A recent federal employment tax initiative has increased the number of businesses being audited, with the IRS focusing on issues involving worker classification (employee v. independent contractor), fringe benefits, officers’ compensation (excessive or unreasonably low) and reimbursed expenses.
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On the state and local front, not collecting or remitting sales tax can result in severe civil penalties and in some instances, criminal prosecution.
Therefore, it is important, now more than ever (after the United States Supreme Court’s decision in Wayfair expanding nexus) to ensure proper collection and remittance of tax to states where there is nexus. We are well versed in the Sales and Use Tax requirements and can advise on the applicability to your specific industry and state. We are also knowledgeable in available exemptions for manufacturers, distributors, wholesalers and nonprofit organizations that can mitigate a businesses’ exposure from previously failing to collect or remit sales tax.
If a taxpayer is held personally responsible for non-remittance of state sales tax or federal payroll tax, the state or IRS will pursue the individual’s personal assets to collect, including using liens, levies and garnishments. A responsible person tax or a Trust Fund Recovery Penalty, are nondischargeable in bankruptcy. A responsible person includes but is not limited to: an officer or an employee of a corporation, corporate director or shareholder, a member or an employee of a partnership, or a member of a board of trustees of a nonprofit organization. We represent those facing state or IRS tax assessments resulting in “trust fund” tax disputes over responsibility for unpaid sales tax and payroll taxes.