Tax Law in Providence, RI

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 , Rhode Island 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.

Providence residents are subject to Rhode Island’s Personal Income Tax. The 2021 rates depend on your income and range from 3.75% to 5.99%. Also, if you own property in Providence, you will have to pay Property Taxes. The 2021 tax rate for residential property is $24.56 per $1,000 of assessed value. However, in some cases, you can reduce your tax liability by claiming a homestead exemption.

Tax Law Topics to Understand

If you find yourself facing , Rhode Island 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 Providence, Rhode Island 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 Providence 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 , Rhode Island 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 Providence, Rhode Island you can face hefty fines, prison time, or both.

Income Tax and Fraud

Income tax fraud is the willful attempt to evade or defraud the IRS and Providence 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

Under Rhode Island Law, you can face varying penalties for failure to pay your taxes in Providence. You may have to pay fines equivalent to 50% of your tax liability. Furthermore, if your actions rise to the level of criminal activity, you could be looking at jail time.

When Would You Need an Experienced Providence, Rhode Island 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 qualified , Rhode Island 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 , Rhode Island 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.

Most Providence businesses have to pay some sort of State Business Tax. Traditional C corporations pay a 7% corporate income tax. However, other business organizations, including Pass-Through Entities, are also subject to minimum tax payments of $400. In addition, Providence businesses must pay local property taxes on both real estate and business equipment. In fact, the City of Providence taxes business property at an even higher rate than residential property.

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.

Rhode Island has a state estate tax that may apply, regardless of your federal tax liability. A tax return is mandatory for all Providence estates, regardless of value. However, only estates worth more than the state threshold will owe taxes. Note that Rhode Island’s threshold is much lower than the federal amount. For deaths in 2021, it is $1,595,156, and for 2022 deaths it will rise to $1,648,611.

Work with an Experienced Tax Law Lawyer In Providence, Rhode Island

Facing issues related to tax law can feel overwhelming. No one wants to go head-to-head with the IRS. Experienced , Rhode Island 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 Rhode Island 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!