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Sacramento Tax Law Blog

IRS Exchanges Financial Account Information with Foreign Tax Administrators

On Friday, October 2, 2015, the Internal Revenue Service ("IRS") announced the exchange of financial account information with certain foreign tax administrations, meeting a key Sept. 30 milestone related to FATCA, the Foreign Account Tax Compliance Act.

Federal Judge Allows Class Action Status in Uber Worker Classification Suit

On September 1, 2015, U.S. District Judge, Edward Chen, authorized the certification of a class action in a lawsuit against Uber Technologies, Inc. for worker misclassification of Uber drivers. The drivers claimed they were misclassified as "independent contractors," and rather are properly classified as "employees." Thus, if the court eventually sides with Uber, the ride-share company would be subject to penalties, applicable lost wages or overtime wages, California and federal law regarding unfair competition, worker benefits, and employment taxes.

MyFTB Account Registration Disabled, What You Can Do in the Meantime

The FTB has disabled registration for new MyFTB accounts in anticipation of a new, enhanced version of MyFTB, to be released January 2016. However, taxpayers who have existing MyFTB accounts are able to use the following online services:

IRS Data Indicates Taxpayers Leaving California - Be Certain to Exit Correctly

The IRS released its most recent State-to-State Migration Data which summarizes information gleaned from individual income tax returns. Trends indicate that taxpayers are migrating into states including Texas, Florida, Colorado, and South Carolina, whereas taxpayers are leaving New York, Illinois, California, New Jersey, and Pennsylvania. Conclusions regarding the reasons taxpayers move may vary; however, self-interest usually prevails. Not surprisingly, the trend indicates taxpayers are leaving states with higher income tax rates and moving into states like Texas, which has no individual income tax. If you are a California resident and plan to either permanently change your tax domicile to another state, or become a part-year resident, it is important to make sure you take the necessary steps to end your residency with California and that you understand any continuing tax obligations you may have in California. Taxpayers should consult a California tax professional for complete advice on California income tax obligations or if contacted by California in a tax residency audit.

IRS Contacting Employers with Decreased Payroll Tax Deposits

In an effort to assist employers in understanding and meeting their payroll tax obligations, the IRS has initiated an Early Interaction Initiative in which the IRS will be alerted when an employer has a reduction in payroll tax deposits. Some employers will receive letters of inquiries asking the employer to contact the IRS with an explanation regarding the decline in payroll tax deposits. Employers should reply promptly to ensure their compliance and to reduce or eliminate potential penalties if the employer has made an error.

Tax Preparers Sentenced to Prison for Helping Clients Hide Millions

Once again, the Department of Justice has flexed its muscles and shown dishonest financial professionals that if they help clients hide assets offshore or create sham entities for clients to evade taxes, they will be prosecuted. The tax preparers in this case helped their wealthy clients to conceal millions of dollars of assets and income in secret foreign bank accounts, filed false federal income tax returns, maintained an offshore account in the name of a sham corporation and failed to disclose the account to the IRS. They also failed to file a Report of Foreign Bank and Financial Accounts (FBAR). Two of the three tax preparers have been sentenced to 36 and 50 months in prison and ordered to pay fines of nearly $300,000. The third tax preparer is still at large.  To learn more, click here.

California Business Portal Launched by GO-Biz

Whether you are thinking about starting a business or you have already done so, the Governor's Office has established a new one-stop-shop website to assist business owners with important information they need regarding filing requirements, permits and licenses, and other important information.For more information, visit  

IRS Offers Tax Tips for Income Producing Hobbies

Making money from your favorite hobby, such as stamp or coin collecting, craft making, or horse breeding? Any income earned from a hobby activity must be reported on your annual federal income tax return, however, the way hobby income is reported is different than reporting business income and there are particular rules and limits for deductions. Five basic tips to know if your hobby produces income:

National Taxpayer Advocate Releases Mid-Year Report

On Tuesday, July 15, 2015, National Taxpayer Advocate Nina E. Olson released her mid-year report to Congress. The report identifies the priority issues the Tax Payer Advocate Service ("TAS") will address during the upcoming fiscal year. In addition to recapping the 2015 filing season, the report discusses the IRS's long-term strategic planning, tax-related identity theft, and the administration of the Patient Protection and Affordable Care Act. Nine other areas of focus are included in the report, including the TAS's efforts to improve its advocacy for and service to taxpayers, pending TAS research initiatives, and an update on the TAS's efforts to implement an integrated technology system. Volume 2 of the report contains the IRS's responses to the administrative recommendations the National Taxpayer Advocate made in her 2014 Annual Report to Congress, along with additional TAS comments.

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