determine if there are any gaps that need to be addressed before starting the dialogue with the IRS agent.

So what are the most essential tax records to have ahead of your audit? Here are a few must-have items:

  • Any W-2 forms from the previous year. This can include documents from full-time and part-time work, large casino and lottery winnings and more.
  • Form 1098 records from your bank or lender on mortgage interest paid from the previous year.
  • Records of any miscellaneous money you earned and reported to the IRS including work done as an independent contractor or freelancer, interest from savings accounts and stock dividends.
  • Written letters from charities confirming your monetary donations from the previous year.
  • Receipts for business expenses you claimed.
  • Mileage Logs for business use of vehicle.
  • Entertainment and Travel Logs for business

Tips On Reconstructing Records

Reconstructing records after a disaster is important for several reasons including insurance reimbursement and taxes. Most importantly, records can help people prove their disaster-related losses. More accurately estimated losses can help people get more recovery assistance like loans or grants.

Whether it’s personal or business property that has been lost or destroyed, here are some steps that can help people reconstruct important records.

Tax records

Get free tax return transcripts immediately using the Get Transcript on IRS.gov or through the IRS2Go app.  Tax return transcripts show line-by-line the entries made on your Federal income tax returns.  The most three recent tax years are available.

Financial statements

People can gather past statements from their credit card company or bank. These records may be available online. People can also contact their bank to get paper copies of these statements.

Property records

  • To get documents related to property, homeowners can contact the title company, escrow company or bank that handled the purchase of their home or other property.
  • Taxpayers who made home improvements can get in touch with the contractors who did the work and ask for statements to verify the work and cost. They can also get written descriptions from friends and relatives who saw the house before and after any improvements.
  • For inherited property, taxpayers can check court records for probate values. If a trust or estate existed, taxpayers can contact the attorney who handled the trust.
  • When no other records are available, people should check the county assessor’s office for old records that might address the value of the property.
  • Car owners can research the current fair-market value for most vehicles. Resources are available online and at most libraries. These include Kelley’s Blue Book, the National Automobile Dealers Association and Edmunds.

Develop And Implement Your Backup Plan

Do not wait for the next disaster to come for then it may be too late to retrieve your important records for a tax audit or for that matter any legal or business matter. And if you do get selected for audit and do not have all the records to support what was claimed on your tax returns, you should contact an experienced tax attorney who can argue the application of your facts and circumstances to pursue the least possible changes in an audit.

The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), Los Angeles and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.  Also if you are involved in cannabis, check out what a cannabis tax attorney can do for you.  And if you are involved in cryptocurrency, check out what a bitcoin tax attorney can do for you.

Can You Go To Jail For Not Filing Tax Returns? Beware this can happen to you.

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A man who did not file tax returns for 8 year in a row pleaded guilty before a Federal District Court Judge to evading his income taxes and now must serve 57 months in jail.

As reported by the Department Of Justice in a press release, from 2009 through 2016 Daryl Brown received taxable income, but did not file tax returns reporting his income or pay the taxes he owed.  To evade his taxes, Mr. Brown opened bank accounts and lines of credit in nominee names and used credit and debit cards from those accounts to pay for personal expenses.  He also bought money orders with cash, directed others to buy money orders for him, and structured his purchase of money orders–sometimes from several locations on the same day–to avoid triggering reporting requirements that would have flagged his activity to the IRS.  Court documents showed Mr. Brown’s conduct caused a tax loss of more than $250,000 to the IRS.

The Department Of Justice in a follow-up press release reported that on June 7, 2021 U.S. District Judge Timothy S. Black in the Southern District of Ohio sentenced Mr. Brown to 57 months in prison for tax evasion and ordered him to serve 3 years of supervised release and pay restitution to the IRS in the amount of $377,240.

An Opportunity To “Get Back Into The System” And Be Compliant.

Our tax system relies on initial voluntary compliance where taxpayers each year file a tax return; however, there are millions of Americans who fail to file a tax return and what’s worse is that these failures are not limited to just one year. Taxpayers who either have never filed a tax return or those who were once compliant but stopped filing a tax return for a period of time, face the same penalties.  Additionally, if the IRS chooses to pursue criminal prosecution and proves that the failure was willful, a taxpayer can be sentenced to prison.  So it is important to engage a tax attorney to come up with a plan to mitigate criminal exposure and establish an arrangement or settlement on the resulting tax liabilities.

An Opportunity For Taxpayers Who Owe The IRS.

As a prerequisite to any proposal (including but not limited to, an Offer In Compromise, payment plan or being put into “uncollectible status”) to the IRS, you must be in current compliance. That means if you have any outstanding income tax returns, they must be completed and submitted to IRS.

Also, if you are required to make estimated tax payments, you must be current in making those payments. Since we are in summer of 2023, taxpayers who expect to owe for 2022 should have their 2022 income tax returns as soon as possible so that the 2022 liability can be rolled over into any proposal.  Unfortunately, your obligation to make estimated tax payments for 2023 cannot be included in your proposal and the IRS will require as a prerequisite that you are current on these payments (1st quarter 2023 was due April 17, 2023 and 2nd quarter was due June 15, 2023).

All taxpayers should continue to meet their tax obligations as normal. Individuals and businesses should keep filing their tax returns and making payments and deposits with the IRS, as they are required to do.

Also, the IRS will continue to take steps where necessary to protect all applicable statutes of limitations. In instances where statute expirations might be jeopardized during this period and a taxpayer is not agreeing to extend such, the IRS will issue Notices of Deficiency and pursue other similar actions to protect the interests of the government in preserving such statute.

What Should You Do?

You know that at the Law Offices Of Jeffrey B. Kahn, P.C. we are always thinking of ways that our clients can save on taxes. If you are selected for an audit, stand up to the IRS by getting representation. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), Los Angeles (including Long Beach and Ontario) and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income. Also if you are involved in cannabis, check out what a cannabis tax attorney can do for you.  And if you are involved in crypto currency, check out what a bitcoin tax attorney can do for you.

 

IRS providing tax relief for victims of severe Florida storms

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The IRS announced on May 2, 2023 that April 12 to 14 Storm victims in parts of Florida now have until August 15, 2023 to file various federal individual and business tax returns and make tax payments.

Other Areas Having Extended Deadlines:

The IRS announced on April 3, 2023 that March 31 Storm victims in parts of Arkansas now have until July 31, 2023 to file various federal individual and business tax returns and make tax payments.

The IRS announced on January 10, 2023 that California storm victims have until May 15, 2023 to file various federal individual and business tax returns and make tax payments. Subsequently on January 13, 2023 the California Franchise Tax Board (“FTB”) announced that California storm victims also have until May 15, 2023 to file various California individual and business tax returns and make tax payments.  Then on February 24, 2023 the IRS announced that their extended deadline for eligible California storm victims would now be extended to October 16, 2023.

