A Word From Our President concerning Tax Counseling:
Everyone thinks they pay too much in taxes. Everyone thinks they have a good, but a bit conservative, accountant. Everyone thinks taxes are mystery to which only a few have the magic code. The Northern Virginia tax lawyers at The Sack Law Firm do have the magic code. It comes from experience, study, and a willingness to challenge the obvious.
In a perfect world, clients would come in months before a transaction was structured or an event occurred and get advance coaching as to how to minimize taxation. That does happen every 20 or 30 years. In real life events create a momentum that require real time advice and counsel even when various parties are screaming that any changes to any document will blow up the transaction. The Sack Law Firm is able consistently to come up with better answers, even though the opportunity to do advance planning is minimal. We understand taxes. We can and do tackle the tax components of choosing a business structure or creating a non-profit organization or dealing with IRS or State audits. It is a messy business, sometimes 82% is the best one can do. However, at the end of the day the client needs to know that the outcome will not be driven by caution or cowardice or self-importance. Fortunately, The Sack Law Firm has none of these characteristics.
Northern Virginia Attorneys Protecting Your Financial Wellbeing
As tax laws change, so do the issues that arise associated with tax matters and planning. Businesses, tax-exempt organizations, and individuals all can be affected. The tax lawyers at The Sack Law Firm have vast experience handling and planning for the issues that may arise. Our attorneys take the time to consider each client’s goals and needs so that we can offer cost-effective solutions that work for their unique interests. Our firm assists clients with business taxes, income taxes, estate and gift taxation, and real estate and property taxes, as well as disputes involving local, state, and federal authorities. We represent clients in proceedings before the IRS and the Virginia Department of Taxation.
Business Tax Matters
When considering debt workouts and restructurings, for example, it is important to understand the tax consequences. These can help a business decide whether it is appropriate to restructure. Income derived from the cancellation of debt (COD) is not included in a bankrupt corporation’s gross income for the purposes of federal taxes. However, when a bankruptcy is not involved, the exclusion is limited to the amount of a taxpayer’s insolvency. Determining the most favorable structure depends on each company’s unique situation and does not follow a specific formula.
If you are running a partnership, you may want to ask a tax attorney in Northern Virginia about TEFRA procedures and how they affect your entity’s tax obligation. TEFRA stands for the Tax Equity and Fiscal Responsibility Act of 1982. It sets out requirements for tax treatment for entities that qualify as TEFRA partnerships. Generally, partnerships are not considered a separate entity from the partners under tax law, and therefore each partner is responsible for reporting partnership earnings on their individual tax forms. TEFRA also requires partnerships to file joint tax forms with information regarding each partner’s income. If the IRS audits the partnership, it will audit it at the entity level, followed by individual audits. Partnerships with 10 or fewer partners fall into the “small partnership exception” under TEFRA and are subject to different criteria.
Limited liability companies (LLCs) are relatively new and do not fit into a specific IRS tax category. Generally, LLCs do not pay taxes directly, and the business income is taxed via the owners’ personal tax returns, either as a sole proprietorship when there is only one member of an LLC or as a partnership when an LLC has multiple members. This is known as “pass-through taxation.” S corporations are also considered “pass-through” entities, whereby the corporation itself is not subject to federal income tax.
Tax-exempt organizations must adhere to strict regulations set forth by the IRS, as well as following state requirements. Organizations exempt from federal income tax pursuant to Section 501(c)(3) of Title 26 of the United States Code include educational institutions, private foundations, health care organizations, religious organizations, lobbying and other advocacy groups, and federal and state agencies and trade associations. The Northern Virginia tax attorneys at The Sack Law Firm can assist with the formation of these organizations and obtaining tax-exempt status, as well as offering advice regarding the tax implications of complex investments or financial transactions that they may encounter.
Taxpayers with high assets or complicated finances may need to appear before the IRS or Virginia, District of Columbia, or Maryland taxing authorities regarding an audit or another controversy. Although the majority of tax disputes are handled through the IRS audit and appeals process, taxpayers also have a right to litigate cases in federal court once their administrative options have been exhausted. Individuals must also consider tax implications when engaging in estate planning, as well as when handling the affairs of a family member who has passed away. The Sack Law Firm is well-versed in all of these matters. For example, we can assist executors with filing IRS Form 706, which must be filed within nine months of a decedent’s death to report the estate as well as any generation-skipping transfer tax.
Contact a Tax Lawyer in Northern Virginia Today
At The Sack Law Firm, we can help determine a tax structure that is appropriate for each client’s situation. We have years of experience appearing before the IRS, as well as the Virginia, District of Columbia, and Maryland taxing authorities. If you have questions regarding any aspect of tax law or the scope of our services, contact our office today at 703-883-0102 or online.
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