Monday, November 4, 2013

Texas State Taxes - A Headache You Did Not See Coming

Texas has a great reputation on the national scene as to taxes.  What you don't hear about is the wide net that the Texas Comptroller throws on businesses. Didn't think you taxes in Texas because we don't have taxes in Texas? Wrong!

Don't take this the wrong way - I'm not criticizing the Texas Comptroller. They do a great job with the resources they have. I do wish they were a little more accomodating to taxpayers, but for the most part they do a great job.

No, the burden is on the business taxpayer. Its up to you to determine what you may owe and what you need to do to handle compliance duties. Here is a great primer at the Texas Comptroller website that may help you get started. 

 Need more info? Contact us here.

Monday, October 28, 2013

IRS Announces Subtle Sub S Change

The IRS is changing the way some Sub S shareholders are taxed. The change depends on the shareholders level of activity in the business. The IRS will now charge passive shareholders a 3.8% tax. The tax is hidden - wait for it - in the Affordable Care Act.

The IRS uses a number of factors to determine whether a shareholder is passive or active. The primary test is the number of hours the shareholder spends in the business, with 500 hours being the threshold level.

Most S corps are made up of active shareholders, so this change will have no impact. The significance to me of this changes, is the continuing trend on shareholders/owners/officers etc to document another aspect of their business.

Also lurking in the background are other changes that may be hidden in the Affordable Care Act that are not yet well publicized.

Questions - contact tax attorney Martin Cantu and the staff at

Wednesday, September 4, 2013

IRS Announces Rules on Same-Sex Marriage

The IRS recently announced how it handle same-sex marriages as a result of the Supreme Court cases interpreting the Defense of Marriage Act.

Here are a few bullet points on the IRS position. Keep in mind that as with all IRS rules and regulations, this new pronouncement is a two edge sword. That is to say, you may have reporting errors if you don't follow the rules. Ironically, this aspect of the new position is truly Equal Opportunity and Equal Treatment - be careful of what you want as you might get it!

Here are the point:

1.   Under these new rules, same-sex marriages that are valid in the state where they were performed will be recognized for all federal tax purposes, even if the couple is domiciled in a state that does not recognize their marriage. 

2.   These rules apply to income taxes, estate and gift taxes and payroll taxes related to employee benefits.

3. Here is an example of "gotcha" from Uncle Sam - As a result, beginning with the 2013 tax year, legally married same-sex couples can no longer claim “unmarried” status on their federal tax returns. Instead, they must file joint or separate returns as married taxpayers.

4.    For prior tax years that are still open (generally 2010, 2011 and 2012), legally married same-sex couples can file amended joint or separate returns claiming “married” status, but they are not required to do so. 

5.   Couples who have not yet filed their 2012 returns have until September 15 to file as unmarried; beginning on September 16, they will have to file as married.

6.    The IRS will not recognize other state-recognized unions, such as domestic partnerships, as marriages for federal tax purposes, even if the couple is allowed to file a joint state tax return.

Hopefully this provides you some general guidance for your current filing status, as well as provides you with some additional planning information for the future. 

 Questions? Contact Tax Attorney Martin Cantu.

Monday, August 19, 2013

IRS Expands Audit Resources

Sometimes events coincide and you have one of those "Ah ha" moments. Well, I had last week. Let's set the scene.

Recently the IRS launched an initiative against small business where the IRS questions if the small business has reported all of their income. The IRS sends out letters with the heading "Notification of Possible Income Under reporting."  It notifies the business owner "your gross receipts may be under reported" and says they must complete a form "to explain why the portion of your gross receipts from non-card payments appears unusually low." The Forbes article goes into more detail about the initiative, and the response from the business community.

This on the heels of a report that the IRS is using social media as a way to monitor the spending habits of suspected tax cheats.

Now the third leg of the stool - I spoke with a colleague recently who recounted how the Texas Comptroller's Office BART unit instigated a sales tax inquiry based on a document filed with a governmental agency several years ago. 

This is data mining to the extreme. While the Texas Comptroller is more limited than the IRS, they are apparently out front in examining all areas of the business universe to measure compliance and potential under reporting. 

Think of the tools the IRS has at its disposal and the potential for measuring compliance. And we thought the IRS matching program was a great idea. Is it far fetched to think that the IRS will ask you about the Coach purse you bought your wife and that she put on Facebook, but could not pay your tax debt? Are they going to know your total bank deposits to measure against reported income - before you file a return? The IRS has the ability to check and cross check your return before you even finish your return. 

