by Fresh Start Tax | Nov 27, 2017 | Tax Help
We are an “Affordable Local Professional Tax Firm” that specializes in IRS and state tax debt help on back taxes. Since 1982. 954-492-0088
We are former IRS Agents & Managers who know the system, since 1982.We’re high dollar experts. being former IRS agents and managers we know the exact system IRS uses to close each and every case. We are your local experts!
We worked out of the local South Florida offices as managers, supervisors, and teaching instructors. We were also on the job instructors for new IRS agents.
Call us today for a free initial consultation and hear the truth about any tax problem you are currently having.
We handle all civil cases are and are one of the most honest, trustworthy and experienced tax firms in South Florida. We have been in private practice since 1982 and are true affordable tax experts in resolving individual, business and payroll taxes debt.
If you owe the Internal Revenue Service back taxes or back tax debt, it only makes sense to hire former IRS agents and managers who know the system inside and out. We can review with you all the tax options and solutions to reduce your tax debt or tax bill.
We understand all the protocols and systems to affordably and swiftly deal with any IRS tax issue so we can reduce and resolve your IRS or State Tax Problem.
We can help anyone who owes any federal, State, individual, business, or payroll taxes including those who have not filed back tax returns and those wishing to settle IRS tax debt.
If you Haven’t Filed Back Tax Returns
If you have not file tax returns, our former IRS agents can prepare your back tax returns with little or no records and settle your tax debt at all at the same time.
Make sure you file your back tax returns because IRS enjoys the privilege of filing your back tax returns under 6020 B of the code if you fail to file back taxes. What this means is that IRS can prepare a substitute for return, SFR.
They will file your return to make sure you pay the highest amount allowed by law. If this is happened to you, you can file for an IRS audit reconsideration. IRS audit reconsideration’s sometimes can take up to six months to work.
IRS Required Financials Statements on cases involving Tax Debt on Back Taxes
If you owe back taxes and as a general rule your financial statement will determine how IRS will close your settle your case. Form 433F. The completion of your financial statement is one of the keys to deal with the Internal Revenue Service.
If you owe individual, business or payroll taxes, we will take a current financial statement contact the IRS and work out an affordable individual or business payment plan and/or file and settle the tax if applicable.
It is critical that you understand the importance of your current financial statement because it will determine the outcome of your case.
Your last 3 to 6 months of your financial condition is IRS’s determining factor on your case resolution.
Most cases in which back tax debt is owed to Internal Revenue Service will require a current and verifiable financial statement. Generally on forms 433F or 433A.
You can find those financial statements directly on our website.
When you call us we will give you the financial statement applicable to your case.
As a general rule, when taxpayers or businesses owe back individual or payroll taxes, IRS closes case out by putting them into hardships, asking for payments or the settlement through the offer in compromise.
These are the three most common ways that IRS close cases off their enforcement computer.
1.40% go into a currently not collectable,
2. 6.5 million people get put into payment plans and,
3. 40,000 people get offers in compromise accepted.
We will explore every option and can get you the very best possible tax settlement.
Please keep in mind IRS is a general statute of limitations on 10 years on all collection cases. Certain exemptions exist.
Since 1982 we have been resolving IRS tax debt for individuals, businesses and corporations that owe back federal taxes including payroll tax debt.
Call us today for a free initial tax consultation. Speak to true tax experts.
Since 1982 we have been resolving tax debt for South Florida and people across the United States. We are a full service tax firm.
OWE IRS OVER $100K + CALL TRUE TAX EXPERTS + Ft.Lauderdale, Miami, West Palm Beach, Boca Raton
by Fresh Start Tax | Nov 27, 2017 | Tax Help
If you are having a problem with any Florida sales or use tax issue call us today for a free initial tax consultation. IMMEDIATE TAX HELP!
We are the affordable tax firm that deals with sales tax audits and owing back Florida sales tax. HIRE THE BEST EXPERTS!
We can provide the best possible tax defense if you’re undergoing an audit and work out the best possible solution if you have a pending tax warrant or they are about to take enforced collection action.
Call us today for a free initial tax consultation and we will break the process down and you can find out how speaking to us to make this problem worry free.
On staff CPAs, former IRS agents, managers and teaching instructors, very simply put we know the system and are available for free initial tax consultation to review and advise you on the best possible tax strategies for a state of Florida , DOR, sales tax audit.
Things that you need to know during a Florida sales and use tax audit.
Below you will find some information relative to your audit.
It is best to have a tax representative go in for your audit.
As former IRS agents I can tell you that the government employee loves for taxpayers to go in undefended because they pretty much can have their way.
Give us a call and we will give you a free consultation and advise you on how to best handle your Florida sales tax audit.
The methods of audit selection vary by tax. Some examples of sources used for audit selection are:
• Internal Revenue Service (IRS) information
• Information sharing programs with other states and state agencies
• Computer-based random selection
• Analysis of Florida tax return information
• What types of records will I need to provide?
