Tax Law in Tuscaloosa, AL

Tuscaloosa residents are under the Alabama Tax Code, which states that residents of Tuscaloosa pay 4% in state income taxes. However, with added city taxes and levies, this percentage can usually be factored at about 8%. In addition, Alabama does not exempt food from their sales tax system as most states do. A complete breakdown is provided by the Alabama Department of Revenue Sales Tax.

What is , Alabama Tax Law?

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.

If you hire a qualified , Alabama 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.

Tuscaloosa County has a special tax board that collects all of its own taxes. The tax rate in Tuscaloosa sits at 10%. This consists of a 4 % Alabama sales tax, a 3% Tuscaloosa sales tax, and a 3% Tuscaloosa tax.

Tax Law Topics to Understand

If you find yourself facing , Alabama 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 Tuscaloosa, Alabama 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 Tuscaloosa 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 , Alabama 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 Tuscaloosa, Alabama 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 Tuscaloosa 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

There can be significant penalties for Tuscaloosa residents who withhold taxes, either on purpose or accidentally. Alabama Code imposes heavy fines for anyone deliberately refusing to pay income taxes. An individual found guilty of tax fraud is guilty of a felony and must pay a restitution fee of no more than $100,000. However, if a corporation is found guilty of tax evasion, the corporate entity must pay no more than $500,000.

When Would You Need an Experienced Tuscaloosa, Alabama Tax Law Attorney?

Facing Legal Issues Regarding Taxes

If you’re under investigation from the IRS or planning a lawsuit against you, you will need a qualified , Alabama 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 , Alabama 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.

Atlas Alabama provides an overview of the tax structure for those wishing to start a business in Tuscaloosa. LLCs are taxed at a flat rate of 6.5% in Alabama, but this does not factor in the Business Privilege Tax. All Alabama businesses have to pay a tax for the privilege of operating within the state. The rate is gradual, and can be anywhere from $0.25 to $1.75 for every $1,000 of net worth. If the gradual rate does not apply to a business, the business must still pay a flat rate of $100.

If You Have a Taxable Estate

In the case 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.

There are no estate taxes in Alabama, according to the Tax Foundation. It is always a prudent decision to involve an attorney when estates are being divided, but there should be no extra taxes levied in Tuscaloosa.

Work with an Experienced Tax Law Lawyer In Tuscaloosa, Alabama

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

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