Just a post script to the Texas Comptroller BART Unit. This is not the first time I've run across their capability. However, prior to the most recent event it was limited to documents and reports filed with a State of Texas agency. 

The net impact of this is that out of state companies buying a business must run down every potential connection with the State of Texas and include potential back taxes into any purchase. The words I recall from my client was that this was tantamount to a robbery. Hard to argue their sentiment. 
Have questions about your tax situations? Contact tax attorney Martin Cantu

#tax #IRS #texastaxes #SATaxHelp

Tuesday, July 30, 2013

Eagle Ford Workers - Fight that IRS Wage Garnishment

Hey Eagle Ford workers - don't let the IRS garnish your paychecks!

Taking action now - not later - right now, insures that you can keep more of that hard earned overtime dollars. The IRS does not care how many hours you put in or that it was over 100 degrees while you were putting in your time.

Here are a couple of things that we can do to help - so keep them in mind:

1. While we can't stop the garnishment immediately, I can have the IRS fax your payroll office a notice to stop the garnishment.

2. The IRS will issue this notice as soon as you've entered into a payment agreement.

3. You must file any back year tax returns before you can enter into an installment agreement. We deal with this all of the time and have a plan of action for you to take care of this issue painlessly.

The biggest service we provide to you is getting this huge gorilla off your back. The sooner you act, the sooner you can begin to enjoy more of your paycheck.

Call San Antonio Tax Attorney Martin Cantu today - 210/549-6036. 

#IRS #EagleFord #sataxhelp

Saturday, July 20, 2013

Texas Taxes - Austin, We Have a Problem!

#IRS #Taxes #TexasComptroller

We're seeing a number of clients having problems with the Texas Comptrollers Office for state due on businesses that were shut down years ago.

While the taxpayer may have viewed the business as shut down, the Comptroller did not. What starts out small grows huge - if only our 401k's grew as fast. The scenario is something like this:

1. Business incorporates and obtains a sales tax permit.

2. Business goes kaput, is shut down, but corporation and sales permit stay active.

3. No reports filed - the Comptroller prepares substitute returns for a couple of years.

4. Taxpayer moves, ignores certified mail from the comptroller, summons, etc. Judgment is taken, including the substituted returns where no actual sales are made.

5. Taxpayer finds out about the judgment years later, after the debt has grown ten-fold.

6. Comptroller refuses to negotiate on the amount due, leaving you between a rock an a hard place - an not able to get that house or car you want because of the debt.

So what to do? First, terminate the sales tax permit, and be sure to file returns while you do have it, even if there is no sales. Second, terminate your entity according to the rules. Third, open that certified letter.

Have questions on taxes? Contact Tax Attorney Martin Cantu.

Tuesday, July 16, 2013

Special Tax Benefits for Armed Forces Personnel

Members of the U.S. Armed Forces receive several tax benefits. Special tax rules apply to military members on active duty, including those serving in combat zones. These rules can help lower your federal taxes and make it easier to file your tax return.

Here are ten of those benefits:

1. Deadline Extensions.  Qualifying military members, including those who serve in a combat zone, can postpone some tax deadlines. 

2. Combat Pay Exclusion.  If you serve in a combat zone, you can exclude certain combat pay from your income. 

3. Earned Income Tax Credit.  You can choose to include nontaxable combat pay as earned income to figure your EITC. 

4. Moving Expense Deduction.  If you move due to a permanent change of station, you may be able to deduct some of your unreimbursed moving costs.

5. Uniform Deduction.  You can deduct the costs and upkeep of certain uniforms that regulations prohibit you from wearing while off duty. You must reduce your expenses by any reimbursement you receive for these costs.

6. Signing Joint Returns.  Both spouses normally must sign joint income tax returns. However, when one spouse is unavailable due to certain military duty or conditions, the other may, in some cases sign for both spouses, or will need a power of attorney to file a joint return.

7. Reservists’ Travel Deduction.  If you’re a member of the U.S. Armed Forces Reserves, you may deduct certain travel expenses on your tax return. You can deduct unreimbursed expenses for traveling more than 100 miles away from home to perform your reserve duties.