The IRS announced on January 19, 2023 that Storm victims in parts of Georgia and Alabama now have until May 15, 2023 to file various federal individual and business tax returns and make tax payments.

The IRS announced on March 24, 2023 that the December 23 to December 28, 2022 Storm victims in parts of New York now have until May 15, 2023 to file various federal individual and business tax returns and make tax payments.

The IRS announced on March 28, 2023 that March 24 and 25 Storm victims in parts of Mississippi now have until July 31, 2023 to file various federal individual and business tax returns and make tax payments.

The IRS announced on April 10, 2023 that March 31 Storm victims in parts of Tennessee now have until July 31, 2023 to file various federal individual and business tax returns and make tax payments.

The IRS announced on April 18, 2023 that March 31/April 1 Storm victims in parts of Indiana now have until July 31, 2023 to file various federal individual and business tax returns and make tax payments.

IRS Tax Relief Details

The IRS is offering this relief to any area designated by the Federal Emergency Management Agency (FEMA), as qualifying for individual assistance.

For California – Currently, relief is available to affected taxpayers who live or have a business anywhere in Colusa, El Dorado, Glenn, Humboldt, Los Angeles, Marin, Mariposa, Mendocino, Merced, Monterey, Napa, Orange, Placer, Riverside, Sacramento, San Bernardino, San Diego, San Joaquin, San Luis Obispo, San Mateo, Santa Barbara, Santa Clara, Santa Cruz, Solano, Sonoma, Stanislaus, Sutter, Tehama, Ventura, Yolo, and Yuba counties.

For Georgia – Currently, relief is available to affected taxpayers who live or have a business anywhere in Butts, Henry, Jasper, Meriwether, Newton, Spalding and Troup counties in Georgia.

For Alabama – Currently, relief is available to affected taxpayers who live or have a business anywhere in Autauga and Dallas counties in Alabama.

For New York – Currently, relief is available to affected taxpayers who live or have a business anywhere in Erie, Genesee, Niagara, St. Lawrence and Suffolk counties in New York.

For Mississippi – Currently, relief is available to affected taxpayers who live or have a business anywhere in Carroll, Humphreys, Monroe and Sharkey counties in Mississippi.

For Arkansas – Currently, relief is available to affected taxpayers who live or have a business anywhere in Cross, Lonoke and Pulaski counties in Arkansas.

For Tennessee – Currently, relief is available to affected taxpayers who live or have a business anywhere in Cannon, Hardeman, Hardin, Haywood, Lewis, Macon, McNairy, Rutherford, Tipton and Wayne counties in Tennessee.

For Indiana – Currently, relief is available to affected taxpayers who live or have a business anywhere in Allen, Benton, Clinton, Grant, Howard, Johnson, Lake, Monroe, Morgan, Owen, Sullivan and White counties in Indiana.

For Florida – Currently, relief is available to affected taxpayers who live or have a business anywhere in Broward county in Florida.

The current list of eligible localities is always available on the disaster relief page on IRS.gov.  The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area.

The additional relief postpones until May 15, 2023 (Georgia, Alabama and New York) or October 16, 2023 (California) or July 31, 2023 (Mississippi, Arkansas, Tennessee and Indiana) or August 15, 2023 (Florida), various tax filing and payment deadlines, including those for most calendar-year 2022 individual and business returns. This includes: individual income tax returns, originally due on April 18, 2023 (May 15, 2023 per the previous IRS announcement); various business returns, normally due on March 15th and April 18th of 2023; and returns of tax-exempt organizations, normally due on May 15, 2023.

Among other things, this means that eligible taxpayers will also have until May 15, 2023 (Georgia, Alabama and New York) or October 16, 2023 (California) or July 31, 2023 (Mississippi, Arkansas, Tennessee and Indiana) or August 15, 2023 (Florida) to make 2022 contributions to their IRAs and health savings accounts.

In addition, farmers who choose to forgo making estimated tax payments and normally file their returns by March 1, 2023 (May 15, 2023 per the previous IRS announcement) will now have until May 15, 2023 (Georgia, Alabama and New York) or October 16, 2023 (California) or July 31, 2023 (Mississippi, Arkansas, Tennessee and Indiana) or August 15, 2023 (Florida), to file their 2022 return and pay any tax due.

The May 15, 2023 (Georgia, Alabama and New York) or October 16, 2023 (California) or July 31, 2023 (Mississippi, Arkansas, Tennessee and Indiana) deadline also applies to the estimated tax payment for the fourth quarter of 2022, originally due on January 17, 2023. This means that taxpayers can skip making this payment and instead include it with the 2022 return they file, on or before May 15, 2023 (Georgia, Alabama and New York) or October 16, 2023 (California).

The May 15, 2023 (Georgia, Alabama and New York) or October 16, 2023 (California) or July 31, 2023 (Mississippi, Arkansas, Tennessee and Indiana) or August 15, 2023 (Florida) deadline also applies to 2023 estimated tax payments, normally due on April 18th, June 15th and September 15th of 2023. It also applies to the quarterly payroll and excise tax returns normally due on January 31st, April 30th and July 31st of 2023.

FTB Tax Relief Details

On March 10, 2023 the FTB announced that it too would follow IRS allowing taxpayers impacted by 2022-23 winter storms to have an extension to October 16, 2023 to file individual and business tax returns and make certain tax payments.  This includes:

  • Individuals whose tax returns and payments are due on April 18, 2023.
  • Quarterly estimated tax payments due January 17, 2023, March 15, 2023, April 18, 2023, June 15, 2023, and September 15, 2023.
  • Business entities whose tax returns are normally due on March 15 and April 18.
  • Pass-through entity (PTE) elective tax payments due on March 15, 2023 and June 15, 2023.

However, the postponement of time to file and pay does not apply to residents and businesses located in the following 7 counties: Imperial, Kern, Lassen, Modoc, Plumas, Shasta, and Sierra.

Residents and businesses located in the above 7 counties must file and pay by the normal established deadlines. This includes:

  • Individuals whose tax returns and payments are due on April 18, 2023.
  • Quarterly estimated tax payments due January 17, 2023, March 15, 2023, April 18, 2023, June 15, 2023, and September 15, 2023.
  • Business entities whose tax returns are normally due on March 15 and April 18.
  • PTE elective Tax payments due on March 15, 2023, and June 15, 2023.

Tax Planning Tip

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2023 return normally filed next year), or the return for the current year (2022).

Be sure to write the FEMA declaration number on any return claiming a loss.  That number being: “FEMA-3591-DR” for California or “FEMA 4685-DR” for Georgia or “FEMA 4684-DR” for Alabama or “FEMA “4694-DR” for New York or “4697-DR” for Mississippi or “4698-DR” for Arkansas or “4701-DR” for Tennessee or “4704-DR” for Indiana or “4709-DR” for Florida.

When filing a California return claiming a loss, be sure to write the name of the disaster in blue or black ink at the top of your tax return to alert FTB.