• When notified of the Department’s intent to audit, you will be informed as to what records you will need to provide.
The types of records needed may include, but are not limited to:
• General ledgers and journals
• Cash receipt and disbursement journals
• Purchase and sales journals
• Sales tax exemption or resale certificates
• Florida tax returns
• Federal tax returns
• Depreciation schedules
• Property records
• Other documentation to verify amounts entered on tax returns
• You must keep your records for three years for auditing purposes.
The Department may also audit for periods longer than three years if you did not file a return or payment, or filed a return or payment that was substantially incorrect.
• What are my rights during an audit?
• The Florida Taxpayer’s Bill of Rights (GT-800039 ) included in Section 213.015, Florida Statutes, explains the rights and obligations of the taxpayer and the Department.
Your rights include:
• The right to fair and consistent application of tax laws.
• The right to get available information and prompt, accurate responses to your questions.
• The right to have the Department begin and complete its audit in a timely manner following notifications of the intent to audit.
• The right to receive simple, nontechnical statements which explain the reason for audit selection and the procedures, remedies, and rights available during audit, appeals, and collection proceedings.
Can I request technical assistance during the audit?
When an auditor and a taxpayer agree on the facts of an audit case, but disagree on how tax law should be applied to the case, the taxpayer can request an opinion on the application of law to a specific set of facts.
The Department’s office of Technical Assistance and Dispute Resolution will issue a Technical Assistance Advisement (TAA), which is binding on the Department.
For more information, read Requesting Advice During an Audit (GT-800061 ). The Department’s Revenue Law Library can help you research the issue before requesting technical assistance.
What happens when the sales and use audit is complete?
After the audit is complete, you may review the audit findings and proposed changes. The auditor will give you a copy of the work papers and explain your rights, including deadlines for filing protests.
If you agree with the audit findings, you are expected to pay the amount due in full, if any. You have the right to protest the proposed changes if you disagree with them.
Other Audit-Related Information
Auditing in an Electronic Environment (e-Auditing) (GT-800050 ) contains details regarding a computer-assisted audit using electronic records to complete all or part of the audit. If you use a computer to record your business activity and keep this data electronically, you are eligible for an electronic audit.
The Department prefers to examine electronic records because it is the most accurate and efficient method of conducting an audit.
The Certified Audit Program (GT-800065 ) is a cooperative effort between the Florida Department of Revenue and the Florida Institute of Certified Public Accountants (FICPA).
If you have not received a Notice of Intent to Audit Books and Records from the Department, you may be eligible to participate.
The program gives you the opportunity to hire a qualified CPA firm to review your sales and use and local option tax compliance. As an incentive, the Department waives penalties and reduces interest if tax is due.
The Voluntary Disclosure Program allows you to report previously unpaid or underpaid tax liabilities for any tax administered by the Florida Department of Revenue.
Once you have paid the tax and interest, the Department will waive the penalties. If you believe you might owe back taxes and the Department has not contacted you about the liability, you may be eligible for the Voluntary Disclosure Program.
Tax Clearance Letter, Certificate of Compliance, or Transferee Liability Certificate:
When buying a Florida business, the purchaser should ask the seller for documentation of any tax, penalty, or interest due to the Florida Department of Revenue. A business owner can use a Certificate of Compliance as proof of good standing with the Department.
Self-audit or self-analysis projects are used to educate taxpayers on issues related to a particular compliance problem or industry.
The Department sends selected taxpayers information about a specific tax or issue, user-friendly instructions, and simple worksheets.
The Department asks the taxpayer to review the materials, complete the worksheets, calculate any additional tax due, and return the paperwork with payment, if needed.
The auditor has limited contact with the taxpayer and does not visit the taxpayer’s location.
The Department generally accepts the taxpayer’s responses.
However, participation in a self-audit/self-analysis does not exempt the taxpayer from further audit review of the same time period.
Call us for details. 1-866-700-1040
by Fresh Start Tax | Nov 27, 2017 | Tax Help
Christian EDD Employment Tax Audit Experts and Specialists, Stop the Worry NOW!!
Proverbs 12:15
The way of a fool is right in his own eyes, But a wise man is he who listens to counsel.
Proverbs 11:14
Where there is no guidance the people fall, But in abundance of counselors there is victory.
As a former IRS agent and teaching instructor I can tell you to never go in unrepresented to any government agency during any employment, corporate, payroll or income tax audit.
Our firm handles all IRS, state EED employment tax matters. When you owe back taxes are going through an IRS audit you want to speak to former IRS agents who know the system inside and out. We were so good at what we did, we actually taught tax law to new agents.
Since 1982 we have been representing taxpayers, corporations and businesses through all federal and state tax matters.