8. Nontaxable ROTC Allowances.   Educational and subsistence allowances paid to ROTC students participating in advanced training are not taxable. However, active duty pay – such as pay received during summer advanced camp – is taxable.

9. Civilian Life.  After leaving the military, you may be able to deduct certain job hunting expenses. Expenses may include travel, resume preparation fees and job placement agency fees. Moving expenses may also be deductible.

10. Tax Help.  Most military bases offer free tax preparation and filing assistance during the tax filing season. 

Have questions about your taxes? Contact Tax Attorney Martin Cantu

Tuesday, July 9, 2013

Update from the IRS Audit Battlefield - Tax Return to Audit to Tax Return

Here are three tips from the IRS Audit front line:

1. Business Owners, reconcile your total bank deposits with reported income. This is request number one on the auditor's list. Help yourself out and have this list ready when you receive your audit notice by making it part of your tax return supporting documents.

2. Travel Logs - use a calendar, excel spreadsheet and a mapping tool such as Google Maps to document regular trips and the distance per Google maps. This is an easy sign off by the auditor.

3. Credit Cards - the best comment I heard from an auditor is to treat credit cards like another bank account. Account for each charge as a separate item. Not all charges may be deductible, just like a business bank account.

Hope this give you a heads up on your tax return and audit planning.

Have questions on your return or IRS audit? Contact tax attorney Martin Cantu.

Friday, July 5, 2013

IRS Whistle-blower Alerts to Huge Tax Loophole

Great article in the Austin American Statesman about an IRS whistle-blower and his attempts to point out the huge cost to taxpayers on ITIN numbers.

The article is chock full information on a number of items - the ITIN program itself; how fraudsters and maybe even drug cartels are using loopholes costing taxpayers huge amounts of money; how the whistle-blower process works.

But in light of the ongoing Tea Party fiasco, the more interesting thing is how the IRS works on a personal level. I often tell clients that no two tax cases are the same, primarily because the IRS seems to have different "tracks" to handle cases.  Their computer systems handles cases differently. Add the human touch, and you the process gets even trickier. This article describes how IRS workers are evaluated and how one case can get lost in a volume of cases. This is great example of why its sometimes best to "kick the can down the road".

The two examples also explain why a number of other techniques work. For example, I'm adamant about over preparing for an audit - it makes the auditor more likely to pass on otherwise key issues. Or, the easier you make on the IRS agent, the easier it is for them to check you off your list and let them focus on a more difficult case.

It also points out that the human touch can be detrimental - see the Tea Party cases.

Monday, July 1, 2013

1099s - The Gift That Keeps on Giving

1099s are a road map into your financial situation. The IRS uses 1099s as a road map to track any number of financial transactions in which you participate. For example:

  • Non-employee compensation;
  • Rents;
  • Sale proceeds;
  • Forgiveness of debt;
  • Interest earned and paid;
  • stock and commodity transactions.
The IRS uses a matching program to verify whether you included these items in your return. Sounds simple enough, but often times the system is blind. For example, it cannot located sums included with other amounts, say in gross rents. It will not deduct basis or expenses from the amounts. It cannot tell if the forgiven debt was for homestead or investment property.

All of these situations are a critical part of your tax calculation in a given year. Here's the kicker - the IRS may not send you an inquiry for years. So your left digging in your records to justify an expense 3 years ago, or to figure out how you calculated your gross income.

The IRS can also use it on a going forward basis, asking you to document why you did not earn the same income in the succeeding years.

So pay attention to those 1099s, and pay attention what ID number you down when someone asks you a w-9 - it may come back to haunt you down the road.

Sunday, June 23, 2013

IRS Reignites Employee vs. Independent Contractor Debate

Independent Contractor v. Employee. This fight has been going on between the IRS and the business for as long as anyone can remember. Even cities are not safe from scrutiny. Safe Harbors, amnesty programs, voluntary classification program - the IRS refuses to recognize independent contractors that are used on a routine basis.

Lets review a couple of things on this issue:

  1. The IRS has preference for classification of workers as employees for tax collections purposes.
  2. More and more workers are working at a number of different jobs for multiple employers, and many from home - this is the new economy.
  3. Many states are now interested in classifying workers as employees - we recently saw a case with the Texas Workforce Commission that classed workers as employees independent of an IRS involvement.
  4. Obamacare is right around the corner - employers will adapt to get under the 50 employee threshold. 

