Accuracy Related Penalties

Accuracy related penalties are a collection of different penalties, the two most common being the “substantial understatement” penalty and the “negligence and disregard of the rules and regulations” penalty. These penalties are calculated as a flat 20% of the net understatement of tax. The accuracy related penalties may usually be avoided by providing adequate disclosures Read more…

The Taxpayer Advocate

  What is taxpayer assistance? If you feel that you are experiencing significant hardship as a result of some IRS action, you might request assistance from the Taxpayer Advocate. The Taxpayer Advocate is a quasi-independent branch of the IRS, mandated by Congress to protect taxpayers against the harsh application of the tax laws. Each state Read more…

The Legal Difference Between Independent Contractor And Employee According To The IRS

There is no strict definition of “employee”. In general, a worker is an employee if you have the right to control and direct the worker both as to the task to be accomplished and the manner in which that task is to be accomplished. The IRS has developed a twenty-factor analysis (Form SS-8) to aid Read more…

My Employer Wants To Claim Me As An Independent Contractor? IRS Consequences?

If your employer has improperly characterized you as an independent contractor and the IRS later reclassifies you as an employee, the consequences can be severe for your employer. The employer will probably owe the IRS an amount equal to approximately 35% of that paid to you. Moreover, even if the employer operates his business as a corporation, he may end up Read more…

I Operate A Small Business And Failed To Pay Employment Taxes

Payment Options And Potential Penalties Paying Over Time And Abatement Of Penalties The IRS generally just wants their money paid in full and will let you pay over time usually in monthly installment payments. If you request an installment agreement however, the Internal Revenue Service will first carefully examine your books and records, and you will Read more…

Employer Penalties For Failure To Pay Employment Tax

There is a host of civil penalties for negligent or inadvertent failure to make proper or timely payments and deposits of employment taxes. For any willful failure to withhold or pay employment taxes, both civil penalties and criminal sanctions may apply. Perhaps the most commonly encountered civil penalty is the Trust Fund Recovery Penalty. This Read more…