We can give anybody immediate tax help!
The California Employment Tax Audit, EDD
The Internal Revenue Service and the state of California have the right to audit companies that have employees. One of the things an experienced professional firm can do is to limit the exposure during in employment tax audit.
Many times the government employee conducting the audit may expand the audit to do a full-scale audit on all business activities.
The representatives that come out to do employment tax audits are specialist in their area and had been specially trained for badges of fraud and other issues, I know is I was one of those persons when I work for the federal government.
Many different things can trigger a California employment tax audit.
Some of the events that may trigger a tax audit:
1. Sometimes matching forms do not make sense,
2. Year end reports with other government agencies do not match up,
3. Sometimes a scorned employee,
4. Many times a hurt spouse can start any investigation,
5. Businesses and corporations may face an audit due to random chance or because their time for an audit has come.
As a former IRS agent and teaching instructor many things can kick out these audits. Most of the time red flags do occur.
Caution: Anyone undergoing an audit, make sure you are absolutely truthful to make sure this audit stays on a civil basis and does not turn to criminal. Always be truthful during your EDD for IRS payroll tax audit.
Mis-Classification is common during these audits.
With that said what are common tests of employees vs employer.
These are the famous common law tests.
1. Instructions:
Employees.
An employee is required to comply with instruction about when, where, and how to work. Even if no instructions are given, the control factor is present if the employer has the right to give instructions.
Independent Contractor (“IC’s”). IC’s determine on their own on how they will proceed in accomplishing an assigned task. An IC is under no obligation to comply with instructions as to how to perform an assigned task, only that they accomplish it.
2. Training:
Employees.
An employee is trained to perform services in a particular manner.
Independent Contractors. IC’s ordinarily use their own methods to accomplish the required task and receive very little or no training from the party which retains their services.
3. Integration:
Employees.
An employee provides services that are an integral part of the employer’s operations.
Independent Contractors. IC’s services are generally not part of the core operations of the engaging party.
4. Services rendered personally:
Employees.
Employees are personally required to perform their services and may not assign another individual to perform their tasks.
Independent Contractors. IC’s may or may not personally render the required services, as they are permitted to engage others to do the work.
5. Hiring assistant:
Employees.
An employee works for an employer that directly hires, supervises, and compensates the individuals performing the work. Employees do not hire assistants to help perform the required task.
Independent Contractors. An IC may hire, supervise, and pay assistants under a contract that requires the former to provide materials and/or labor, and is responsible for the contracted results.
6. Continuing relationship:
Employees.
An employee has a continuing relationship with an employer on what is hoped to be a long-term basis.
Independent Contractors. IC’s typically enter temporary relationships and move from assignment to assignment.
7. Set hours of work:
Employees.
An employee has set hours of work established by an employer.
Independent Contractors. IC’s are masters of their own time; they set their own hours of work.
8. Full-time work:
Employees.
An employee normally works full-time for an employer.
Independent Contractors. IC’s work when and for whom they choose; and may be engaged by more than one entity at one time.
9. Work done on premises:
Employees.
An employee works on the premises of an employer, or works at a location chosen by the employer.
Independent Contractors. IC’s typically work off the engaging firm’s premises, unless the particular tasks need to be done at the engaging firm’s place of business.
10. Order or sequence set:
Employees.
An employee performs services in the sequence set by an employer, a manifestation of the employer’s direction and control over the method used to perform the work.
Independent Contractors. IC’s decide the method to be used in performing the required task, including the sequence of activities.
11. Reports:
Employees.
An employee submits interim reports to an employer to keep the employer informed as to the method being used to perform the work. This reporting obligation tends to demonstrate that the individual is subject to direction and control.
Independent Contractors. IC’s generally do not submit interim reports; they are only responsible for reporting completion of the work.
12. Payments:
Employees.
An employee is paid by the hour, week, or month.
Independent Contractors. IC’s are normally compensated by a flat rate for a project or a manner different from the engaging firm pays its employees. However, if the general practice in certain trades and professions is to pay on the basis of a unit of time, the method of payment will not be given great weight.
13. Expenses:
Employees.
An employee’s business and travel expenses are paid for by an employer.
Independent Contractors. Typically, IC’s pay their own business and traveling expenses. However, it is customary in certain trades and professions for IC’s to bill their clients for disbursements such as travel, photocopying and other incidental expenses. Payment of disbursements in addition to the fee for services, does not create an employment relationship.
14. Tools and materials:
Employees.
An employer furnishes employees the necessary tools, material, and other equipment needed to complete the task.
Independent Contractors. IC’s generally furnish their own tools and materials.
15. Investment:
Employees.
Employees generally have no investment in equipment or facilities. This demonstrates a lack of interdependence from the hiring firm and is additional indication of an employer-employee relationship.
Independent Contractors.
IC’s have an investment in the equipment and facilities used in their line of work.