Employers, better gear up for a fight on this issue. Document your files. Review the safe harbor policies on classification. Re-class if necessary.

Have questions on this tax issue? Contact Tax Attorney Martin Cantu for a consult today.

Wednesday, February 13, 2013

Eight Tax Benefits for Parents

This information brought to you by the Law Office of Martin Cantu and San Antonio Tax Help.

Are you a parent? Here are eight tax benefits for parents

1. Dependents. In most cases, you can claim a child as a dependent even if your child was born anytime in 2012.   

2. Child Tax Credit. You may be able to claim the Child Tax Credit for each of your children that were under age 17 at the end of 2012. 

3. Child and Dependent Care Credit. You may be able to claim this credit if you paid someone to care for your child or children under age 13, so that you could work or look for work. 

4. Earned Income Tax Credit. If you worked but earned less than $50,270 last year, you may qualify for EITC. If you have qualifying children, you may get up to $5,891 dollars extra back when you file a return and claim it. 

5. Adoption Credit.  

6. Higher education credits. 

7. Student loan interest. 

8. Self-employed health insurance deduction - If you were self-employed and paid for health insurance, you may be able to deduct premiums you paid to cover your child. 

Tuesday, February 12, 2013

Are You Missing Your W-2? Here's What to Do.

The IRS recommends these three steps:

1. Contact the employer first.  Make sure your employer has your correct address.

2. After February 14, you may call the IRS at 800-829-1040 if you have not yet received your W-2. Be prepared to provide your name, address, Social Security number and phone number. Also have the following information when you call:

• Your employer’s name, address and phone number;

• Your employment dates; and

• An estimate of your wages and federal income tax withheld in 2012, based upon your final pay stub or leave-and-earnings statement, if available.

3. File your return on time. You should still file your tax return on or before April 15, 2013, even if you have not yet received your W-2. File Form 4852, Substitute for Form W-2, Wage and Tax Statement, in place of the W-2. 

If you need more time to file you can get a six-month extension of time. File Form 4868, Application for Automatic Extension of Time to File US Individual Income Tax Return.  If you are requesting an extension, you must file this form on or before April 15, 2013.

Have Questions? Contact tax attorney Martin Cantu.

Monday, February 11, 2013

We call it IRS Tax Relief. Others call it IRS Tax Resolution. Large law firms call it Tax Controversy. In any case, you're looking for help.

No matter the label, the problem is still the same. You owe money to the IRS and you haven't made any arrangement to pay that debt. Each individual situation may be a little different, with some more urgent than others, but the facts are basically the same.

As you conduct your search, be aware of a couple of things:

1. I've yet to see a taxpayer satisfied with the performance of a national tax service. Plain and simple, they're just marketing machines interested in taking your money instead of providing you service.

2. IRS Tax Relief, IRS Tax Resolution and Tax Controversy are specialized areas of the law. Retain someone who provides these services on a routine basis. The IRS has a very specific set of rules. You can accomplish a lot by knowing the rules, and you'll flounder if you don't.

3. IRS Tax Relief is not something to put off. Deal with it sooner and make your life easier - its also easier on your pocketbook.

Have questions? Contact IRS Relief Attorney Martin Cantu.

Saturday, February 9, 2013

A Saturday Tax Tip

Here's a quick tax thought for a Saturday - with filing season upon us, it would be great if you had a file in the clouds with all your tax documents, rather than hunting for the blue folder in the kitchen with names and phone numbers on it. You know that folder, don't you?

Make a habit of scanning, or even faxing it to yourself.

Use the clouds to help you access it - it makes it easy to prepare and easy to access in the future. Need help with your tax relief case? Contact San Antonio tax attorney Martin Cantu.  

Friday, February 8, 2013

The Key to Your Tax Relief Case

The simplest key to success of your tax relief case is - pick-up your mail. Simple as it sounds, no one like receiving those letters from the IRS and even fewer open the letters.

Yet, those letters tell you exactly what your response should be. It provides you with a road map to getting this matter behind and moving on with your life.

Have questions about your tax relief case? Contact tax attorney Martin Cantu for answers to your questions. 

Thursday, February 7, 2013

What are you looking for in a Tax Relief Service?

What are you looking for in a tax relief service? I provide you with one-on-one, affordable tax relief and tax resolution services.

Let an attorney handle your case with the attention it deserves.

Have questions? Contact tax attorney Martin Cantu with your questions.