Tax Law in Vermont

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 Vermont 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.

The state income tax in Vermont is based on a progressive scale. There are 5 income brackets for the state, and each bracket is taxed at a different rate. The lowest bracket is taxed at a rate of 3.35%. However, your tax rate increases as your income increases. For instance, once you make more than $54,100 your tax rate nearly doubles to 6.6% Smart Asset provides an online calculator to help you assess your tax bracket in Vermont.

Tax Law Topics to Understand

If you find yourself facing Vermont 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 Vermont 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 Vermont 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 Vermont 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 Vermont, 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 Vermont 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

The Vermont Department of Taxes urges all residents to be on the alert for tax scams that have become prevalent in the last few years. One of the more popular scams is to steal personal information in order to file a fraudulent tax return. Once the money is received, the scammer will simply vanish with what is rightfully yours. If you have experienced, or suspect tax fraud in Vermont, the state provides resources to file a report.

When Would You Need an Experienced Vermont 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 Vermont 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 Vermont 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.

Tax Foundation lists Vermont’s top corporate interest tax rate at 8.5%. However, Vermont applies a minimum tax to every business entity operating within the state. This also applies to LLCs that are taxed as C-Corporations.

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.

The Vermont Department of Taxes declares any estate worth over $5,000,000 is subject to an estate tax. However, there are certain “Generation-Skipping-Transfer-Laws”, that may shield you from exorbitant taxes even after you pass. It may be in your best interest to hire an experienced Vermont attorney to help you protect your property.

Work with an Experienced Tax Law Lawyer in Vermont

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