Importance To Preserve Records

Keep in mind that the IRS has up to three years to select a tax return for audit. The FTB has up to four years to select a tax return for audit. In some cases this period is extended to six years. When a taxpayer is selected for audit, the taxpayer has the burden of proof to show that expenses claimed are properly deductible. Having the evidence handy and organized makes meeting this burden of proof much easier.

Essential Records to Have for a Tax Audit

If you are getting ready for a tax audit, one of the most important things to do is gather and organize your tax records and receipts. There’s a good chance that you have a large amount of documents and receipts in your possession. No matter how organized you are, it can be a daunting task to collect the right pieces and make sure that you have them organized and handy for the audit conference.

We have seen many tax audits that hinge on whether or not the taxpayer can provide proper documentation for their previous tax filings. A tax lawyer in Orange County or elsewhere can make sure that the documentation is complete and proper.  By submitting this to your tax attorney in advance of the audit, your tax attorney can review your documentation and determine if there are any gaps that need to be addressed before starting the dialogue with the IRS agent.

So what are the most essential tax records to have ahead of your audit? Here are a few must-have items:

  • Any W-2 forms from the previous year. This can include documents from full-time and part-time work, large casino and lottery winnings and more.
  • Form 1098 records from your bank or lender on mortgage interest paid from the previous year.
  • Records of any miscellaneous money you earned and reported to the IRS including work done as an independent contractor or freelancer, interest from savings accounts and stock dividends.
  • Written letters from charities confirming your monetary donations from the previous year.
  • Receipts for business expenses you claimed.
  • Mileage Logs for business use of vehicle.
  • Entertainment and Travel Logs for business

Tips On Reconstructing Records

Reconstructing records after a disaster is important for several reasons including insurance reimbursement and taxes. Most importantly, records can help people prove their disaster-related losses. More accurately estimated losses can help people get more recovery assistance like loans or grants.

Whether it’s personal or business property that has been lost or destroyed, here are some steps that can help people reconstruct important records.

Tax records

Get free tax return transcripts immediately using the Get Transcript on IRS.gov or through the IRS2Go app.  Tax return transcripts show line-by-line the entries made on your Federal income tax returns.  The most three recent tax years are available.

Financial statements

People can gather past statements from their credit card company or bank. These records may be available online. People can also contact their bank to get paper copies of these statements.

Property records

  • To get documents related to property, homeowners can contact the title company, escrow company or bank that handled the purchase of their home or other property.
  • Taxpayers who made home improvements can get in touch with the contractors who did the work and ask for statements to verify the work and cost. They can also get written descriptions from friends and relatives who saw the house before and after any improvements.
  • For inherited property, taxpayers can check court records for probate values. If a trust or estate existed, taxpayers can contact the attorney who handled the trust.
  • When no other records are available, people should check the county assessor’s office for old records that might address the value of the property.
  • Car owners can research the current fair-market value for most vehicles. Resources are available online and at most libraries. These include Kelley’s Blue Book, the National Automobile Dealers Association and Edmunds.

Develop And Implement Your Backup Plan

Do not wait for the next disaster to come for then it may be too late to retrieve your important records for a tax audit or for that matter any legal or business matter. And if you do get selected for audit and do not have all the records to support what was claimed on your tax returns, you should contact an experienced tax attorney who can argue the application of your facts and circumstances to pursue the least possible changes in an audit.

The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), Los Angeles and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.  Also if you are involved in cannabis, check out what a cannabis tax attorney can do for you.  And if you are involved in cryptocurrency, check out what a bitcoin tax attorney can do for you.

 

California Continues Applying Pressure On Delinquent Taxpayers To Pay

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Like the Federal government, State governments also enforce collection of taxes.  California is unique in the structure of its tax system. Most States operate under a single tax agency. The Federal government uses a single tax agency called the IRS. But California has three tax agencies! They are the Franchise Tax Board (“FTB”), California Department Of Tax And Fee Administration (“CDTFA”) and the Employment Development Department (“EDD”).

What does FTB cover?

The FTB administers the income tax. This tax applies not only to individuals, but also to sole proprietorships, partnerships, estates, and trusts. In addition, the income “passed through” to individuals by Subchapter S corporations and certain other entities is subject to State Personal Income Taxation. The tax is applied to all sources of income unless specifically excluded, including wages and salaries, interest, dividends, business-related income, and capital gains.

What does CDTFA cover?

The CDTFA administers the Sales and Use Tax. The tax in a specific California location has three parts: the state tax rate, the local tax rate and any district tax rate that may be in effect. Sales and Use Tax is the second largest source of tax revenue in California and is assessed at both the state and local levels. CDTFA also collects other taxes and fees, most notably the State’s Cannabis Excise Tax (15% tax rate).

What does EDD cover?

EDD involves payroll taxes which includes all employer paid taxes, State Income Tax Withholding of employees, State Disability Insurance (“SDI”) Taxes and Unemployment Insurance (“UI”) Taxes.

The FTB can go way beyond liens and levies to enforce collection and put pressure on taxpayers.

Top 500 Delinquent Taxpayers List

The FTB publishes Top 500 Delinquent Taxpayers (one list for personal and one for corporate) twice a year in April and October. The FTB is required by law to post this information at least twice annually. California Revenue & Taxation Code § 19195.  Since the list’s inception in October 2007, FTB has collected more than $1 billion from delinquent taxpayers through the program.

The FTB will notify each taxpayer by certified mail 30 days before they post their information.

  • As cases are resolved, those taxpayers are removed from the list, reducing the total number of listings from the original 500.
  • Your occupational and professional licenses, including your driver’s license may be suspended under Business and Professions Code §494.5.
  • State agencies will not enter into contracts for the acquisition of goods and services with you under Public Contract Code §10295.4.

If you or your business is on this list, the FTB will mail you or your business a letter at least 30 days before placing you or your business on the list (Notice of Tax Delinquencies – FTB 4192). This letter gives you or your business at least 30 days to reach a resolution of the tax debt (including establishing a payment plan) to avoid being placed on this list.

Suspension Or Denial Of Licenses

If you or your business is on the list, some state-issued licenses may be suspended. Common licenses that may be suspended include:

  • Driver license
  • Real estate
  • Medical, dental, nursing
  • Insurance
  • Cosmetology
  • Contractor’s license

Use Of Your Goods Or Services Are No Longer Contracted

State agencies will not enter into contracts with a contractor on the list to acquire goods or services. Other persons and businesses may use this list to make sure they do not work with people or businesses who are on the list.

Suspension Of Good Standing With California Secretary Of State (“SOS”)

When your business has been suspended or forfeited, it is not in good standing and loses its rights, powers, and privileges to do business in California.

To revive your business and be in good standing, you must:

  • File all past due tax returns
  • Pay all past due tax balances
  • File a revivor request form

Generally, businesses are suspended when they fail to file a tax return or pay any tax account balance.

