IRS Tax Experts Blog

The extra 1% Mental Health Services Tax in California for many years appeared to be a tax that would only affect the very wealthy. However, with professionals having high salaries, investment income, or what looks like a significant amount of cash coming in all at once, they can surpass the $1 million mark surprisingly fast today. There is also a California surtax on income over $1,000,000 at the rate of 1% on the excess. Most importantly, the $1 million index is not adjusted for inflation, which could eventually draw more taxpayers into the tax's reach due to increases in wages and asset values. Look for an experienced tax professional (like an attorney for IRS issues ) for some extra benefits. How Can You Inadvertently End Up with Over A Million Dollars? The tax doesn't need to be triggered by a seven-figure income. There can be many different income events that could drastically affect your income taxes in one year. Stock Compensation Vesting of stock options, exe...

It can be overwhelming to deal with a growing state tax debt and financial difficulties. The California Franchise Tax Board (FTB) offers a lifeline to taxpayers in an absolute financial crisis. The state has a program called an offer in compromise that can help clear your debt. What relief does the FTB OIC program offer to distressed taxpayers? The FTB OIC program is a legal path to resolve final, undisputed state tax debt for less than the total balance due. If you are in structural financial hardship, then the state has a chance to forgive the rest of your personal income tax. This relief is crafted for you when it is not feasible to pay off the full amount of debt. The role of the IRS tax lawyer or other experts can help to file the plea with the FTB. Who qualifies for an offer based on severe financial hardship? The FTB considers each case individually and prioritizes those taxpayers who are unable to pay their tax obligation now or in the near future. The state's len...

  Payroll and employment taxes are among the most closely monitored areas of business taxation in the United States. While many business owners focus on growing revenue and managing operations, payroll tax compliance often receives less attention until an IRS notice arrives. Unfortunately, even small mistakes can result in penalties, interest, audits, and significant financial stress. Understanding the most common payroll and employment tax issues can help employers identify risks early and take corrective action before they become costly. Whether you own a small business or manage a growing company, knowing these warning signs can protect both your finances and your reputation. 1.     Missing Payroll Tax Deposit Deadlines One of the most common issues businesses face is failing to deposit payroll taxes on time. Employers are responsible for withholding federal income tax, Social Security, and Medicare taxes from employee wages and remitting them according to I...

  Most people assume the IRS only comes knocking when someone has done something truly terrible. But the truth is, the line between a civil tax issue and a criminal one isn't always obvious — even to the people crossing it. It's Not Always About Intent — But Intent Matters a Lot Tax mistakes happen. People misclassify income, forget to report a freelance gig, or claim a deduction they're not quite entitled to. These errors can lead to civil penalties, which are serious, but they're not criminal charges. Civil tax fraud, under federal law, typically involves a deliberate underpayment of taxes with some intent to deceive. The IRS doesn't need to prove beyond a reasonable doubt that you meant to defraud the government — the standard here is a preponderance of evidence, meaning it's more likely than not that you acted fraudulently. That's a lower bar. Criminal tax evasion, by contrast, is a whole different legal category. Under 26 U.S.C. § 7201, the gove...

  A transition to reduced tax headaches and enhanced admin efficiency, the 2026 tax season is a landmark change for California's increasingly mobile workforce. In the past, working remotely from Bali or Berlin would require some crisscrossing the screens in California in order to comply with residency “ audit triggers” as well as pacify mismatched tax calendars between California and other countries. But the Federal One Big Beautiful Bill Act (OBBBA) has passed the "Unified Tax Year" (UTY) plan. It is the concept that people with a "Golden State" domicile who work in other countries can flawlessly avoid double taxation and the most hassle-free route to a “zero liability” return. What is the 'Unified Tax Year' and why does it matter for Californians? By adopting a regulated change with a new calendar synchronized with an international income calendar from March 1 to June 30, the Unified Tax Year significantly improves the transparency of the tax ba...

The IRS is actively integrating artificial intelligence and machine learning into its audit selection system. This marks a clear move away from traditional methods that relied heavily on outdated statistical models and manual reviews. Those earlier systems often produced high “no-change” audit rates, where audits resulted in no additional tax liability. With an estimated $688 billion annual tax gap, the IRS is now focusing on precision-driven enforcement. Reports from the Treasury Inspector General for Tax Administration highlight that while AI models show strong potential, they still require better feedback loops, evaluation systems, and ensemble learning to reach full efficiency. High-income individuals, large partnerships, and corporations are expected to face increased scrutiny under this evolving system. How AI Is Transforming Audit Selection? The IRS now uses advanced AI models across multiple taxpayer categories. These systems focus on pattern recognition and relational an...