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Complying with tax and business laws successfully often proves easier said than done. The Internal Revenue Code (IRC), which is vigorously enforced by the Internal Revenue Service (IRS), is notorious for its complexity and level of detail. In addition to federal tax regulations, California residents and business owners must also comply with various state tax laws, such as California’s unique sales tax regulations. California tax agencies include the Franchise Tax Board (FTB), which enforces California’s personal and corporate income tax laws, and the California Department of Tax and Fee Administration (CDTFA), which monitors businesses to ensure they are complying with state sales and use tax laws.
With the IRS, CDTFA, FTB, and other government agencies looking over your shoulder, it is imperative to obey all state and federal tax laws – otherwise, you could be at risk of a tax audit, civil fraud penalties, or even criminal prosecution. Tax compliance is also essential for effective financial planning, whether for your business, your family, or yourself. Engage in smart tax planning – and avoid tax penalties before you get into trouble – by working with an experienced Oxnard IRS attorney, like those at the Tax Law Office of David W. Klasing. Serving the Oxnard region and beyond, our California and U.S. tax compliance lawyers are here to counsel, guide, protect, and represent you.
See our Audit Representation Q and A Library
California and U.S. Income Tax Compliance
With a few exceptions, most U.S. citizens, resident aliens (such as green card holders), and non-resident aliens file federal personal income tax returns. If the taxpayer owns, co-owns, or operates a business, he or she may also need to file the appropriate type of tax or information returns – for instance, Form 1120 (U.S. Corporation Income Tax Return) or Form 1065 (U.S. Return of Partnership Income). California residents may also be responsible filing and paying state income taxes, which are administered by the Franchise Tax Board (FTB).
If you have failed to file California income tax returns or U.S. income tax returns, state or federal voluntary disclosure programs may be able to provide a resolution, such as the FTB Voluntary Disclosure Program or an FTB Filing Compliance Agreement. In some instances, it may be more practical to simply file delinquent or amended returns, depending on your specific circumstances. Since noncompliance with state or federal income tax laws can trigger costly failure-to-pay or failure-to-file penalties, following the law is essential. A lawyer for unfiled taxes can help you find ways to resolve issues with state or federal back taxes.
State and Federal Employment and Payroll (FICA) Tax Compliance
Employers are responsible for withholding and, in some cases, matching various employment and payroll (“FICA”) taxes, including the Medicare Tax, the Social Security Tax, and in some cases, the Additional Medicare Tax (AMT). Employers who fail to pay over withheld employee wages risk an investigation for payroll tax fraud, often triggered by a worker classification audit or related issues. Noncompliant employers and other “responsible parties” risk Trust Fund Recovery Penalties (TFRPs) – or worse, prosecution by the Department of Justice (DOJ). Work with a federal or California employment tax lawyer in Oxnard to ensure that your business is following the rules correctly.
Among these regulations, some of the most important pertain to employment taxes and payroll taxes, which include federal income taxes, Social Security and Medicare taxes, the Federal Unemployment Tax (FUTA), the Additional Medicare Tax, and, for the self-employed, the Self-Employment (SE) Tax. With a few exceptions, such as FUTA, which should never be withheld from your employees’ compensation, employers are generally required to withhold, match, and deposit these taxes or be subject to costly penalties, such as failure-to-file and failure-to-pay penalties. Employers in California must also concern themselves with an array of state payroll taxes, such as State Disability Insurance (SDI) and Unemployment Insurance (UI).
Depending on the nature of the violation and how the entity is structured, the business owner may assume personal liability for unpaid payroll taxes, which could seriously damage the business, potentially to the point of insolvency. Our tax professionals can help you navigate all of the state and federal employment and payroll/FICA tax obligations that affect your business, mitigating penalties while identifying ways to increase efficiency and protect the company’s financial health to the greatest extent possible.
See our Employment Tax Law Q and A Library
California State Sales Tax Compliance for Businesses and Online Retailers
Regardless of whether you own a physical store or sell products online, either on your own website or through Amazon (or similar platforms), you may be responsible for collecting and remitting California sales tax, which is enforced by the CDTFA, if transactions meet certain criteria. For example, even if you are an out-of-state business, you may have California sales tax responsibilities if you have “economic nexus” with California. You may have nexus if you employ workers or salespeople in California, own a storefront or warehouse in California, or even make online sales to California customers. Noncompliance will likely trigger a California sales tax audit – which is every business owner’s nightmare. Avoid this situation, or minimize the potential for damage, by consulting with a knowledgeable business tax lawyer in Oxnard.
