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 complicated and easy to misinterpret. However, some employers may misclassify their employees, which leaves workers without benefits and opens business owners to legal trouble.
As a business owner here in Connecticut, you may have people working for you. How you classify them determines whether you owe payroll taxes. If you improperly classify an employee as a contractor and fail to make payroll tax payments, you could end up on the IRS's radar.
When the Internal Revenue Service sends you a Notice of Deficiency, there may be multiple years at issue.
Tax litigation is a broad term, referring to a dispute with tax authorities at the federal, state, local or even foreign level. The term encompasses both civil and criminal tax matters. It is also the last resort for many taxpayers, utilized only after administrative appeals and settlement options have been exhausted.
Most legal claims are subject to deadlines, called statutes of limitations. In practical terms, that means that a plaintiff cannot bring a lawsuit after the applicable period of time has expired.
If you disagree with a tax assessment or position taken by the Connecticut Department of Revenue Services, the agency’s website states that a taxpayer may file a written protest. However, the process is often more complicated.
A company may understand the rationale for keeping good records regarding its payroll taxes. Under federal law, any withholdings from employee paychecks should be kept separate, and not spent on other company expenses, before they are submitted to the IRS.
In our last post, we discussed a lawsuit brought against the IRS by two former corporate executives, claiming that questionable IRS tactics had cost them their job. A federal court ruled that the IRS, as an agency, was immune from claims of alleged deceit toward the two executives.
For those who are Shakespeare historians, the phrase “beware the ides of March” continues to have significance. We hope that the middle of March came and went without any significant issues for our readers. However, for those still struggling to complete their federal income tax returns, it is the ides of April that may be cause for concern.