Tax Law in Ohio

Tax law refers to the regulations governing the calculating, filing, and paying of taxes. When handling tax law cases, attorneys may manage taxes at various levels, such as local, state, and federal. The practice of this type of law involves understanding, defending, and resolving issues related to payment or non-payment.

If you hire a qualified Ohio professional to handle your business or personal taxes, you may feel protected from 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.

Like most states, Ohio tax laws include a state personal income tax. The rate is dependent on your income, as well as your filing status. For the 2021 tax year, the rates range from 2.765% to 3.99%. However, incomes under $25,000 are not subject to state taxes. In addition to state income taxes, some of Ohio’s larger cities also levy a municipal income tax.

Tax Law Topics to Understand

If you find yourself facing Ohio taxation issues, understanding tax law and how it works can help. Most Americans have only basic knowledge of how the tax systems work, and with good reason. They are complex. Small business owners need to understand tax law and how it impacts their business. Here are some essential tax law topics to get you started.

IRS Audits

An IRS audit is a review of an experienced Ohio individual’s or an organization’s finances and accounts to ensure accuracy. The audit may also uncover discrepancies business owners were not aware existed.

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 of 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 qualified Ohio tax law attorney. They can help you to navigate the complex process ahead and offer advice as issues arise.

Tax Evasion

Tax evasion refers to any activity an individual or business in Ohio engages in to reduce or avoid their 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 become 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 in Ohio, 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 Ohio 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

Tax fraud in Ohio can result in both civil and criminal penalties. The statutory fines are often equivalent to the amount of tax in question, essentially doubling the tax burden. In addition, misdemeanor or felony charges may also apply. These can lead to additional fines, and imprisonment for up to 3 years.

When Would You Need an Experienced Ohio Tax Law Attorney?

Facing Legal Issues Regarding Taxes

If you’re under investigation from the IRS or planning a lawsuit against, you will need a Ohio attorney who practices tax law. To illustrate, counsel can help collect the information you need and create a viable defense.

When Starting a Business

There’s more to starting a business in Ohio than selling products or services. You also need to determine the business type and structure. This status, in turn, determines how the business and your earnings get taxed. Choosing the wrong business structure can cost you.

Instead of a corporate income tax, Ohio businesses are subject to the state’s Commercial Activity Tax (CAT). Unlike with federal income taxes, the organizational structure of your business does not change your CAT liability. Instead, almost every business in Ohio, from corporations to sole proprietorships, must pay this tax. The rate is 0.26% of your gross receipts for businesses with receipts totaling at least $1 million. Smaller businesses are only liable for a flat minimum tax of $150.

If You Have a Taxable Estate

If your estate is worth more 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.

According to the Ohio Department of Taxation, the state has not had an estate tax since 2013. In addition, as of 2022, estates are not retroactively subject to the tax, even if the death was prior to 2013. Keep in mind, however, that federal estate tax laws still apply to Ohio estates.

Work with an Experienced Tax Law Lawyer in Ohio

Facing issues related to tax law can feel overwhelming. No one wants to go head-to-head with the IRS. Experienced Ohio tax law lawyers have the expertise you need, from conducting audits to defending you in court.  We can even help you connect with an attorney across Ohio state lines.

Submit a request online or call us today at (866) 345-6784 to get in touch with an experienced lawyer in your area!