See our Sales Tax Q and A library
FBAR and FATCA Tax Compliance for U.S. Citizens, Residents, and Non-Residents
Even if you live and work in Oxnard, you could still be impacted by unique tax laws that affect international taxpayers. For example, an Oxnard resident with a foreign bank account could be affected by FBAR laws, which require U.S. citizens, residents, and businesses to file an FBAR (Foreign Bank Account Report, i.e. FinCEN Form 114) if they own or control offshore bank accounts or foreign stock worth $10,000 or more in aggregate. A similar law, the Foreign Account Tax Compliance Act (FATCA), requires citizens, residents, non-residents, and business entities to report specific foreign assets exceeding $50,000 in aggregate value. Our international tax attorneys can guide you through an FBAR audit, help you make a streamlined disclosure, or take other actions to mitigate civil penalties and limit your criminal tax exposure.
C corporations, S corporations, and limited liability companies (LLCs) that elect to be taxed as corporations face some of the most complex rules found in the Internal Revenue Code. Corporations are also responsible for complying with state tax laws, which are vigorously enforced by California agencies such as the Franchise Tax Board (FTB), Employment Development Department (EDD) Franchise Tax Board (FTB). There can be costly penalties for failure to comply, placing your business in jeopardy of operational delays, reduced profits, damaged relationships with other vendors, or potentially even bankruptcy not to mention criminal tax exposure if willful noncompliance (tax fraud) is detected.The best way to avoid penalties, achieve corporate tax compliance, and strategize effectively is to work with an experienced tax professional, like the Oxnard tax lawyers and CPAs at the Tax Law Office of David W. Klasing. With offices in Oxnard, our international and domestic business tax attorneys provide a wide array of tax, legal, bookkeeping and accounting services to California, foreign, and multinational C and S corporations. If you need assistance with a corporation tax issue in California, turn to our Oxnard IRS lawyers for award-winning service supported by more than 20 years of experience.See our International Tax Law Q and A Library
Tax Guidance for Entity Selection and Business Formation
Congratulations on making the exciting decision to launch your own business. One of the first and most important decisions you must make is how the business entity will be “structured,” or organized. To use a common example, should your corporation be structured as an S-corporation, which will allow you to avoid double-taxation due to having pass-through entity status, or as a C-corporation, which – despite affording other advantages – will cause you to be taxed at both the entity and individual level? This is merely one example of the myriad ways in which entity selection, and other aspects of business formation, can impact your company’s financial future before operations even begin.
Unfortunately for business owners, entity selection is not the only business decision with major tax ramifications. On the contrary, tax laws will directly or indirectly impact virtually every aspect of your day-to-day operations and long-term financial strategies. For example, if you are planning to someday pass the business down to your son or daughter, have you adequately prepared for the estate tax issues which will arise? If you sell the business, will greater tax benefits result from an asset sale or a stock sale? How will your payroll tax obligations change if your workers are classified as employees rather than independent contractors, and how do you classify your workers properly? What tax credits, deductions, and exemptions are available, and how might claiming them impact other aspects of your overall tax strategy?
These are just a few of the many questions business owners should ask themselves when planning for the future. Our experienced tax attorneys can sit down with you to analyze your operational budget, discuss your mission and objectives for the company, and design a tailored plan that advances your goals and adheres to your vision while complying with the law.
What Type of Corporation Should I Form, C or S?
When incorporating a business in California, taxpayers have two options: the C corporation, or the S corporation. Each type of corporation has its own unique set of benefits and drawbacks, depending on the business owner’s short-term and long-term goals, resources, and overall financial strategy. In some instances, the most appropriate structure is the limited liability company (LLC), which, though not technically a corporation, shares many of the corporation’s features, such as protection from personal liability for business debts. Moreover, an LLC can elect to be treated as a C or S corporation or partnership for tax purposes. Our Oxnard business tax attorneys can help you make the right choice, positioning your business for growth from day one.
S Corporations as Pass-Through Entities
S corporations are known as “pass-through” or “flow-through entities,” because the business’ income “passes through” or “flows through” to the individual owners, members, and investors, who report the income on their personal federal tax returns. This stands in contrast to “double-taxation,” discussed in the following section on C corporations.
C Corporations and Double-Taxation
C corporations are taxed differently from S corporations. Unlike S corps, which are pass-through entities, C corps are subject to “double-taxation,” which means dividends are effectively taxed twice: once at the corporate level, and once at the personal level. Corporate income is reported to the IRS by filing Form 1120 (U.S. Corporation Income Tax Return), along with associated forms such as Form 1120-W (Estimated Tax for Corporations).
While a flow-through structure, such as an S corporation, has an advantage in avoiding double-taxation, it is not always the right choice in every financial scenario, making it essential to consult with a knowledgeable entity selection lawyer before you start your business – particularly now that the Tax Cuts and Jobs Act (TCJA) has changed so many tax regulations directly affecting corporations. A third option for business owners may be the LLC, discussed in the section below.
See our Entity Selection Q and A Library
How Are LLCs Taxed?
