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Tax Law & IRS Defense

Understanding Death Taxes

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February 14th, 2022

Posted in Asset Protection,Probate & Guardianship,Tax Law & IRS Defense,Wills, Trusts & Estate Planning

Many people worry about filing or paying taxes to IRS or the federal government at death. The truth of the matter is that very few need to be concerned. According to IRS data, just 0.15% of decedents needed to file an estate tax return (Form 706) in 2019, and only 0.07% will pay any estate tax. That’s lower than the historical 1% to 2% share. Note there are some states that also have an estate or inheritance tax. Florida is not one of those states.


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Important Deadlines for Taxpayers in 2022

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January 21st, 2022

Posted in Business & Corporate Law,Tax Law & IRS Defense

Calendaring important IRS and tax authority deadlines can help you avoid stress. To avoid paying penalties and other tax consequences, calendar tax deadlines and plan for tax filings with your accountant and other members of your professional team. Below are few examples of important tax deadlines:


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Trust Fund Recovery Penalty for Business Employment Taxes to IRS

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October 8th, 2021

Posted in Business & Corporate Law,Tax Law & IRS Defense

The Trust Fund Recovery Penalty (“TFRP”) was created to encourage prompt payment of withheld income and employment taxes such as social security taxes, railroad retirement taxes, or collected excise taxes. Typically, the employee’s money is held “in trust” until the business owner or responsible party makes a tax deposit to the IRS for the amount owed, e.g. tax withheld on IRS Form 941 Employer’s Quarterly Federal Tax Return.

Problems arise when a business owner or person responsible for collecting or paying withholds these taxes from employees but does not pay the same over to IRS. Some businesses may ignore payment because they are struggling to make ends meet or choose to spend the withheld money elsewhere. Other businesses are simply unaware of the tax obligation or the person responsible takes action contrary to what the business is aware of. Either way, the IRS will seek payment from the business and also look to apply personal liability for the TFRP to certain people who are responsible for payment and willfully do not make payment.


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Compensation & Fees for Personal Representatives, Trustees, and Attorneys in Florida Estates and Trusts

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September 15th, 2021

Posted in Asset Protection,Probate & Guardianship,Tax Law & IRS Defense,Wills, Trusts & Estate Planning

Under Florida law, the personal representative of an estate (sometimes also called an executor) and the trustee of a trust are entitled to compensation, as are the attorneys who represent the personal representative and trustee.

Compensation of Personal Representative The personal representative is entitled to a commission from the estate assets, which can be calculated using a percentage of the inventory value of the probate estate assets and the income earned during administration. For a formal probate administration, the following table sets forth what amount is deemed to be reasonable compensation:


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Florida Sales Tax Rates on Commercial Leases May Reduce to 2% in 2022

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August 13th, 2021

Posted in Business & Corporate Law,Real Estate Law,Tax Law & IRS Defense

A legislative bill was recently enacted that may reduce the sales tax rate on commercial leases to 2%. The timing of the decrease depends on the economic recovery of the unemployment compensation trust fund. Once this balance has reached its pre-pandemic level, the sales tax rate will adjust. You may need to periodically consult with your accountant to determine the current tax rate since it is contingent upon the amount in the employment compensation trust fund.


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The IRS Collection Process

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April 9th, 2021

Posted in Asset Protection,Tax Law & IRS Defense

If you do not pay in full when you file your taxes, you will receive a bill notice from the IRS. This bill begins the collection process, which continues until your account is satisfied or until the IRS may no longer legally collect the tax, for example if the collection period has expired. The first notice you receive will be a bill that explains the balance due and demands payment in full. It will include the amount of the tax, plus any accrued penalties and interest, which will continue to accrue.


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Responding to a CP2000 Underreported Income Notice from the IRS

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January 15th, 2021

Posted in Tax Law & IRS Defense

When your tax return does not match data reported to the IRS from third parties, a letter called an IRS Notice CP2000 may be sent to you. It is not a formal audit notification, but it can quickly turn into a deficiency notice if not addressed. CP2000 Notices contain:

  • The amounts you reported on your original or processed amended return;
  • The amounts reported to the IRS by the payer or 3rd parties;
  • The payer’s name, ID number, the type of document issued (W-2, 1098, 1099), and the tax identification number of the person to whom the document was issued;
  • The proposed changes to your income, tax, credits, or payments; and
  • A Response form, payment voucher, and an envelope.

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2020 Special Tax Deductions for Cash Donations to Charities

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December 18th, 2020

Posted in Tax Law & IRS Defense

The CARES Act, enacted by Congress previously this year, includes a special $300 charitable tax deduction, even if you do not itemize your deductions on your taxes. The purpose of this deduction is to help charities that may be struggling due to the COVID-19 pandemic. This new and temporary deduction is only available to taxpayers who make a cash contribution directly to a charity and before the end of the 2020 year.


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