Business entities registered with the SOS must file and pay at least $800.00 franchise or annual tax from their registration date to current, regardless of business activity.

Getting Off FTB’s List

FTB has a process established by which you or your business is eligible to be removed from the list.  If successful, FTB has 5 business days to remove your or your business’s name from the list. FTB will also request other State agencies to restore any suspended licenses. The licensing agencies have 5 business days from receipt of FTB’s request to restore licenses.

The CDTFA can go way beyond liens and levies to enforce collection and put pressure on taxpayers.

The CDTFA has a similar list of the state’s top sales and use tax debtors, which is updated quarterly.

The CDFTA will revoke your seller’s permit. If your seller’s permit is revoked, you cannot sell your goods. Also, as a corporate director, officer, member, manager, or other person having control or supervision of the filing of returns or payments of taxes, you may become personally liable for any unpaid sales and use taxes, interest, and penalties. Such personal liability for any unpaid taxes and interest and penalties on those taxes is triggered upon termination, dissolution, or abandonment of a corporate business or limited liability company, any officer, member, manager, or other person having control or supervision of, or who is charged with the responsibility for the filing of returns or the payment of tax, or who is under a duty to act for the corporation or limited liability company in complying with any requirement of this part. Section 6829 of the Revenue and Taxation Code.

EDD Collection Action Exposure

The IRS has the Trust Fund Recovery Penalty (also known as the 100-percent penalty). The EDD has something similar referred to as “CUIC 1735”. But CUIC goes way beyond the IRS’ version. Not only does the EDD assert a full 100-percent exposure of the employees tax withholdings AND the employer’s share of payroll taxes to targeted responsible individuals but also a 10% nonabatable assessment penalty (it should be noted that the IRS version is limited only to the employee’s share of FICA and withheld federal income taxes, roughly 60% of the corporate employer’s overall liability). The two key elements of CUIC 1735 are responsibility and willfulness. The EDD must have both elements before they can make the 100% assessment stick. Any officer, major stockholder, or other person in charge of the affairs of the business can be held responsible. Before the assessment can become final, the targeted responsible person must be given notice, an opportunity for an administrative hearing, and an appeal. If the targeted individual loses his or her administrative hearing and appeal, and does not pay within 10 days after assessment, her or she will be penalized a further 10% pursuant to CUIC 1135.

Don’t Take The Chance And Lose Everything You Have Worked For.

Protect yourself. Federal and State Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), Los Angeles and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.  Also, if you are involved in cannabis, check out what our cannabis tax attorney can do for you.  Additionally, if you are involved in cryptocurrency, check out what a bitcoin tax attorney can do for you.Top of Form

What’s New And What To Consider When Filing Your 2022 Income Tax Returns

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Before you know it, April 18, 2023 (the deadline to file your 2022 Individual Income Tax Return) will be here.  We get three extra days because April 15th is a legal holiday in Washington D.C. (Emancipation Day) and the next business day is Monday, April 18th.  Here are some things you should know to be prepared.

Reporting Rules Changed For Form 1099-K.

Taxpayers should receive Form 1099-K, Payment Card and Third Party Network Transactions, by January 31, 2023, if they received third party payments in tax year 2022 for goods and services that exceeded $600.

Prior to 2022, Form 1099-K was issued for third party networks transactions only if the total number of transactions exceeded 200 for the year and the aggregate amount of these transactions exceeded $20,000. The American Rescue Plan Act of 2021 lowered the reporting threshold for third party networks that process payments for those doing business.  Now a single transaction exceeding $600 can require the third party platform to issue a 1099-K. Money received through third party payment networks from friends and relatives as personal gifts or reimbursements for personal expenses is not taxable.

No “above-the-line” Charitable Deductions.

During COVID, taxpayers could take up to a $600 charitable donation tax deduction on their tax returns. However, in 2022, those who take a standard deduction may not take an above-the-line deduction for charitable donations.  All charitable donations must now be included as itemized deductions.  If your standard deduction exceeds the total itemized deductions, you will want to claim the standard deduction.

Some Tax Credits Return To 2019 Levels.

This means that affected taxpayers will likely receive a significantly smaller refund compared with the previous tax year. Changes include amounts for the Child Tax Credit (CTC), Earned Income Tax Credit (EITC) and Child and Dependent Care Credit.

  • Taxpayers who got $3,600 per dependent in 2021 for the CTC will, if eligible, get $2,000 for the 2022 tax year.
  • For the EITC, eligible taxpayers with no children who received roughly $1,500 in 2021 will now get $500 in 2022.
  • The Child and Dependent Care Credit returns to a maximum of $2,100 in 2022 instead of $8,000 in 2021.

Time Limits For Keeping Your Tax Records

Even though your 2022 income tax return is processed by the IRS and a refund is issued, that does not mean the IRS can later question or audit the tax return,  In fact the Statute Of Limitations allows the IRS three years to go back and audit your tax return.  That is why it’s a good idea to keep copies of your prior-year tax returns and supporting backup documentation for at least three years.

Planning Opportunity For Taxpayers Who Owe The IRS

As a prerequisite to making any proposal to the IRS, you must be in current compliance. That means if you have any outstanding income tax returns, they must be completed and submitted to IRS.

Also, if you are required to make estimated tax payments, you must be current in making those payments. Fortunately, as we are now going into 2023, taxpayers who expect to owe for 2022 should have their 2022 income tax returns done as soon as possible in 2023 so that the 2022 liability can be rolled over into any proposal and the requirement to make estimated tax payments will not start until April 18, 2023.

What Should You Do?

You know that at the Law Offices Of Jeffrey B. Kahn, P.C. we are always thinking of ways that our clients can save on taxes. If you are selected for an audit, stand up to the IRS by getting representation. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), the San Francisco Bay Area (including San Jose and Walnut Creek) and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income. Also if you are involved in cannabis, check out what a cannabis tax attorney can do for you and if you are involved in crypto-currency, check out what a Bitcoin tax attorney can do for you.

5 Moves To Make Before Year End That Can Save You A Lot of Money on Your 2022 Taxes

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On August 16, 2022 President Biden signed the 2022 Inflation Reduction Act which has some favorable tax changes you should be aware especially now that we are approaching the end of 2022.

Major Changes From The New Law Include:

A three-year extension of expanded Affordable Care Act health insurance subsidies, which were set to expire at the end of 2022.

Expanding residential clean energy tax credits and clean vehicle tax credits to promote clean energy incentives.

Returning to a 50% deduction limitation for business related food and beverages starting January 1, 2023.

The Big Picture:

With many itemized deductions having disappeared by the 2017 Tax Cuts And Jobs Act and a higher standard deduction, less taxpayers will be itemizing deductions in 2022 but there is still significant tax planning you can do.

For 2022, the standard deduction amounts are: $12,950 (single); $19,400 (head of household); $25,900 (married filing jointly and surviving spouse); and $12,950 (married filing separately). The additional standard deduction amount for taxpayers who are 65 or older or blind is $1,400. This additional amount is increased to $1,750 if the individual is also unmarried and not a surviving spouse.