16. Profit or loss:
Employees.
Employees are typically paid for their time and labor and are not responsible for ensuring that their revenue exceeds their expenses.
Independent Contractors.
For an IC, a given assignment presents an opportunity for a profit (revenue exceeding expenses) or a loss (expenses exceeding revenues). In other words, there is risk and reward associated with being an IC.
17. Works for more than one person or firm:
Employees.
While an employee can have more than one job at a time, employers can demand exclusive employment and prohibit an employee from working for another employer.
Independent Contractors.
IC’s usually offer their services to multiple, unrelated entities at the same time. Having more than one client or customer at a particular time is persuasive evidence of IC status.
18. Offers services to general public:
Employees.
Employees offer their services only to their employers.
Independent Contractors. IC’s offer their services to the general public.
19. Right to fire:
Employees.
An employee can be terminated by an employer.
Independent Contractors. An IC can be only terminated in accordance with terms of the agreement of engagement.
For example, an IC who fails to perform in accordance with the contract terms is in breach, which may be a basis for termination.
20. Right to quit:
Employees.
An employee can quit his or her job at any time without incurring liability for uncompleted tasks or assignments.
Independent Contractors. An IC usually agrees to perform a specific task and is responsible for its satisfactory completion, or is legally obligated to take responsibility for the damages caused by their failure to complete the job. Right to quit.
California Employment Development Department.
What are some of the most common mistakes found in a tax audit????
A. Mis- Classification of workers.
Some companies want to save on employee costs by classifying employees as independent contractors. is much easier for a company to pay via a 1099 to avoid many taxes versus putting them as full-time employees.
B. Excessive use of cash in the business.
Some industries rely more so on cash transactions than others. However the IRS and EDD recognize that cash is more prone to abuse, concealment, and other wrongdoing. Thus, businesses that rely heavily on cash, even legitimately, face higher odds of an employment tax audit. There various sources in ways that IRS can find out if a company is relying heavily on cash.
C. Use of business funds to cover personal expenses.
CEO’s, managers, and company presidents who lose sight of the line that divides personal assets and expenses from business assets and expenses. For instance, individuals who embezzle /steal funds from their company or who characterize personal trips as business retreats can face serious charges.
D. Failure to keep sufficient/adequate business records.
Employment and tax records must be kept by businesses for a certain number of years. If your company is audited, you will need to rely on these records to show your compliance with all employment tax obligations.
California Employment Development Division (EDD) Handles Employment tax and Payroll Tax
While the IRS handles the administration of the federal employment tax obligations, the Employment Development Division handles the state-based employment tax obligation in California.
The IRS & EDD typically requires an in-person meeting where they will take a tour of the business facilities. They very much act like an IRS auditor revenue agent during this process. Good agents make a full examination of the business, they keep their eyes out for everything.
Oftentimes, the IRS or EDD agent will conduct an informal interview with the individual giving the tour including the individual’s role in the company, the business the company is engaged in, and the markets and places where the company’s goods and services are sold. Sometimes they may want to ask employees questions.
A TAX TIP. As a former IRS agent make sure you walk with them and let your representative answer the questions. You do not want to fall into a government trap question.
What Records are required for a California or Federal Employment Tax Audit?
A California or IRS employment tax audit will typically begin with an in person tour and interview of the facility by the auditing agent. Auditors have great flexibility during their audits.
The audit process truly begins at this stage as the auditor is detailed oriented and will take note of the scope and scale of your operations. Each auditor can work your case differently.
EDD and IRS may ask to see one year of records or they may expand the investigation of three years and IRS can expand it to a fourth-year depending on the omissions that they find if there are any. Each government agency has their own set of criteria.
California does provide for a list of minimum required business records as set forth by Sections 1085 and 1092 of the CUIC.
These records include but are not limited too :
• Annual financial statements,
• Ledgers,
• Check registers,
• Check stubs,
• Bank statements,
• Federal and state income tax returns,
Note: They may also asked for all electronic records pertinent to the above. This is not a comprehensive list.
The EDD may also request additional records for payroll purposes including state and federal tax forms such as W-2s, W-3’s ,W-4s, DE-9s, DE-7s, DE-4 and other documents.
Having former IRS agents and auditors on staff, we know exactly what government agencies look for during the time of their audit.
Call us anytime for up free professional tax consultation and speak to a true IRS, or state tax expert.<><
EDD Audit Letter + Owe EDD Payroll Taxes + Owe & Settle California Tax Debt + Los Angeles + Christian Tax Service Experts
by Fresh Start Tax | Nov 27, 2017 | Tax Help
EDD Employment Tax Audit Experts and Specialists, Stop the Worry NOW! 1-866-700-1040 Since 1982 We Know the System No Cost Consults
As a former IRS agent and teaching instructor I can tell you to never go in unrepresented to any government agency during any employment, corporate, payroll or income tax audit.
