Corporate Tax Law Terms

All corporations are legal entities, which mean your corporation is formed under the state laws that it is incorporated within. Every state has its own set of corporate tax laws that you need to follow. For this reason, it is quite important that you form a corporation in the state which is ideally suited for you. For example, Florida is a much better place to form a corporation than Texas.

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IRS notices

Never ignore the notices of the IRS. Regardless of what the notice says, you must answer whatever issue is in question. If you are facing issues in understanding the notice, you can get help from a tax professional. By ignoring the notices of IRS, you can loose important legal rights. In addition, heavy fines can be imposed on your business.

Business liability

When you hire a competent tax professional who deals exclusively with the IRS, you find out that there are lots of options available in terms of tax credits and exemptions.

Uncollectable status

If you manage to convince the IRS that your operating expenses are more than your income and you are not in position to pay the taxes, the IRS can delay the process of tax collection for a period of six months.

Installment agreement

An installment agreement comes into play when you agree to pay the amount owed in monthly increments. However, penalties and interest may continue to accrue even after installment agreement.

Offer in Compromise

An Offer in Compromise means that the IRS will settle for a part of what is owed when there is not much of a possibility that they can get complete payment. For that to happen, you need to convince the IRS that an installment agreement is not a good choice for your business. Make sure that your installment plan is backed by the proper legal documentation. If that is not the case, there is a good chance that the IRS will continue to levy and lien your assets and property. Any agreement with the IRS will only stand when it is signed both by an IRS official and the company.

Audit

If you structure your business as a sole proprietorship, you need to be audited. You also need to file and declare income and losses on a Schedule C, which you can find in the Form 1040. When your business receives a notice of audit, immediately contact the revenue agent that is dealing with your case. As your business bears the burden of proof, you have to make sure that all the details are complete and accurate. If that is not the case, you may be charged with the additional taxes. If you are not happy with the report of your revenue agent, you can appeal on many levels. Apart from US tax court, you can also appeal before an appeals officer and an agent’s manager.