If your itemized deductions in 2022 will be close to your standard deduction amount, consideration should be given to paying certain deductible amounts (such as medical and charitable expenses) in 2022 rather than 2023 to the extent possible, or vice versa. In other words, determine whether bunching deductions in one year and taking the standard deduction in alternate years can provide a net-tax benefit over the two-year period.

Following are five year-end tax moves to make before this New Year’s Day:

  1. Give more to charity in 2022.

In addition to the usual dollar donations to charities, religious institutions and educational institutions, consider clearing your home of those unwanted household goods and clothing to give to charities. Many groups will accept these items even vehicles, with some even making arrangements to pick up them up from your home. You may also consider to donate stock or mutual funds that you’ve held for more than a year but that no longer fit your investment goals. The charity gets the asset to hold or sell, and your portfolio re-balancing nets you a deduction for the asset’s value at the time of gifting. Even better, you do not have to worry about capital gains taxes on the appreciation of your gift. Remember that if you take the standard deduction in 2022, you won’t get any tax savings from your charitable contributions made in 2022.

  1. Make the most of your home – mortgage interest.

Home-ownership provides a variety of tax breaks, some of which you can use by year-end to reduce your current year’s tax bill. Make your January mortgage payment by December 31st and deduct the mortgage interest on your 2022 tax return.

  1. Make the most of your home – property taxes.

Like prepaying mortgage interest, the same tactic will apply for property taxes; however, keep in mind that property taxes along with other state and local taxes will be deductible only up to $10,000.

  1. Pay your self-employed business expenses

If you are self-employed, you should accelerate payment of your business expenses in 2022. Recognizing these expenses in 2022 will provide you with a tax savings for 2022

  1. Defer your income into 2023.

If you are a small business owner, consider delaying income until January 2023. So if you are chasing up some customers or clients to pay the bill you sent them a while ago, you might want to wait until January to get aggressive on collecting. Consider delaying the delivery of invoices for year-end jobs until January 2023.  Small business owners should make sure they are benefiting from the deduction of 20% of their business income. If you are an employee, ask your boss to hold your bonus until January. Individuals should also consider putting more money into a tax-deferred workplace retirement plan in 2022 and hold off on selling assets that will produce a capital gain until 2023.

What Should You Do?

With not much time left in 2022 you will need to act quickly on those tax moves that are easy to accomplish to reduce your tax bill.

You know that at the Law Offices Of Jeffrey B. Kahn, P.C. we are always thinking of ways that our clients can save on taxes. If you are selected for an audit, stand up to the IRS by getting representation. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), Los Angeles and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income. Also, if you are involved in cannabis, check out what our cannabis tax attorney can do for you. Additionally, if you are involved in cryptocurrency, check out what a bitcoin tax attorney can do for you.

IRS Providing Tax Relief For Victims in Federal Declared Disaster Areas

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Did you miss the October 17, 2022 tax return filing deadline? Areas with a new filing deadline of February 15, 2023, include: Florida, Puerto Rico, North Carolina, South Carolina, Areas in Alaska identified under FEMA’s Major Disaster Declaration 4672 and Hinds County, Mississippi.

The IRS announced on October 5, 2022 that Hurricane Ian victims throughout both North Carolina and South Carolina now have until February 15, 2023, to file various federal individual and business tax returns and make tax payments.

This comes after the IRS announced on September 29, 2022 that Hurricane Ian victims throughout Florida now have until February 15, 2023, to file various federal individual and business tax returns and make tax payments; and after the IRS announced on September 27, 2022 that victims in parts of Alaska now have until February 15, 2023 to file various individual and business tax returns and make tax payments; and after the IRS announced on September 20, 2022 that victims of Hurricane Fiona in all 78 Puerto Rican municipalities now have until February 15, 2023 to file various individual and business tax returns and make tax payments; and after the IRS announced on September 2, 2022 that victims of the Mississippi water crisis in Hinds County now have until February 15, 2023 to file various individual and business tax returns and make tax payments

IRS Tax Relief Details

The IRS is offering this relief to any area designated by the Federal Emergency Management Agency (FEMA), as qualifying for individual assistance. Currently, relief is available to affected taxpayers who live or have a business anywhere in both the Carolinas or in the State of Florida or the Commonwealth of Puerto Rico or Hinds County, Mississippi; and individuals and households that reside or have a business in the Regional Education Attendance Areas of Bering Strait, Kashunamiut, Lower Kuskokwim and Lower Yukon, in Alaska.   Other areas in Alaska added later will also qualify for this relief.  The current list of eligible localities is always available on the disaster relief page on IRS.gov.  The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area.

For Carolina taxpayers, the tax relief postpones various tax filing and payment deadlines that occurred starting on September 25, 2022 in South Carolina and September 28 in North Carolina. As a result, affected individuals and businesses will have until February 15, 2023 to file returns and pay any taxes that were originally due during this period. This includes 2021 individual income tax returns due on October 17, 2022 and any businesses with tax returns that were originally due during this period.

The February 15, 2023, deadline also applies to quarterly estimated income tax payments due on January 17, 2023, and the quarterly payroll and excise tax returns normally due on October 31, 2022 and January 31, 2023. Businesses with an original or extended due date also have the additional time including, among others, calendar-year corporations whose 2021 extensions run out on October 17, 2022. Similarly, tax-exempt organizations also have the additional time, including for 2021 calendar-year returns with extensions due to run out on November 15, 2022.

In addition, for South Carolina taxpayers, penalties on payroll and excise tax deposits due after September 25, 2022 and before October 11, 2022, will be abated as long as the deposits are made by October 11, 2022.  For North Carolina taxpayers, penalties on payroll and excise tax deposits due after September 28, 2022 and before October 13, 2022, will be abated as long as the deposits are made by October 13, 2022.

Tax Planning Tip

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2022 return normally filed next year), or the return for the prior year (2021).

Be sure to write the FEMA declaration number on any return claiming a loss.

For Puerto Rico: “DR-3583-EM”

For Alaska: “DR-4672-AK”

For Florida: “DR-4673-FL”

For South Carolina: “DR-3585-EM-SC”

For North Carolina: “DR-3586-EM-NC”

For Mississippi Water Crisis: “EM-3582-MS”

Importance To Preserve Records

Keep in mind that the IRS has up to three years to select a tax return for audit. The FTB has up to four years to select a tax return for audit. In some cases this period is extended to six years. When a taxpayer is selected for audit, the taxpayer has the burden of proof to show that expenses claimed are properly deductible. Having the evidence handy and organized makes meeting this burden of proof much easier.

Essential Records to Have for a Tax Audit

If you are getting ready for a tax audit, one of the most important things to do is gather and organize your tax records and receipts. There’s a good chance that you have a large amount of documents and receipts in your possession. No matter how organized you are, it can be a daunting task to collect the right pieces and make sure that you have them organized and handy for the audit conference.