Our firm handles all IRS, state EED employment tax matters. When you owe back taxes are going through an IRS audit you want to speak to former IRS agents who know the system inside and out. We were so good at what we did, we actually taught tax law to new agents.
Since 1982 we have been representing taxpayers, corporations and businesses through all federal and state tax matters.
We can give anybody immediate tax help!
The California Employment Tax Audit, EDD
The Internal Revenue Service and the state of California have the right to audit companies that have employees. One of the things an experienced professional firm can do is to limit the exposure during in employment tax audit.
Many times the government employee conducting the audit may expand the audit to do a full-scale audit on all business activities.
The representatives that come out to do employment tax audits are specialist in their area and had been specially trained for badges of fraud and other issues, I know is I was one of those persons when I work for the federal government.
Many different things can trigger a California employment tax audit.
Some of the events that may trigger a tax audit:
1. Sometimes matching forms do not make sense,
2. Year end reports with other government agencies do not match up,
3. Sometimes a scorned employee,
4. Many times a hurt spouse can start any investigation,
5. Businesses and corporations may face an audit due to random chance or because their time for an audit has come.
As a former IRS agent and teaching instructor many things can kick out these audits. Most of the time red flags do occur.
Caution: Anyone undergoing an audit, make sure you are absolutely truthful to make sure this audit stays on a civil basis and does not turn to criminal. Always be truthful during your EDD for IRS payroll tax audit.
Mis-Classification is common during these audits.
With that said what are common tests of employees vs employer.
These are the famous common law tests.
1. Instructions:
Employees.
An employee is required to comply with instruction about when, where, and how to work. Even if no instructions are given, the control factor is present if the employer has the right to give instructions.
Independent Contractor (“IC’s”). IC’s determine on their own on how they will proceed in accomplishing an assigned task. An IC is under no obligation to comply with instructions as to how to perform an assigned task, only that they accomplish it.
2. Training:
Employees.
An employee is trained to perform services in a particular manner.
Independent Contractors. IC’s ordinarily use their own methods to accomplish the required task and receive very little or no training from the party which retains their services.
3. Integration:
Employees.
An employee provides services that are an integral part of the employer’s operations.
Independent Contractors. IC’s services are generally not part of the core operations of the engaging party.
4. Services rendered personally:
Employees.
Employees are personally required to perform their services and may not assign another individual to perform their tasks.
Independent Contractors. IC’s may or may not personally render the required services, as they are permitted to engage others to do the work.
5. Hiring assistant:
Employees.
An employee works for an employer that directly hires, supervises, and compensates the individuals performing the work. Employees do not hire assistants to help perform the required task.
Independent Contractors. An IC may hire, supervise, and pay assistants under a contract that requires the former to provide materials and/or labor, and is responsible for the contracted results.
6. Continuing relationship:
Employees.
An employee has a continuing relationship with an employer on what is hoped to be a long-term basis.
Independent Contractors. IC’s typically enter temporary relationships and move from assignment to assignment.
7. Set hours of work:
Employees.
An employee has set hours of work established by an employer.
Independent Contractors. IC’s are masters of their own time; they set their own hours of work.
8. Full-time work:
Employees.
An employee normally works full-time for an employer.
Independent Contractors. IC’s work when and for whom they choose; and may be engaged by more than one entity at one time.
9. Work done on premises:
Employees.
An employee works on the premises of an employer, or works at a location chosen by the employer.
Independent Contractors. IC’s typically work off the engaging firm’s premises, unless the particular tasks need to be done at the engaging firm’s place of business.
10. Order or sequence set:
Employees.
An employee performs services in the sequence set by an employer, a manifestation of the employer’s direction and control over the method used to perform the work.
Independent Contractors. IC’s decide the method to be used in performing the required task, including the sequence of activities.
11. Reports:
Employees.
An employee submits interim reports to an employer to keep the employer informed as to the method being used to perform the work. This reporting obligation tends to demonstrate that the individual is subject to direction and control.
Independent Contractors. IC’s generally do not submit interim reports; they are only responsible for reporting completion of the work.
12. Payments:
Employees.
An employee is paid by the hour, week, or month.
Independent Contractors. IC’s are normally compensated by a flat rate for a project or a manner different from the engaging firm pays its employees. However, if the general practice in certain trades and professions is to pay on the basis of a unit of time, the method of payment will not be given great weight.
13. Expenses:
Employees.
An employee’s business and travel expenses are paid for by an employer.
Independent Contractors. Typically, IC’s pay their own business and traveling expenses. However, it is customary in certain trades and professions for IC’s to bill their clients for disbursements such as travel, photocopying and other incidental expenses. Payment of disbursements in addition to the fee for services, does not create an employment relationship.
14. Tools and materials:
Employees.
