Texas sales and use tax are structured to prevent the same tax from being collected more than once on a taxable transaction. However, under Texas law, the Comptroller may pursue both the seller and purchaser for tax arising from the same transaction.[1] The law limits the Comptroller to collecting the tax only once.[2] However, courts have held tha...
How Innocent Spouse Relief Can Affect Tax Liability When spouses file a joint federal tax return, both are generally responsible for the tax liability associated with that return. Federal tax law provides certain forms of relief that may limit a qualifying taxpayer's responsibility for particular joint tax liabilities. Eligibility depends on the ty...
Challenging a Texas Sales Tax Assessment A taxpayer who disagrees with a Texas Comptroller tax assessment may have options to challenge the determination through the administrative process. A redetermination proceeding allows a taxpayer to dispute an assessment before it becomes final. Addressing Business and Personal Tax Liability Our client came ...
When an IRS Error Leads to an Incorrect Gift Tax Assessment An IRS error related to a gift tax return can result in a taxpayer's account reflecting a liability that should not be due. Even when the source of the assessment is identified, the IRS may still need to make the appropriate account adjustment before the liability is removed. Challenging a...
Correcting a Tax Liability Caused by a Return Error An error on a federal tax return can result in an IRS account reflecting a liability that does not accurately reflect what the taxpayer owes. Depending on the type of error, an amended return may be used to correct information reported on the original return. Processing the amended return is an im...
When the IRS Does Not Properly Credit Federal Tax Withholding Federal income tax withholding reported on Form W-2 generally represents amounts withheld from an employee's wages and applied toward the employee's federal income tax obligations. When those amounts are not properly credited to a taxpayer's account, the IRS may show an outstanding balan...
What Happens During a Texas Sales and Use Tax Audit? A Texas sales and use tax audit may involve a review of a taxpayer's records and transactions to determine whether the correct amount of tax was reported and paid. Depending on the issues under review, the audit can create potential additional tax exposure for a business. When disputed issues ari...
Challenging a Property's Appraised Value in Texas A property's appraised value can directly affect the amount used to determine property tax obligations. When a property owner disputes that valuation, Texas law provides procedures for challenging the appraisal. Depending on the stage of the dispute, a property tax matter may proceed beyond the admi...
How the Section 121 Principal Residence Gain Exclusion Works Section 121 of the Internal Revenue Code can allow qualifying taxpayers to exclude a certain amount of gain from the sale of a principal residence, making the exclusion an important consideration in income tax planning related to a home sale. When the IRS questions whether the exclusion a...
What Are the IRS Hobby Loss Rules? Generally, taxpayers may deduct “ordinary and necessary” business expenses under Sections 162 and 212 of the Internal Revenue Code. Many taxpayers believe that they can deduct their expenses related to their passions, similar to how one may deduct expenses related to a business. However, Section 183 limits this de...
IRS Offshore Compliance Options for Foreign Asset Reporting Many tax practitioners and taxpayers have noticed increased enforcement in the international tax space. It’s always better to correct failures in filing foreign information returns or FBARs before receiving a letter from the IRS. Based in The Woodlands and serving the Greater Houston area,...
Texas Sales Tax Audit Leads to Significant Penalty Assessment Texas sales tax audits conducted by the Texas Comptroller can result in substantial additional tax assessments, penalties, and interest for businesses. When disputes arise over audit findings, taxpayers may challenge the assessment through a Redetermination Hearing to seek adjustments an...
Fraudulent Tax Filing Results in IRS Liability Identity theft and fraudulent tax return filings can create serious IRS issues for taxpayers when returns are filed using stolen Social Security numbers. In this case, a fraudulent tax return was filed using our client’s Social Security number to claim a large refundable credit. As a result, the IRS as...
Offer in Compromise Used to Resolve Significant IRS Tax Debt Taxpayers facing substantial IRS liabilities may qualify for an Offer in Compromise when paying the full amount would create financial hardship. Our client owed approximately $305,000 in federal tax liabilities and sought a resolution that would avoid prolonged IRS collection activity. Af...
What Is a Trust Fund Recovery Penalty and How the IRS Enforces It A Trust Fund Recovery Penalty (TFRP) is one of the most serious payroll tax enforcement actions the IRS can impose. When employment taxes are not properly remitted, the IRS may assess personal liability against individuals deemed responsible for collecting and paying those taxes. Unl...
What Is the Section 121 Principal Residence Gain Exclusion? When a taxpayer sells a principal residence, the Internal Revenue Code allows eligible homeowners to exclude a portion of the gain from taxable income under Section 121. Individuals may exclude up to $250,000 of gain, while married couples filing jointly may exclude up to $500,000 if they ...
Introduction Many business owners find the appeals process for Texas Comptroller sales tax audits daunting. The best way to resolve contested issues in an audit is directly with the auditor. However, when you are unable come to an agreement with the auditor, there are various channels available to taxpayers to pursue a more favorable result. The pu...
How Texas Sales Tax Audits Create Additional Tax and Penalty Exposure Businesses operating in Texas must comply with sales and use tax requirements enforced by the Texas Comptroller. When discrepancies are identified during an audit, the state may assess additional tax, interest, and penalties based on its review of the company’s records. Sales tax...
What is the TFRP? The Trust Fund Recovery Penalty (TFRP) allows the IRS to hold certain individuals personally liable for the unpaid employment taxes of a business. Under Section 6672 of the Internal Revenue Code, any person who is required to collect and pay over any tax and fails to do so may be liable for a penalty equal to the amount of tax tha...
Fraud Penalties in Sales Tax Audits and How They Are Challenged Sales tax audits conducted by state taxing authorities can result in additional tax assessments, interest, and penalties when discrepancies are identified. In certain cases, the taxing authority may assert fraud penalties, which significantly increase the total liability. Fraud penalti...
