What is Tax Law?
Tax law refers to the regulations and procedures governing the calculating, filing and paying of taxes owed by individuals or organizations. When handling tax law cases, attorneys may handle taxes at various levels, such as local, state, and federal. The practice of tax law involves understanding, defending, and resolving issues related to the payment or non-payment of taxes.
If you hire a professional to handle your business accounting and personal taxes, you may feel protected from tax law disputes. However, even a misplaced comma or added zero can cause the IRS to believe you owe more than you do. In some instances, accountants might also take deliberate actions that result in legal and financial repercussions.
In most of these instances, trusting clients sign off on the complex paperwork, believing all is well. Unfortunately, that signature can sometimes come back to haunt you as it implies you were aware of and in league with whatever the completed documents stated.
Tax Law Topics to Understand
If you find yourself facing tax law issues, understanding what tax law is and how it works can help. Most Americans have only a basic understanding of how the tax system works and with good reason. It is complex. It’s especially important for small business owners to understand tax law as it relates to their business. Here are some important tax law topics to get you started.
An IRS audit is a review of an individual’s or an organization’s financial information and financial accounts to ensure what was reported is accurate and filed correctly, according to the tax laws. The audit may also uncover discrepancies business owners were not aware of.
These are just a few of the things the IRS looks for when conducting an audit:
- Does your lifestyle match your income?
- Are you passing off personal expenses as business expenses?
- Are you overstating any or your business expenses?
- Did you fail to report any business income or did you inflate that income?
- Do your payroll taxes match that of your employees?
- If your business handles a lot of cash, are you diverting any of this into your own pocket?
If you are about to have your business audited, consider hiring a tax law attorney. They can help you to navigate the complex process ahead and offer advice as issues arise.
Tax evasion refers to any activity an individual or business engages in to reduce or avoid paying their true tax liabilities. There are two types of tax evasion: evasion of assessment and evasion of payment.
Evasion of assessment means the taxpayer performed an action with the goal of defeating the assessment of a tax. The under-reporting of taxes is a common example of this.
Evasion of payment means that you avoid paying the IRS by hiding money or assets that should be taxed.
Here are some examples of tax evasion:
- Keeping a double set of books
- Overstating deductions
- Destroying financial records
- Concealing sources of income
- Filing a false return
- Making false invoices
- Holding property in another person’s name to avoid taxation
If you are found guilty of tax evasion, you can face hefty fines, prison time, or both.
Income Tax Fraud
Income tax fraud is the willful attempt to evade or defraud the IRS and tax laws. Tax fraud occurs when an individual or business does any of the following:
- Prepares and files a false tax return
- Willfully fails to pay taxes
- Intentionally fails to file an income tax return
- Intentionally fails to report income received
- Makes fraudulent or false claims on the tax return
This also carries the risks of fines, incarceration, or both. If threatened with legal action, seeking legal counsel is a wise decision.
When Would You Need a Tax Law Attorney?
Facing Legal Issues Regarding Taxes
If you’re under criminal investigation from the IRS or you are planning a lawsuit against the IRS, you will need an attorney who understands and practices tax law. For example, if you’re under investigation for tax fraud, your attorney will help you to collect all the information you need and come up with a viable defense while representing you in court.
When Starting a Business
There’s a lot more to starting a business than selling products or services. You also need to determine the business type and structure. This, in turn, determines how the business and your earnings get taxed. Choosing the wrong business structure can cost you.
Your tax lawyer can advise you on the tax structure of your business. Lawyers can also help you prepare for conducting international business. Conducting business overseas often requires special contracts, tax treatments, and other legal concerns.
Luckily, experienced professionals can step in to assist even after committing this error, but it’s better to be proactive. The sooner you act, the sooner you can start protecting your business.
If You Have a Taxable Estate
If your estate is greater than $11.58 million, or $23.16 million if you’re married, your estate might get taxed up to 40% for surpassing that threshold. No one wants a huge portion of their estate going to the IRS instead of their heirs. This is why wealthy people involve tax lawyers in their estate planning process.
It may seem like surpassing the threshold in wealth may do your finances more harm than good, but there are ways around this. Tax lawyers can advise you on what financial decisions to make on an ongoing basis to ensure your taxable estate remains below the threshold.
Work with an Experienced Tax Law Lawyer
Facing issues related to tax law can feel overwhelming. No one wants to go head-to-head with the IRS. Experienced taw lawyers have the knowledge and expertise you need to defend you: from conducting their own audits on your finances to defending you in the court of law.
Submit a request online or call us today at (866) 345-6784 to get in touch with an experienced lawyer in your area!