What To Do About

Payroll Tax Problems

If your business has employees you are required to payroll taxes. Depending upon the size of your payroll you may be required to make tax deposits with the IRS as soon as the day after you pay your employees. If you fail to pay your payroll taxes on time then the IRS imposes interest and penalties. If you let things go too long the penalties and interest can be larger than the amount of the payroll taxes.

There are several ways that payroll tax problems arise. Sometimes a business is short on cash. If you don't pay your suppliers or your landlord you will be out of business very quickly. On the other hand the IRS moves slowly. It can be months and months before the IRS gets serious. Some business owners hope that by the time the IRS calls or visits they will have enough money to solve their payroll tax problems. Unfortunately that usually doesn't happen. Instead the payroll tax problems grows quarter after quarter, and interest and penalties keep accruing. By the time the IRS shows up things have gotten so bad that the IRS is threatening to shut down the business. In some circumstances the failure to pay payroll taxes can be a felony subject to punishment by imprisonment, or fine.

Another way that payroll tax problems arise is when incompetent or dishonest employees fail to pay the payroll tax debts, and hide their mistakes from the business owners. Although your business can not avoid payroll taxes entirely even if you have incompetent or dishonest employees, I may be able to negotiate a settlement with the IRS to reduce the penalties and interest. I may also be able to prevent the IRS from holding you personally responsible for these payroll tax debts. Most businesses that have IRS payroll tax problems also have state payroll tax problems.

Even though the IRS has many weapons you have rights, including the right to consult a tax lawyer, or tax attorney to help you obtain tax relief. As a tax lawyer, I might be able to help you resolve your payroll tax problems. Solutions for your payroll tax problem may include:

• Submitting an Offers in Compromise to reduce your payroll tax debt
• Obtaining a short-term deferral of your payroll tax debt so that you can have time to get back on your feet
• Negotiating an Installment Payment Agreement so that you can pay your payroll tax debt over as long as 10 years or more
• Reviewing your tax accounts to determine whether or not the IRS has correctly calculated your payroll taxes
• Determining whether the time the IRS has for collecting your payroll tax debt has expired, or will expire soon
• Negotiating releases of federal tax liens so that you obtain a loan to pay-off your taxes
• Having your payroll tax debt declared currently uncollectible so you can have a tax holiday from your old payroll tax debts
• Obtaining releases of payroll tax levies
• Filing claims for interest and penalty abatement

Of course every case is different, and you need an experienced tax lawyer to advise you on the best solution for your situation.

Filing for bankruptcy will not solve your payroll tax problems. Even if your business is a corporation the IRS may be able to collect a portion of the payroll tax debt from the owners, officers, and sometimes even independent contractors and employees. This is known as the trust fund penalty, trust fund recovery penalty, 100% penalty, civil penalty, or Code Section 6672 penalty. I can determine if you are liable for the trust fund recovery penalty. If we believe that you are not a responsible officer subject to the trust fund recovery penalty we can negotiate with the IRS revenue officers and IRS Appeals Officers to have them drop the trust fund penalty. If the IRS doesn't agree our tax attorneys are experienced tax litigators, and we can sue the IRS and represent you before a United States District Court judge.

I can also advise you about the best way to make any partial payments to the IRS in order to reduce your personal liability for the trust fund penalty. Many business owners make payments to the IRS of hundreds of thousands of dollars only to discovery later on that the payments haven't reduced the amount of their personal IRS payroll tax debt.

HOW TO PROTECT YOUR PROPERTY IF THERE IS A "NATIONAL EMERGENCY"

If the new President were to suddenly declare a National Emergency or institutes martial law, what would that mean for you and your assets?

If you say nothing, you may be sadly mistaken. In today's political climate, almost nothing is beyond the reach of our overactive and overprotective federal government.

Below are suggestions to protect you, your business and your family.* (Even without an "emergency", these are still effective strategies)

If you have property that you believe may be at risk for some future expansion of emergency or wartime controls, you still may legally take action to protect it. Here are some ideas:

• Transfer funds outside the United States and outside the U.S. dollar. It's still possible to legally transfer funds from the United States, but it may not be if the U.S. imposes foreign exchange controls. This could occur in the event of another terrorist attack on the United States, or if the U.S. dollar falls sharply due to a terrorist incident or financial panic. That possibility may seem remote at the moment, because the U.S. dollar has appreciated sharply in the last few weeks in response to the global economic crisis. But this gives U.S. investors a rare opportunity to invest offshore and convert their dollars to foreign currencies, or to gold, at the most attractive exchange rates in more than a year.
• Use offshore structures to hold non-U.S. investments. This strategy may not only provide protection against domestic judgments, but may also provide a legal means to avoid future foreign exchange controls.
• Hold investments that aren't subject to U.S. jurisdiction. The most vulnerable investments are those located within the United States. But as this report documents, foreign investments may also be vulnerable, particularly those denominated in U.S. dollars. The least vulnerable foreign investments are foreign real estate and gold, silver or collectibles held outside the United States. Certain contractual relationships, such as insurance contracts and trusts, may also be configured to avoid U.S. jurisdiction.
• Avoid electronic transactions in U.S. dollars through U.S. clearing networks. Most electronic transfers of U.S. dollars clear through a U.S. clearing bank and ultimately the Federal Reserve. U.S. courts have ruled that funds involved in such transactions are subject to U.S. jurisdiction and thus to possible confiscation. A growing number of countries have set up dollar clearing facilities to clear their own domestic U.S. dollar electronic transactions. Such foreign clearing networks are at far less risk from the U.S. legal system than U.S. clearing networks.
• If you’re a foreign investor with U.S. interests, assess your risk to U.S. emergency or war controls. Investors from any country accused of "sympathizing with" or "harboring" terrorists are at particular risk. So are investors in countries or financial institutions through which terrorists have been accused of operating bank and trust accounts.
• U.S. persons not wishing to live under emergency controls are understandably interested in relocating to lower profile jurisdictions. Many countries welcome affluent retirees or other financially self-sufficient persons.

