Milikowsky Tax Law Blog

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In early May of this year, the Biden Administration officially made the decision to revoke the previously adjusted Trump era ruling on independent contractor classification.    Earlier this year, in January 2021, the Trump administration took advantage of the opportunity to implement final changes to the Department of Labor (DOL) before leaving office. The “final rule” that they implemented stood largely unchanged from the original ruling which established a tiered test to determine employee versus contractor status as part of the Fair Labor and Standards Act (FLSA).    The updated proposal established a two-part analysis to determine whether a worker’s…
  Over the past year businesses flocked to the Small Business Administration (SBA) to submit applications to receive their share of the federally allocated Paycheck Protection Program funding.    PPP loans were distributed to businesses struck hard by the ongoing coronavirus pandemic. Their intended use was to help keep workers employed by providing funding to support their ongoing paychecks following mass layoffs at the forefront of the pandemic.    Since their initial rollout, it has been discovered that many businesses wrongly claimed PPP loans, resulting in millions of dollars of fraudulent claims.    As of May 31, SBA…
While nobody wants to be responsible for paying any more taxes than is absolutely necessary, it’s critical to remain aware of the fine line between getting creative with your tax responsibilities in a legal way, and taking it too far into tax evasion or avoidance. The latter should be avoided if you don’t want to land yourself as the subject of a government audit, or even in prison.    In 2019, IRS declared a tax gap of $441 billion, representing the difference between the amount of taxes that should have been collected, and how much was collected.     Despite this…
In March 2021, the current administration and congress were able to enact the American Rescue Plan, the plan provides cash payments to individuals and included tax law changes benefitting lower-income individuals and families. The American Rescue Plan tax changes are temporary (expiring at the end of 2021) remedies targeted at those affected by the economic downturn caused by COVID-19. They include:  A child tax credit of $3,600 per child under age 6 and $3,000 per child ages 6 through 17 is fully refundable and payable in advance. It will revert for 2022 to $2,000 per child under age 17 unless…
Originally published by GP Solo Magazine for the American Bar Association. Written by Lauren Suarez and Allison D.H. Soares. April 15 symbolizes a lot of things to various lawyers, depending on whether you are a solo practitioner, a midsize firm, a partner in a large, national firm, or merely an individual just coming out of law school trying to decide whether to incorporate and hang your own shingle.  As we look back at the impact the previous presidential administration had on the profession of law as a whole, one of the most crucial pieces of legislation of the Trump…
2020 was a challenging year for many business owners. The ongoing global pandemic not only brought on a health crisis, but an economic crisis to match. While many companies were able to stay open because they were deemed to be essential workers, many others struggled to maintain their day-to-day operating costs on their own and turned to the government’s SBA PPP and EIDL programs for support.    SBA informed lenders Tuesday, May 4th that the PPP general fund was out of money. The remaining funds ($8 billion) are set aside for community financial institutions (CFIs).  CFIs work with businesses in…
No one wants to find themselves under audit. Whether from IRS, EDD CFTB, or other government agencies, audits are stressful and time-consuming. When it comes to facing an audit, how you react at the start of the audit can make all the difference.  Some business owners feel that it is an overreaction to call a lawyer, or, that that is somehow an admission of guilt. In cases of government audits, it is wise to bring in qualified counsel at the start of the audit to prevent the audit from expanding to other areas beyond the initial scope. The importance cannot…
One important aspect of being a business owner is ensuring that you keep up with changing laws and regulations that may be applicable to your business. There are consistent changes and updates being made to various legal requirements and ignoring those changes or failing to recognize them could result in negative consequences for your business.  One ruling that business owners should be sure to maintain awareness of is the need to complete and file Form 5472.  Who must file Form 5472?  Form 5472 must be filed by any business owner that has a foreign owner or foreign shareholders of 25%…
Late in 2020 IRS announced that they intended to increase audits of small businesses by 50%. This news came as a shock to many small business owners who were still attempting to recover from the economic downturn brought on by the COVID-19 pandemic. While many businesses have struggled to hold on, and others closed their doors permanently there were a handful of industries whose revenues actually increased despite their early concern that they would be negatively impacted. While IRS tax audits are daunting, there are ways to protect yourself from the negative outcomes of an audit including fees, penalties, and…
If you are a CPA, here are 4 things to help your client reduce the risk of an EDD, IRS, or SBA audit: 1. Confirm that your client’s 1099-K (provided by a merchant processor) does not report gross proceeds from credit card sales that are higher than the amount you are reporting as “gross receipts” on a business income tax return.  If there is a difference, you may consider adding a statement to explain a legitimate difference. For instance, chargebacks and returns are not subtracted from the amount of “gross proceeds” on the 1099-K form. 2. If you have a…