An employer furnishes employees the necessary tools, material, and other equipment needed to complete the task.
Independent Contractors. IC’s generally furnish their own tools and materials.
15. Investment:
Employees.
Employees generally have no investment in equipment or facilities. This demonstrates a lack of interdependence from the hiring firm and is additional indication of an employer-employee relationship.
Independent Contractors.
IC’s have an investment in the equipment and facilities used in their line of work.
16. Profit or loss:
Employees.
Employees are typically paid for their time and labor and are not responsible for ensuring that their revenue exceeds their expenses.
Independent Contractors.
For an IC, a given assignment presents an opportunity for a profit (revenue exceeding expenses) or a loss (expenses exceeding revenues). In other words, there is risk and reward associated with being an IC.
17. Works for more than one person or firm:
Employees.
While an employee can have more than one job at a time, employers can demand exclusive employment and prohibit an employee from working for another employer.
Independent Contractors.
IC’s usually offer their services to multiple, unrelated entities at the same time. Having more than one client or customer at a particular time is persuasive evidence of IC status.
18. Offers services to general public:
Employees.
Employees offer their services only to their employers.
Independent Contractors. IC’s offer their services to the general public.
19. Right to fire:
Employees.
An employee can be terminated by an employer.
Independent Contractors. An IC can be only terminated in accordance with terms of the agreement of engagement.
For example, an IC who fails to perform in accordance with the contract terms is in breach, which may be a basis for termination.
20. Right to quit:
Employees.
An employee can quit his or her job at any time without incurring liability for uncompleted tasks or assignments.
Independent Contractors. An IC usually agrees to perform a specific task and is responsible for its satisfactory completion, or is legally obligated to take responsibility for the damages caused by their failure to complete the job. Right to quit.
California Employment Development Department.
What are some of the most common mistakes found in a tax audit????
A. Mis- Classification of workers.
Some companies want to save on employee costs by classifying employees as independent contractors. is much easier for a company to pay via a 1099 to avoid many taxes versus putting them as full-time employees.
B. Excessive use of cash in the business.
Some industries rely more so on cash transactions than others. However the IRS and EDD recognize that cash is more prone to abuse, concealment, and other wrongdoing. Thus, businesses that rely heavily on cash, even legitimately, face higher odds of an employment tax audit. There various sources in ways that IRS can find out if a company is relying heavily on cash.
C. Use of business funds to cover personal expenses.
CEO’s, managers, and company presidents who lose sight of the line that divides personal assets and expenses from business assets and expenses. For instance, individuals who embezzle /steal funds from their company or who characterize personal trips as business retreats can face serious charges.
D. Failure to keep sufficient/adequate business records.
Employment and tax records must be kept by businesses for a certain number of years. If your company is audited, you will need to rely on these records to show your compliance with all employment tax obligations.
California Employment Development Division (EDD) Handles Employment tax and Payroll Tax
While the IRS handles the administration of the federal employment tax obligations, the Employment Development Division handles the state-based employment tax obligation in California.
The IRS & EDD typically requires an in-person meeting where they will take a tour of the business facilities. They very much act like an IRS auditor revenue agent during this process. Good agents make a full examination of the business, they keep their eyes out for everything.
Oftentimes, the IRS or EDD agent will conduct an informal interview with the individual giving the tour including the individual’s role in the company, the business the company is engaged in, and the markets and places where the company’s goods and services are sold. Sometimes they may want to ask employees questions.
A TAX TIP. As a former IRS agent make sure you walk with them and let your representative answer the questions. You do not want to fall into a government trap question.
What Records are required for a California or Federal Employment Tax Audit?
A California or IRS employment tax audit will typically begin with an in person tour and interview of the facility by the auditing agent. Auditors have great flexibility during their audits.
The audit process truly begins at this stage as the auditor is detailed oriented and will take note of the scope and scale of your operations. Each auditor can work your case differently.
EDD and IRS may ask to see one year of records or they may expand the investigation of three years and IRS can expand it to a fourth-year depending on the omissions that they find if there are any. Each government agency has their own set of criteria.
California does provide for a list of minimum required business records as set forth by Sections 1085 and 1092 of the CUIC.
These records include but are not limited too :
• Annual financial statements,
• Ledgers,
• Check registers,
• Check stubs,
• Bank statements,
• Federal and state income tax returns,
Note: They may also asked for all electronic records pertinent to the above. This is not a comprehensive list.
The EDD may also request additional records for payroll purposes including state and federal tax forms such as W-2s, W-3’s ,W-4s, DE-9s, DE-7s, DE-4 and other documents.
Having former IRS agents and auditors on staff, we know exactly what government agencies look for during the time of their audit.
Call us anytime for up free professional tax consultation and speak to a true IRS, or state tax expert.