We have seen many tax audits that hinge on whether or not the taxpayer can provide proper documentation for their previous tax filings. A tax lawyer in Orange County or elsewhere can make sure that the documentation is complete and proper.  By submitting this to your tax attorney in advance of the audit, your tax attorney can review your documentation and determine if there are any gaps that need to be addressed before starting the dialogue with the IRS agent.

So what are the most essential tax records to have ahead of your audit? Here are a few must-have items:

  • Any W-2 forms from the previous year. This can include documents from full-time and part-time work, large casino and lottery winnings and more.
  • Form 1098 records from your bank or lender on mortgage interest paid from the previous year.
  • Records of any miscellaneous money you earned and reported to the IRS including work done as an independent contractor or freelancer, interest from savings accounts and stock dividends.
  • Written letters from charities confirming your monetary donations from the previous year.
  • Receipts for business expenses you claimed.
  • Mileage Logs for business use of vehicle.
  • Entertainment and Travel Logs for business

Tips On Reconstructing Records

Reconstructing records after a disaster is important for several reasons including insurance reimbursement and taxes. Most importantly, records can help people prove their disaster-related losses. More accurately estimated losses can help people get more recovery assistance like loans or grants.

Whether it’s personal or business property that has been lost or destroyed, here are some steps that can help people reconstruct important records.

Tax records

Get free tax return transcripts immediately using the Get Transcript on IRS.gov or through the IRS2Go app.  Tax return transcripts show line-by-line the entries made on your Federal income tax returns.  The most three recent tax years are available.

Financial statements

People can gather past statements from their credit card company or bank. These records may be available online. People can also contact their bank to get paper copies of these statements.

Property records

  • To get documents related to property, homeowners can contact the title company, escrow company or bank that handled the purchase of their home or other property.
  • Taxpayers who made home improvements can get in touch with the contractors who did the work and ask for statements to verify the work and cost. They can also get written descriptions from friends and relatives who saw the house before and after any improvements.
  • For inherited property, taxpayers can check court records for probate values. If a trust or estate existed, taxpayers can contact the attorney who handled the trust.
  • When no other records are available, people should check the county assessor’s office for old records that might address the value of the property.
  • Car owners can research the current fair-market value for most vehicles. Resources are available online and at most libraries. These include Kelley’s Blue Book, the National Automobile Dealers Association and Edmunds.

Develop And Implement Your Backup Plan

Do not wait for the next disaster to come for then it may be too late to retrieve your important records for a tax audit or for that matter any legal or business matter. And if you do get selected for audit and do not have all the records to support what was claimed on your tax returns, you should contact an experienced tax attorney who can argue the application of your facts and circumstances to pursue the least possible changes in an audit.

The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), Los Angeles and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.  Also if you are involved in cannabis, check out what a cannabis tax attorney can do for you.  And if you are involved in crypto currency, check out what a bitcoin tax attorney can do for you.

California Franchise Tax Board Provides Tax Relief For Hurricane Ian Victims

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The California Franchise Tax Board (“FTB”) announced on October 6, 2022 special state tax relief for taxpayers and businesses affected by Hurricane Ian.

Taxpayers and businesses in presidentially declared disaster areas are granted an extension to Feb. 15, 2023, to file California tax returns on 2021 income and make any tax payments that would have been due between September 23, 2022, and February 15, 2023.

“This offers relief to taxpayers who were victims of Hurricane Ian and have a California filing requirement,” said State Controller and FTB Chair Betty T. Yee. “For some, this will mean several additional months to file their California tax returns or make their quarterly estimated tax payment to the state.”

The relief means those affected taxpayers who would have had an October 17, 2022, tax filing deadline now have until February 15, 2023 to file. However, tax year 2021 tax payments originally due on April 18, 2022, are not eligible for the extension.

This announcement by FTB follows announcements made by IRS providing similar tax relief to taxpayers affected by Hurricane Ian in Florida, South Carolina and North Carolina.  FTB automatically conforms to IRS postponement periods for presidentially declared disasters.  Taxpayers who are affected by a presidentially declared disaster may claim a deduction for a disaster loss.

Tax Planning Tip

Just like with IRS, taxpayers can claim a disaster loss with FTB in one of two ways. They may claim the disaster loss for the 2022 tax year when they file their return next spring, or they may claim the loss against 2021 income on this year’s return. An amended return may be filed by those who already have filed this year. The advantage of claiming the disaster loss on a tax year 2021 return is that FTB can issue a refund sooner.

Taxpayers should write the name of the disaster (for example, Hurricane Ian) in blue or black ink at the top of their tax return to alert FTB. If taxpayers are filing electronically, they should follow the software instructions to enter disaster information. If an affected taxpayer receives a late filing or late payment penalty notice related to the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

Importance To Preserve Records

Keep in mind that the FTB has up to four years to select a tax return for audit. The IRS has up to three years to select a tax return for audit. In some cases this period is extended to six years. When a taxpayer is selected for audit, the taxpayer has the burden of proof to show that expenses claimed are properly deductible. Having the evidence handy and organized makes meeting this burden of proof much easier.

Essential Records to Have for a Tax Audit

If you are getting ready for a tax audit, one of the most important things to do is gather and organize your tax records and receipts. There’s a good chance that you have a large amount of documents and receipts in your possession. No matter how organized you are, it can be a daunting task to collect the right pieces and make sure that you have them organized and handy for the audit conference.

We have seen many tax audits that hinge on whether or not the taxpayer can provide proper documentation for their previous tax filings. A tax lawyer in Orange County or elsewhere can make sure that the documentation is complete and proper.  By submitting this to your tax attorney in advance of the audit, your tax attorney can review your documentation and determine if there are any gaps that need to be addressed before starting the dialogue with the IRS agent.

So what are the most essential tax records to have ahead of your audit? Here are a few must-have items:

  • Any W-2 forms from the previous year. This can include documents from full-time and part-time work, large casino and lottery winnings and more.
  • Form 1098 records from your bank or lender on mortgage interest paid from the previous year.
  • Records of any miscellaneous money you earned and reported to the IRS including work done as an independent contractor or freelancer, interest from savings accounts and stock dividends.
  • Written letters from charities confirming your monetary donations from the previous year.
  • Receipts for business expenses you claimed.
  • Mileage Logs for business use of vehicle.
  • Entertainment and Travel Logs for business

Tips On Reconstructing Records

Reconstructing records after a disaster is important for several reasons including insurance reimbursement and taxes. Most importantly, records can help people prove their disaster-related losses. More accurately estimated losses can help people get more recovery assistance like loans or grants.

Whether it’s personal or business property that has been lost or destroyed, here are some steps that can help people reconstruct important records.

Tax records

Get free tax return transcripts immediately using the Get Transcript on IRS.gov or through the IRS2Go app.  Tax return transcripts show line-by-line the entries made on your Federal income tax returns.  The most three recent tax years are available.