The idea that the President would impose monetary controls might seem remote, but they’ve been imposed many times in U.S. history. And, as this financial crisis deepens, they may be imposed once again, so prepare yourself.

*Be sure to consult an attorney or financial professional before attempting to structure an offshore account or other specialized structure, since there can be significant tax consequences to improperly setting one up.

Setting Up A " Series LLC"

When One is Better Than Many: The Series LLC

by Jay Adkisson and Chris Riser

Segregating “dangerous” assets and businesses into separate entities away from other assets, especially “safe” assets, is always a good idea from an asset protection point of view. For example, an individual who owns a gas station and a rental home should not own both within the same entity. Further, an individual with a large amount of liquid assets (cash, securities, etc.) to protect should not hold those assets in the same entity as a business.

Best practices would dictate that every distinct business or major business asset be segregated into a different limited liability entity. In an ideal situation, someone with 25 rental properties would have 25 separate LLCs, one for each property. However, this is not always practical because of administrative costs and government fees that must be paid for each LLC. What can such a business owner do to protect his assets from liabilities unrelated to those assets in a cost-effective way?

Enter the series LLC. The LLC acts of Delaware, Iowa and Oklahoma provide for the creation of separate protected “cells” (‘series’) within one limited liability “container” (the series LLC) without the need to create separate entities, thus avoiding the inefficiencies associated with multiple related entities. [1] The Delaware LLC Act is the LLC act most often used for series LLCs and is the act used for discussion purposes in this article.

The Delaware LLC Act provides that the liabilities of a particular series are enforceable only against the assets of that series. The Act also provides that classes or groups of members can be established, having whatever rights the LLC agreement says they have.

The combination of these two provisions allows a series to function in many ways as a separate entity for practical purposes. The series LLC concept is similar in function to segregated portfolio companies and protected cell companies designed for the mutual fund and captive insurance industries in a number of offshore and onshore jurisdictions.

Be Careful with Ads Touting "Offers In Compromise"

Check Carefully Before Applying for Offers in Compromise

WASHINGTON — The Internal Revenue Service today issued a consumer alert advising taxpayers to beware of promoters’ claims that tax debts can be settled for “pennies on the dollar” through the Offer in Compromise Program. Some promoters are inappropriately advising indebted taxpayers to file an Offer in Compromise (OIC) application with the IRS. This bad advice costs taxpayers money and time. An Offer In Compromise is an agreement between a taxpayer and the IRS that resolves the taxpayer's tax debt. The IRS has the authority to settle, or "compromise," federal tax liabilities by accepting less than full payment under certain circumstances. “This program serves an important purpose for a select group of taxpayers. But we are increasingly concerned about unscrupulous promoters charging excessive fees to taxpayers who have no chance of meeting the program’s requirements,” said IRS Commissioner Mark W. Everson. “We urge taxpayers not to be duped by high-priced promises.” The OIC may be considered only after other payment options have been exhausted. If taxpayers are unable to pay their taxes in full, there are other payment options, such as monthly installment agreements, that must be explored before an OIC can be submitted. The IRS.gov Web site contains complete information on the collection process and payment options. Publication 594, The IRS Collection Process, also provides helpful information on the options available to taxpayers. Taxpayers also should review Form 656, Offer In Compromise, or Form 9465, Installment Agreement Request, to determine if they qualify for either payment program. Form 656 provides detailed instructions for submitting an offer and includes all of the necessary financial forms. Some taxpayers may be exempt from the $150 OIC fee depending on income or whether the OIC is based solely on doubt as to tax liability. Taxpayers who claim the poverty guideline exception must certify their eligibility using Form 656-A, Income Certification for Offer in Compromise Application Fee. The poverty guideline exception applies only to individuals. All publications and forms are available at IRS.gov or taxpayers may order copies by calling 1-800-829-3676. All publications and forms are available free. Taxpayers may feel they need the assistance of a qualified tax professional to prepare and submit an OIC. Taxpayers may contact local or state tax professional associations for enrolled agents, CPAs or attorneys to locate someone in their geographic area that has the education and experience to assist them.