An LLC is a limited liability company, a flexible “hybrid entity” that merges features associated with both corporations and partnerships – including the option to be taxed as either. LLCs are generally treated as partnerships by default and, in order to be treated as corporations for tax purposes, must file with the IRS Form 8832 (Entity Classification Election). Single-member LLCs can either elect to be treated as corporations, or, otherwise, receive “disregarded entity” status.
State Tax Compliance for California, Foreign, and Online Businesses
Corporations are responsible for filing and paying a myriad of federal taxes, such as federal income and employment taxes, in addition to meeting rigorous recordkeeping requirements. It is equally crucial for corporations and LLCs to comply with state tax laws. Even out-of-state (“foreign”) corporations, including online businesses, can be affected by certain California tax provisions, such as state sales tax regulations, depending on factors like the number of internet transactions that were made. In California, state tax regulations are primarily enforced by three agencies:
- California Department of Tax and Fee Administration (CDTFA) – California sales and use tax
- Employment Development Department (EDD) – California employment tax
- Franchise Tax Board (FTB) – California personal and corporate income tax
Any of these agencies, working alongside or independently from the IRS, may conduct a tax audit of your business if you do not file timely corporate tax returns, do not pay estimated California taxes, underreport business income, understate sales (e.g. engaging in illegal “skimming” practices), or make other corporate tax compliance errors. If your C or S corporation has been selected for a California sales tax audit, a worker classification audit, or any other type of state or IRS audit, our Oxnard tax audit attorneys are here to counsel, protect, and advise your business.See our Audit Representation Q and A Library See our Employment Tax Law Q and A Library See our Sales Tax Q and A librarySee our Criminal Tax Law Q and A Library Oxnard, CA Corporate Tax Compliance Lawyers + CPAs for S and C Corporations
Corporate tax compliance is a challenging and complex issue with profound financial ramifications for your business. Before you make another financial decision, consult with a trusted business tax attorney or CPA with decades of experience serving corporations throughout California. To set up a reduced-rate business tax consultation, contact the Tax Law Office of David W. Klasing online, or call our Oxnard tax office at (805) 617-4566. Please note that meetings at our Oxnard location are by appointment only.
Note: If you have concerns about the privacy of our initial or subsequent communication and are unable to easily travel to our Irvine / Orange County Main Office, consider scheduling a GoToMeeting to safely and securely establish an initial or maintain an existing attorney client relationship. With end-to-end encryption, strong passwords and top-rated reliability, no one is messing with your meeting. To schedule a reduced rate initial consultation via GoToMeeting follow this link. Call our office and request a GoToMeeting if you are an existing client. We are generally happy to travel to any of our appointment only satellite offices for a subsequent meeting in appropriate circumstances once a relationship is established via a signed engagement letter and the payment of an initial retainer or where enough retainer is available where a current client to cover the reasonable travel time and time required for the meeting.
Will it cost me more to hire the Tax Law Offices of David W. Klasing, who’s main office and the vast majority of the firm’s staff is located in Irvine California, but an appointment only Satellite office is close to my location, as opposed to a local company? Absolutely not!
Oxnard Tax Corporate Tax Compliance Lawyers + CPAs
Tax compliance can be a challenge – particularly for taxpayers whose financial situations have been complicated by events such as receiving an inheritance, starting a business, selling your company, buying a house, retiring, getting married, getting divorced, donating to charity, or investing in U.S. or foreign securities. No matter what aspect of tax compliance you need assistance with, count on our versatile, award-winning Oxnard tax attorneys and CPAs to provide the sophisticated service you need to resolve the issue efficiently.
To set up a reduced-rate consultation, contact the Tax Law Office of David W. Klasing online, or call our Oxnard tax office at (805) 617-4566 today. Please be advised all meetings at our Oxnard location must be scheduled in advance.
Note: If you have concerns about the privacy of our initial or subsequent communication and are unable to easily travel to our Irvine / Orange County Main Office, consider scheduling a GoToMeeting to safely and securely establish an initial or maintain an existing attorney client relationship. With end-to-end encryption, strong passwords and top-rated reliability, no one is messing with your meeting. To schedule a reduced rate initial consultation via GoToMeeting follow this link. Call our office and request a GoToMeeting if you are an existing client. We are generally happy to travel to any of our appointment only satellite offices for a subsequent meeting in appropriate circumstances once a relationship is established via a signed engagement letter and the payment of an initial retainer or where enough retainer is available where a current client to cover the reasonable travel time and time required for the meeting.
Will it cost me more to hire the Tax Law Offices of David W. Klasing, who’s main office and the vast majority of the firm’s staff is located in Irvine California, but an appointment only Satellite office is close to my location, as opposed to a local company? Absolutely not! See our policies that address this issue here:
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