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Danbury Tax Law Blog

Tax crimes do not pay

A woman in another state recently pleaded guilty to a form of tax fraud. She has yet to be sentenced, but she may end up facing years behind bars and have to pay a significant fine. The lesson here -- whether one resides in Connecticut or elsewhere, and whether one does his or her own taxes or taxes for other individuals -- is that tax crimes do not pay. 

According to a news report, the 31-year-old female was arrested and charged for falsifying information on tax returns in order to receive higher refunds for her clients. It is unknown if her clients were aware that this was happening. Most people want to trust their accountants to do their jobs honestly. 

Facts about tax liens

According to the dictionary, a lien is the right of a creditor to take possession of someone else's property until that person's debt is paid or discharged. When it comes to taxes, the government has the right to take one's property if taxes are not paid. Connecticut residents who are facing tax liens may have options to deal with the situation before it becomes a significant issue.

If the government issues a tax lien, how does one get rid of it? There are three basic ways to deal with this type of issue; first is to pay the debt -- easier said than done if money is tight. The second is to work out an offer in compromise with the IRS -- which simply means that a payment plan is reached for all or a reduced amount of the taxes owed. Finally, the third is to consider bankruptcy. Taxes may be discharged if the circumstances are just right.

Connecticut sales tax: things to know

Taxes, taxes, taxes -- they are a part of life that no one can escape. Connecticut residents who are business owners have to pay a slew of taxes, including sales tax on the items that they sell. How exactly does sales tax filing work?

According to the Connecticut Department of Revenue's website, one must register his or her business and then file and pay sales taxes quarterly, monthly or annually. It all depends on an individual's sales tax liability. For example, if one has a tax liability of $1,000 or less over the course of a year, then he or she would only have to pay annually. Those with higher tax liabilities may have to pay monthly or quarterly.

Are your workers properly classified?

As a Connecticut business owner, one of the surest ways to find trouble with the IRS is through mistakes in payroll deductions. Laws regarding the deduction and payment of taxes from employee paychecks is complex and easy to misinterpret. However, some employers may misclassify their employees, which leaves workers without benefits and opens business owners to legal trouble.

If you own a business, you may have employees or independent contractors. Often, there is such a fine line between the two that even the workers may not be certain if they are employed by you or are independent contractors. However, clarifying the classification of each employee is essential to avoiding the serious penalties you may face if you fail to pay the appropriate payroll taxes.

Better to pay income tax over time than not at all

Numerous Connecticut residents find themselves in the position of owing far more in taxes than they can actually afford. When this happens, they may feel overwhelmed and just opt to wait to pay their income tax when they have all the money on hand to do so. This is not something that will sit well with the IRS and can cause some serious legal problems for those who take this route.

At the end of the day, it is better to pay income taxes over time in payment plans than put off paying indefinitely. Believe it or not, the government understands that sometimes money is tight and some people will simply not have the ability to make significant tax payments in one lump sum. This is why they do offer payment plans.

Connecticut man accused of tax evasion pleads guilty

Business owners will do what they can to limit their tax liability. In doing so, some may make mistakes that could cost them dearly in the end. Recently, the owner of Pasquale Furano Landscaping -- a 48-year-old male -- recently opted to enter a guilty plea rather than be indicted for tax evasion.

According to a recent report in the Connecticut Post, this individual is accused of under-reporting receipts on his federal 2009 to 2013 tax returns. The amount he is said to have failed to report is roughly $2.5 million. This means that, over a five-year period, he ended up paying just over $44,000 in taxes rather than the $580,000-plus that he actually owed.

Those facing tax audits may want an attorney in their corner

Those who seek professional help during tax season may believe that their tax preparer is the only person they will need to turn to in the event of an audit. While it is the tax preparer's job to defend whatever he or she did, resulting in the audit, there may be reason to seek the assistance of an experienced tax attorney. Here are a couple reasons why Connecticut residents -- particularly those who are dealing with business tax issues -- who are facing tax audits may want to think about seeking help from legal counsel.

The number one reason to seek out a tax law attorney is time. One won't have forever to figure out what went wrong, how to defend oneself and what to if the audit does not bode well in one's favor. Legal counsel can help one do everything possible to prepare for the audit process in the short time frame given, to have everything submitted for review and fight for a fair outcome.

Connecticut residents facing tax audits can seek help

Every year, you've completed your taxes to your best ability. You've either taken on the role of tax preparer yourself or you turned to a trusted individual to get everything filed for you. Your returns were accepted with no problem, and you paid or received a refund as expected. Then it happens -- you receive notice that you are being audited for a tax return submitted two years ago. You and other Connecticut residents like you who are facing tax audits can seek help to get through it unscathed.

No one wants to be audited. Sometimes, people are chosen at random and just have to put up with the process, and sometimes, the IRS actually has reason to question one's tax return, either due to a minor a glaring error. It doesn't matter why the audit is occurring; it is, and how you handle it matters.

Are you in trouble because of your tax professional?

For the next few months, you will be seeing tax preparation cubicles in the malls and department stores around Danbury. At one time, you may have been tempted to gather your receipts and W-2s and sit down in one of those booths to complete and file your tax return. However, you are a business owner now, and your tax preparation may be far too complex for someone whose qualifications you may not know.

Like working with any other professional, it is important to have a relationship with your tax consultant that is comfortable and trustworthy. After all, when it comes to the IRS, you are the one who pays the consequences if something goes wrong.

Don't let tax debt destroy your business

A former NFL star is learning the hard way that staying on top of paying taxes matters. Two of Kamerion Wimbley's restaurants in another state have been seized by the Department of Revenue for failure to pay taxes. He is not the only one facing the loss of his businesses over tax debt. This is an issue that may also affect business owners in Connecticut.

According to a recent news report, Mr. Wimbley owns two Wings & Things restaurants in his former home state of Kansas. Just recently, both locations were seized and padlocks put on the doors. The Department of Revenue plans to sell the assets of the businesses at auction in order to collect the funds owed, which are said to total over $82,000.

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