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Minneapolis Tax Law Blog

Tax benefit of home ownership challenged by proposed reform

The current tax proposal under consideration in Congress has a direct impact on homeowners. Essentially, the proposal removes deductions for state and local taxes paid on property that a homeowner can claim on federal tax returns. This can result in an increase in one’s federal tax bill. A publication in The Washington Post discussed this issue, noting this is just one of many tax obligations home owners should note that could change as a result of tax reform.

Sell a home in 2017? Three tax considerations.

The sale of a home is more than just a simple transaction. It is important that home owners are aware that these transactions can have tax implications. Three specific tax implications to watch for include:

Top tip to avoid tax refund fraud

Tax season is just around the corner. As we get our tax filings in order, it is important to keep in mind the dangers of tax refund fraud. This practice is on the rise in recent years. As noted in a piece in The Huffington Post, the reliance on digital technology likely plays a role in the increase in this form of fraud.

There are steps that can help to reduce the risk of becoming a victim. The main step: file early. The earlier you file your taxes, the less likely you are to become a victim. 

Avoid IRS tax penalties with these tips

Tax penalties can apply in a number of situations. One example involves a failure to pay enough taxes during the year. Generally, a taxpayer should account for at least 90 percent of an individual’s tax obligation through withholdings. A failure to do so can result in penalties.

The Internal Revenue Service (IRS) has encouraged taxpayers to avoid this type of penalty, referred to as the estimated tax penalty. 

Drive for Uber? Sell on Etsy? Tax tips for the sharing economy.

The term “sharing economy” refers to those who provide goods or services through online platforms. The options for employment in this market are seemingly endless. Some offer transportation services through Uber; others sell homemade goods on Etsy. The platforms that offer employment in this market are alluring for a number of reasons. One of the benefits is the convenience of employment without the restrictions common in typical jobs.

Although this type of employment can offer a quick and fairly easily earned bit of cash, it is also important to keep Uncle Sam in mind.

Does the IRS discriminate in its tax practices?

The Internal Revenue Service (IRS) was recently accused of discriminatory practices. In Linchpins of Liberty v. United States of America, a group of plaintiffs allege that the agency intentionally delayed the approval of their tax-exempt status.

How did these groups build a case against the IRS? One of the linchpins for the case is the fact that the tax laws are designed to be “administered fairly and without regard to politics of any kind.” These allegations involve delays to the tax exempt status of conservative groups, like the Tea Party. 

When charitable organizations get an unexpected tax bill

It can be difficult for entrepreneurs and humanitarians to put together businesses to benefit society. There are a few perks that are present to help encourage these endeavors. One of the main perks: exemption from taxation.

How can an organization qualify for exemption from taxation? Charitable organizations operate under the rules provided by the Internal Revenue Code under section 501(c)3. These rules provide guidance to help businesses meet the requirements necessary to avoid taxation.

IRS called to increase small business audits

The Treasury Inspector General for Tax Administration (TIGTA) recently reported that small businesses and merchants who make use of platforms like Uber or Etsy are not properly reporting their income. This accusation is supported by discrepancies that were found between numbers filed on Form 1099-K and individual tax returns. These discrepancies are likely to trigger audits to dig into the issue.

What were the discrepancies? As noted, the issue involves income reported on Form 1099-K and individual tax returns. Form 1099-K, the Payment Card and Third Party Network Transactions Form, is used to report payment from card transactions like credit cards, debit cards and stored-value cards like gift cards.

Audit basics: Know these three types

The Internal Revenue Service (IRS) conducts audits for a variety of reasons. Some audits the result of discrepancies in tax filings, others are allegedly random. Whatever the reason for the audit, those who are the subject of scrutiny by the IRS likely have one thing in common: the stress of the event.

One way to ease the stress is to know what types of methods the agency uses when conducting an audit. Determining which type you are dealing with can help you prepare for the process. The three basic types to be aware of include:

Three ways to stop a tax levy on your salary

Getting hit with a tax levy may seem like something that could never happen to you. It seems unfair that the government can simply take your money directly from your paycheck, yet they do. The Internal Revenue Service (IRS) will employ this means of tax collection for overdue payments.

When with the IRS move forward with a levy? The IRS generally sends a Notice and Demand for Payment, or a tax bill, before moving forward with a levy. The IRS will send a Final Notice of Intent to Levy and Notice of Your Right to a Hearing if the bill is not paid. This is sent 30 days prior to the levy going into effect. 

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