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by Fresh Start Tax | Nov 27, 2017 | Tax Help
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If you are having any issue with the state of California, federal employment taxes, owing California state tax get a firm that has worked thousands of cases and will give you the honest truth about how to settle your case with both state and federal governments.
Simply put we know the system and you’ll learn this after speaking to us the very first time.
As a former IRS agent and teaching instructor I can tell you to never go in unrepresented to any government agency during any employment, corporate, payroll or income tax audit.
How to deal with a The California Employment Tax Audit, EDD
The Internal Revenue Service and the state of California have the right to audit companies that have employees. One of the things an experienced professional firm can do is to limit the exposure during in employment tax audit.
Many times the government employee conducting the audit may expand the audit to do a full-scale audit on all business activities.
The representatives that come out to do employment tax audits are specialist in their area and had been specially trained for badges of fraud and other issues, I know is I was one of those persons when I work for the federal government.
Many different things can trigger a California employment tax audit.
Some of the events that may trigger a tax audit:
1. Sometimes matching forms do not make sense,
2. Year end reports with other government agencies do not match up,
3. Sometimes a scorned employee,
4. Many times a hurt spouse can start any investigation,
5. Businesses and corporations may face an audit due to random chance or because their time for an audit has come.
As a former IRS agent and teaching instructor many things can kick out these audits. Most of the time red flags do occur.
Caution: Anyone undergoing an audit, make sure you are absolutely truthful to make sure this audit stays on a civil basis and does not turn to criminal. Always be truthful during your EDD for IRS payroll tax audit.
Mis-Classification is common during these audits.
With that said what are common tests of employees vs employer.
These are the famous common law tests.
1. Instructions:
Employees.
An employee is required to comply with instruction about when, where, and how to work. Even if no instructions are given, the control factor is present if the employer has the right to give instructions.
Independent Contractor (“IC’s”). IC’s determine on their own on how they will proceed in accomplishing an assigned task. An IC is under no obligation to comply with instructions as to how to perform an assigned task, only that they accomplish it.
2. Training:
Employees.
An employee is trained to perform services in a particular manner.
Independent Contractors. IC’s ordinarily use their own methods to accomplish the required task and receive very little or no training from the party which retains their services.
3. Integration:
Employees.
An employee provides services that are an integral part of the employer’s operations.
Independent Contractors. IC’s services are generally not part of the core operations of the engaging party.
4. Services rendered personally:
Employees.
Employees are personally required to perform their services and may not assign another individual to perform their tasks.
Independent Contractors. IC’s may or may not personally render the required services, as they are permitted to engage others to do the work.
5. Hiring assistant:
Employees.
An employee works for an employer that directly hires, supervises, and compensates the individuals performing the work. Employees do not hire assistants to help perform the required task.
Independent Contractors.
An IC may hire, supervise, and pay assistants under a contract that requires the former to provide materials and/or labor, and is responsible for the contracted results.
6. Continuing relationship:
Employees.
An employee has a continuing relationship with an employer on what is hoped to be a long-term basis.
Independent Contractors.
IC’s typically enter temporary relationships and move from assignment to assignment.
7. Set hours of work:
Employees.
An employee has set hours of work established by an employer.
Independent Contractors. IC’s are masters of their own time; they set their own hours of work.
8. Full-time work:
Employees.
An employee normally works full-time for an employer.
Independent Contractors. IC’s work when and for whom they choose; and may be engaged by more than one entity at one time.
9. Work done on premises:
Employees.
An employee works on the premises of an employer, or works at a location chosen by the employer.
Independent Contractors.
IC’s typically work off the engaging firm’s premises, unless the particular tasks need to be done at the engaging firm’s place of business.
10. Order or sequence set:
Employees.
An employee performs services in the sequence set by an employer, a manifestation of the employer’s direction and control over the method used to perform the work.
Independent Contractors. I
decide the method to be used in performing the required task, including the sequence of activities.
11. Reports:
Employees.
An employee submits interim reports to an employer to keep the employer informed as to the method being used to perform the work.
This reporting obligation tends to demonstrate that the individual is subject to direction and control.
Independent Contractors.
IC’s generally do not submit interim reports; they are only responsible for reporting completion of the work.
12. Payments:
Employees.
An employee is paid by the hour, week, or month.
Independent Contractors. IC’s are normally compensated by a flat rate for a project or a manner different from the engaging firm pays its employees.
However, if the general practice in certain trades and professions is to pay on the basis of a unit of time, the method of payment will not be given great weight.
13. Expenses:
Employees.
An employee’s business and travel expenses are paid for by an employer.
Independent Contractors. Typically, IC’s pay their own business and traveling expenses. However, it is customary in certain trades and professions for IC’s to bill their clients for disbursements such as travel, photocopying and other incidental expenses.
Payment of disbursements in addition to the fee for services, does not create an employment relationship.
14. Tools and materials:
Employees.
