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Danbury Tax Law Blog

Tax liens serve what purpose?

Connecticut residents who are behind on their taxes may face legal claims from the Internal Revenue Service in an effort to collect. Tax liens are just one way that the IRS can hold assets hostage until tax debts are paid in full. What can be done when tax liens are filed?

People often fail to pay taxes because they lack the funds to do so. They may have other debts that they feel take priority. Unfortunately, the IRS will disagree with this thought process. Like other creditors, they believe that they are entitled to their money before anyone else. True or not, they are in the position to do something about it.

Income tax and the innocent spouse

It is not uncommon for spouses in Connecticut to file their taxes together in a joint return. There are a lot of benefits to doing so. The only problem one might see when filing an income tax return jointly is the liability issue. Thankfully, when one spouse makes a mistake or an issue is noted with a joint return, it may be possible for one to avoid liability by filing for innocent spouse relief.

There are three different types of innocent spouse relief. These are the basic innocent spouse relief, separation of liability relief and equitable relief. An experienced tax attorney can review the details of one's case and help decide which best fits one's situation.

Get help with a sales tax mistake

You are a business owner in Connecticut. You are doing the best you can to keep your company afloat all while following the state and federal rules that govern certain aspects of your business. Tax season rolls around and it is not until then that you realize you made a big sales tax mistake -- either on your own or because you received an audit notification. What can you do?

Businesses in Connecticut and elsewhere are required by law to collect sales tax on all taxable items. This means the company owners need to stay up to date on what the current tax percentage is and they need to make sure that they actually calculate it correctly for every sale. This may seem easy enough, especially since most companies depend on computers for doing the calculations. However, all it takes entering the wrong tax percentage into the system for everything to get messed up.

Tax evasion is not the same as tax avoidance

As Benjamin Franklin said, "nothing can be said to be certain except death and taxes." Taxes are never going away. It is every person's responsibility to pay them. There are those in Connecticut who may struggle to do so or may be accused of taking steps to avoid doing so, however. These individuals may then be accused of tax evasion or tax avoidance.

Tax avoidance is when a person tries to minimize the amount he or she owes in taxes by using the tax code in order to take legitimate deductions or shelter income. This is a legal move, but one that does have to be taken carefully. Taking too many deductions is likely to flag one's return for an IRS audit, which can result in one having to pay significant fines.

Signs you are in trouble with the IRS

There are unmistakable signs that you have been targeted by the IRS:

You let a deadline slip by. Deadlines are important. Ignore them, and you can expect to be acted against, and with a vengeance. If you are confused about a deadline, that is a good reason to contact a tax lawyer.

Don't let estate taxes kill your loved ones

Losing a loved one is difficult no matter when or how it happens. When that individual fails to leave behind a complete estate plan, estate taxes can kill beneficiaries financially. This week, this column will briefly go over Connecticut's current estate tax laws. These laws are frequently changing, but an experienced attorney will be able to provide any updated information.

In order for an estate to be taxed, its value has to be at a certain point. Currently, for an estate to be taxed, its value must be at least $2 million. So, for those with estates valuing less than that, taxes -- outside of the deceased's state and federal taxes that still must be filed -- on the estate may not be a big worry.

Connecticut tax crimes: Failing to pay

Failing to pay state and federal taxes is a crime. This is simply something expected of Connecticut residents. Tax crimes, like the failure to pay, can have significant consequences. What are they?

Some people simply choose not to pay their taxes, others fail to pay due to a lack of funds, and then there are those who count on financial managers to make sure their taxes get paid but they fail to do their job. Regardless of why one's taxes are not paid and regardless of how long it has been since taxes were last paid, getting them caught up as soon as possible is advised. Why? Fees and interest are charged daily, only increasing the amount for which an individual is responsible.

Get help appealing tax audits

It happened. You got the letter that everyone hopes never to see. You have been picked by the Internal Revenue Service for an audit. Tax audits can be a scary thing, and when all is said and done, you may not agree with your investigator's final decision. Connecticut residents can seek help in appealing such decisions.

No one wants to pay Uncle Sam more than they have to pay. Still, the vast majority of people do their best to complete their taxes honestly. When the letter from the IRS comes, saying you've been picked for an audit, a list of potential errors may pop into your mind, or you may be completely confused by why this is happening to you.

Discussing tax liens and your options

When the topic of taxes comes up, one of the inevitable issues that will get discussed is the tax lien. Tax liens are commonly used by the IRS, but they can also be used by other parties and individuals. So what is a tax lien and how should you proceed if you are unfortunately targeted by one such a lien?

A lien is a legal claim made against an individual. It is placed on an asset or piece of property to compel that individual to pay whatever he or she owes -- may that be tax debt or some other form of debt. Returning to a previous point, the IRS isn't the only entity that can issue you a lien. If you have work done on your home, for example, then a workman's lien could be utilized if you fail to pay the debt in a timely manner.

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