Financial statements

People can gather past statements from their credit card company or bank. These records may be available online. People can also contact their bank to get paper copies of these statements.

Property records

  • To get documents related to property, homeowners can contact the title company, escrow company or bank that handled the purchase of their home or other property.
  • Taxpayers who made home improvements can get in touch with the contractors who did the work and ask for statements to verify the work and cost. They can also get written descriptions from friends and relatives who saw the house before and after any improvements.
  • For inherited property, taxpayers can check court records for probate values. If a trust or estate existed, taxpayers can contact the attorney who handled the trust.
  • When no other records are available, people should check the county assessor’s office for old records that might address the value of the property.
  • Car owners can research the current fair-market value for most vehicles. Resources are available online and at most libraries. These include Kelley’s Blue Book, the National Automobile Dealers Association and Edmunds.

Develop And Implement Your Backup Plan

Do not wait for the next disaster to come for then it may be too late to retrieve your important records for a tax audit or for that matter any legal or business matter. And if you do get selected for audit and do not have all the records to support what was claimed on your tax returns, you should contact an experienced tax attorney who can argue the application of your facts and circumstances to pursue the least possible changes in an audit.

The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), Los Angeles and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.  Also if you are involved in cannabis, check out what a cannabis tax attorney can do for you.  And if you are involved in crypto currency, check out what a bitcoin tax attorney can do for you.

IRS Provides Tax Relief For Hurricane Ian Victims in the Carolinas

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The IRS announced on October 5, 2022 that Hurricane Ian victims throughout both North Carolina and South Carolina now have until February 15, 2023, to file various federal individual and business tax returns and make tax payments.

This comes after the IRS announced on September 29, 2022 that Hurricane Ian victims throughout Florida now have until February 15, 2023, to file various federal individual and business tax returns and make tax payments; and after the IRS announced on September 27, 2022 that victims in parts of Alaska now have until February 15, 2023 to file various individual and business tax returns and make tax payments; and after the IRS announced on September 20, 2022 that victims of Hurricane Fiona in all 78 Puerto Rican municipalities now have until February 15, 2023 to file various individual and business tax returns and make tax payments.

IRS Tax Relief Details

The IRS is offering this relief to any area designated by the Federal Emergency Management Agency (FEMA), as qualifying for individual assistance. Currently, relief is available to affected taxpayers who live or have a business anywhere in both the Carolinas or in the State of Florida or the Commonwealth of Puerto Rico; and individuals and households that reside or have a business in the Regional Education Attendance Areas of Bering Strait, Kashunamiut, Lower Kuskokwim and Lower Yukon, in Alaska.   Other areas in Alaska added later will also qualify for this relief.  The current list of eligible localities is always available on the disaster relief page on IRS.gov.  The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area.

For Carolina taxpayers, the tax relief postpones various tax filing and payment deadlines that occurred starting on September 25, 2022 in South Carolina and September 28 in North Carolina. As a result, affected individuals and businesses will have until February 15, 2023 to file returns and pay any taxes that were originally due during this period. This includes 2021 individual income tax returns due on October 17, 2022 and any businesses with tax returns that were originally due during this period.

The February 15, 2023, deadline also applies to quarterly estimated income tax payments due on January 17, 2023, and the quarterly payroll and excise tax returns normally due on October 31, 2022 and January 31, 2023. Businesses with an original or extended due date also have the additional time including, among others, calendar-year corporations whose 2021 extensions run out on October 17, 2022. Similarly, tax-exempt organizations also have the additional time, including for 2021 calendar-year returns with extensions due to run out on November 15, 2022.

In addition, for South Carolina taxpayers, penalties on payroll and excise tax deposits due after September 25, 2022 and before October 11, 2022, will be abated as long as the deposits are made by October 11, 2022.  For North Carolina taxpayers, penalties on payroll and excise tax deposits due after September 28, 2022 and before October 13, 2022, will be abated as long as the deposits are made by October 13, 2022.

Tax Planning Tip

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2022 return normally filed next year), or the return for the prior year (2021).

Be sure to write the FEMA declaration number on any return claiming a loss.

For Puerto Rico: “DR-3583-EM”

For Alaska: “DR-4672-AK”

For Florida: “DR-4673-FL”

For South Carolina: “DR-3585-EM-SC”

For North Carolina: “DR-3586-EM-NC”

Importance To Preserve Records

Keep in mind that the IRS has up to three years to select a tax return for audit. The FTB has up to four years to select a tax return for audit. In some cases this period is extended to six years. When a taxpayer is selected for audit, the taxpayer has the burden of proof to show that expenses claimed are properly deductible. Having the evidence handy and organized makes meeting this burden of proof much easier.

Essential Records to Have for a Tax Audit

If you are getting ready for a tax audit, one of the most important things to do is gather and organize your tax records and receipts. There’s a good chance that you have a large amount of documents and receipts in your possession. No matter how organized you are, it can be a daunting task to collect the right pieces and make sure that you have them organized and handy for the audit conference.

We have seen many tax audits that hinge on whether or not the taxpayer can provide proper documentation for their previous tax filings. A tax lawyer in Orange County or elsewhere can make sure that the documentation is complete and proper.  By submitting this to your tax attorney in advance of the audit, your tax attorney can review your documentation and determine if there are any gaps that need to be addressed before starting the dialogue with the IRS agent.

So what are the most essential tax records to have ahead of your audit? Here are a few must-have items:

  • Any W-2 forms from the previous year. This can include documents from full-time and part-time work, large casino and lottery winnings and more.
  • Form 1098 records from your bank or lender on mortgage interest paid from the previous year.
  • Records of any miscellaneous money you earned and reported to the IRS including work done as an independent contractor or freelancer, interest from savings accounts and stock dividends.
  • Written letters from charities confirming your monetary donations from the previous year.
  • Receipts for business expenses you claimed.
  • Mileage Logs for business use of vehicle.
  • Entertainment and Travel Logs for business

Tips On Reconstructing Records

Reconstructing records after a disaster is important for several reasons including insurance reimbursement and taxes. Most importantly, records can help people prove their disaster-related losses. More accurately estimated losses can help people get more recovery assistance like loans or grants.

Whether it’s personal or business property that has been lost or destroyed, here are some steps that can help people reconstruct important records.

Tax records

Get free tax return transcripts immediately using the Get Transcript on IRS.gov or through the IRS2Go app.  Tax return transcripts show line-by-line the entries made on your Federal income tax returns.  The most three recent tax years are available.

Financial statements

People can gather past statements from their credit card company or bank. These records may be available online. People can also contact their bank to get paper copies of these statements.