An employer furnishes employees the necessary tools, material, and other equipment needed to complete the task.
Independent Contractors.
IC’s generally furnish their own tools and materials.
15. Investment:
Employees.
Employees generally have no investment in equipment or facilities. This demonstrates a lack of interdependence from the hiring firm and is additional indication of an employer-employee relationship.
Independent Contractors.
IC’s have an investment in the equipment and facilities used in their line of work.
16. Profit or loss:
Employees.
Employees are typically paid for their time and labor and are not responsible for ensuring that their revenue exceeds their expenses.
Independent Contractors.
For an IC, a given assignment presents an opportunity for a profit (revenue exceeding expenses) or a loss (expenses exceeding revenues). In other words, there is risk and reward associated with being an IC.
17. Works for more than one person or firm:
Employees.
While an employee can have more than one job at a time, employers can demand exclusive employment and prohibit an employee from working for another employer.
Independent Contractors.
IC’s usually offer their services to multiple, unrelated entities at the same time. Having more than one client or customer at a particular time is persuasive evidence of IC status.
18. Offers services to general public:
Employees.
Employees offer their services only to their employers.
Independent Contractors. IC’s offer their services to the general public.
19. Right to fire:
Employees.
An employee can be terminated by an employer.
Independent Contractors. An IC can be only terminated in accordance with terms of the agreement of engagement. For example, an IC who fails to perform in accordance with the contract terms is in breach, which may be a basis for termination.
20. Right to quit:
Employees.
An employee can quit his or her job at any time without incurring liability for uncompleted tasks or assignments.
Independent Contractors. An IC usually agrees to perform a specific task and is responsible for its satisfactory completion, or is legally obligated to take responsibility for the damages caused by their failure to complete the job. Right to quit.
California Employment Development Department.
What are some of the most common mistakes found in a tax audit????
A. Mis- Classification of workers.
Some companies want to save on employee costs by classifying employees as independent contractors. is much easier for a company to pay via a 1099 to avoid many taxes versus putting them as full-time employees.
B. Excessive use of cash in the business.
Some industries rely more so on cash transactions than others. However the IRS and EDD recognize that cash is more prone to abuse, concealment, and other wrongdoing. Thus, businesses that rely heavily on cash, even legitimately, face higher odds of an employment tax audit. There various sources in ways that IRS can find out if a company is relying heavily on cash.
C. Use of business funds to cover personal expenses.
CEO’s, managers, and company presidents who lose sight of the line that divides personal assets and expenses from business assets and expenses. For instance, individuals who embezzle /steal funds from their company or who characterize personal trips as business retreats can face serious charges.
D. Failure to keep sufficient/adequate business records.
Employment and tax records must be kept by businesses for a certain number of years. If your company is audited, you will need to rely on these records to show your compliance with all employment tax obligations.
California Employment Development Division (EDD) Handles Employment tax and Payroll Tax
While the IRS handles the administration of the federal employment tax obligations, the Employment Development Division handles the state-based employment tax obligation in California.
The IRS & EDD typically requires an in-person meeting where they will take a tour of the business facilities. They very much act like an IRS auditor revenue agent during this process. Good agents make a full examination of the business, they keep their eyes out for everything.
Oftentimes, the IRS or EDD agent will conduct an informal interview with the individual giving the tour including the individual’s role in the company, the business the company is engaged in, and the markets and places where the company goods and services are sold. Sometimes they may want to ask employees questions.
A TAX TIP. As a former IRS agent make sure you walk with them and let your representative answer the questions. You do not want to fall into a government trap question.
What Records are required for a California or Federal Employment Tax Audit?
A California or IRS employment tax audit will typically begin with an in person tour and interview of the facility by the auditing agent. Auditors have great flexibility during their audits.
The audit process truly begins at this stage as the auditor is detailed oriented and will take note of the scope and scale of your operations. Each auditor can work your case differently.
EDD and IRS may ask to see one year of records or they may expand the investigation of three years and IRS can expand it to a fourth-year depending on the omissions that they find if there are any. Each government agency has their own set of criteria.
California does provide for a list of minimum required business records as set forth by Sections 1085 and 1092 of the CUIC.
These records include but are not limited too :
• Annual financial statements,
• Ledgers,
• Check registers,
• Check stubs,
• Bank statements,
• Federal and state income tax returns,
Note: They may also asked for all electronic records pertinent to the above. This is not a comprehensive list.
The EDD may also request additional records for payroll purposes including state and federal tax forms such as W-2s, W-3’s ,W-4s, DE-9s, DE-7s, DE-4 and other documents.
Having former IRS agents and auditors on staff, we know exactly what government agencies look for during the time of their audit.
EDD Audit Letter + Owe EDD Taxes + Settle California Tax Debt
Call us today for a free initial tax consultation speak to one of our true tax experts and not a salesperson.