Property records

  • To get documents related to property, homeowners can contact the title company, escrow company or bank that handled the purchase of their home or other property.
  • Taxpayers who made home improvements can get in touch with the contractors who did the work and ask for statements to verify the work and cost. They can also get written descriptions from friends and relatives who saw the house before and after any improvements.
  • For inherited property, taxpayers can check court records for probate values. If a trust or estate existed, taxpayers can contact the attorney who handled the trust.
  • When no other records are available, people should check the county assessor’s office for old records that might address the value of the property.
  • Car owners can research the current fair-market value for most vehicles. Resources are available online and at most libraries. These include Kelley’s Blue Book, the National Automobile Dealers Association and Edmunds.

Develop And Implement Your Backup Plan

Do not wait for the next disaster to come for then it may be too late to retrieve your important records for a tax audit or for that matter any legal or business matter. And if you do get selected for audit and do not have all the records to support what was claimed on your tax returns, you should contact an experienced tax attorney who can argue the application of your facts and circumstances to pursue the least possible changes in an audit.

The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), Los Angeles and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.  Also if you are involved in cannabis, check out what a cannabis tax attorney can do for you.  And if you are involved in crypto currency, check out what a bitcoin tax attorney can do for you.

IRS Provides Tax Relief For Hurricane Ian Victims in Florida

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The IRS announced on September 29, 2022 that Hurricane Ian victims throughout Florida now have until Feb. 15, 2023, to file various federal individual and business tax returns and make tax payments.

This comes after the IRS announced on September 27, 2022 that victims in parts of Alaska now have until February 15, 2023 to file various individual and business tax returns and make tax payments and after the IRS announced on September 20, 2022 that victims of Hurricane Fiona in all 78 Puerto Rican municipalities now have until February 15, 2023 to file various individual and business tax returns and make tax payments.

IRS Tax Relief Details

The IRS is offering this relief to any area designated by the Federal Emergency Management Agency (FEMA), as qualifying for individual assistance. Currently, relief is available to affected taxpayers who live or have a business anywhere in the State of Florida or the Commonwealth of Puerto Rico; and individuals and households that reside or have a business in the Regional Education Attendance Areas of Bering Strait, Kashunamiut, Lower Kuskokwim and Lower Yukon, in Alaska.   Other areas in Alaska added later will also qualify for this relief.  The current list of eligible localities is always available on the disaster relief page on IRS.gov.  The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area.

For Florida taxpayers, the tax relief postpones various tax filing and payment deadlines that occurred starting on September 23, 2022. As a result, affected individuals and businesses will have until February 15, 2023 to file returns and pay any taxes that were originally due during this period. This includes 2021 individual income tax returns due on October 17, 2022 and any businesses with tax returns that were originally due during this period.

The February 15, 2023, deadline also applies to quarterly estimated income tax payments due on January 17, 2023, and the quarterly payroll and excise tax returns normally due on October 31, 2022 and January 31, 2023. Businesses with an original or extended due date also have the additional time including, among others, calendar-year corporations whose 2021 extensions run out on October 17, 2022. Similarly, tax-exempt organizations also have the additional time, including for 2021 calendar-year returns with extensions due to run out on November 15, 2022.

In addition, for Florida taxpayers, penalties on payroll and excise tax deposits due after September 23, 2022 and before October 10, 2022, will be abated as long as the deposits are made by October 10, 2022.

Tax Planning Tip

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2022 return normally filed next year), or the return for the prior year (2021).

Be sure to write the FEMA declaration number on any return claiming a loss.

For Puerto Rico: “DR-3583-EM”

For Alaska: “DR-4672-AK”

For Florida: “DR-4673-FL”

Importance To Preserve Records

Keep in mind that the IRS has up to three years to select a tax return for audit. The FTB has up to four years to select a tax return for audit. In some cases this period is extended to six years. When a taxpayer is selected for audit, the taxpayer has the burden of proof to show that expenses claimed are properly deductible. Having the evidence handy and organized makes meeting this burden of proof much easier.

Essential Records to Have for a Tax Audit

If you are getting ready for a tax audit, one of the most important things to do is gather and organize your tax records and receipts. There’s a good chance that you have a large amount of documents and receipts in your possession. No matter how organized you are, it can be a daunting task to collect the right pieces and make sure that you have them organized and handy for the audit conference.

We have seen many tax audits that hinge on whether or not the taxpayer can provide proper documentation for their previous tax filings. A tax lawyer in Orange County or elsewhere can make sure that the documentation is complete and proper.  By submitting this to your tax attorney in advance of the audit, your tax attorney can review your documentation and determine if there are any gaps that need to be addressed before starting the dialogue with the IRS agent.

So what are the most essential tax records to have ahead of your audit? Here are a few must-have items:

  • Any W-2 forms from the previous year. This can include documents from full-time and part-time work, large casino and lottery winnings and more.
  • Form 1098 records from your bank or lender on mortgage interest paid from the previous year.
  • Records of any miscellaneous money you earned and reported to the IRS including work done as an independent contractor or freelancer, interest from savings accounts and stock dividends.
  • Written letters from charities confirming your monetary donations from the previous year.
  • Receipts for business expenses you claimed.
  • Mileage Logs for business use of vehicle.
  • Entertainment and Travel Logs for business

Tips On Reconstructing Records

Reconstructing records after a disaster is important for several reasons including insurance reimbursement and taxes. Most importantly, records can help people prove their disaster-related losses. More accurately estimated losses can help people get more recovery assistance like loans or grants.

Whether it’s personal or business property that has been lost or destroyed, here are some steps that can help people reconstruct important records.

Tax records

Get free tax return transcripts immediately using the Get Transcript on IRS.gov or through the IRS2Go app.  Tax return transcripts show line-by-line the entries made on your Federal income tax returns.  The most three recent tax years are available.

Financial statements

People can gather past statements from their credit card company or bank. These records may be available online. People can also contact their bank to get paper copies of these statements.

Property records

  • To get documents related to property, homeowners can contact the title company, escrow company or bank that handled the purchase of their home or other property.
  • Taxpayers who made home improvements can get in touch with the contractors who did the work and ask for statements to verify the work and cost. They can also get written descriptions from friends and relatives who saw the house before and after any improvements.
  • For inherited property, taxpayers can check court records for probate values. If a trust or estate existed, taxpayers can contact the attorney who handled the trust.
  • When no other records are available, people should check the county assessor’s office for old records that might address the value of the property.
  • Car owners can research the current fair-market value for most vehicles. Resources are available online and at most libraries. These include Kelley’s Blue Book, the National Automobile Dealers Association and Edmunds.

Develop And Implement Your Backup Plan

Do not wait for the next disaster to come for then it may be too late to retrieve your important records for a tax audit or for that matter any legal or business matter. And if you do get selected for audit and do not have all the records to support what was claimed on your tax returns, you should contact an experienced tax attorney who can argue the application of your facts and circumstances to pursue the least possible changes in an audit.

The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), Los Angeles and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.  Also if you are involved in cannabis, check out what a cannabis tax attorney can do for you.  And if you are involved in crypto currency, check out what a bitcoin tax attorney can do for you.