Legal news

TAX REGULARISATION REQUIREMENTS

The consequences for not filing your taxes increase as time passes.

For instance, delaying your filing past April 15th will automatically result in a fine of either $100 dollars or 5 percent per month of your taxes owed.

If you continue refusing to file, the IRS will charge you 100 percent of your taxes owed and will not allow you any deductions or credits.

This means that any perks for having dependents, giving to charity, or even paying interest on your mortgage are not considered.

Ignoring bills and notices from the IRS can lead to a determination of tax evasion.

Tax evasion is a serious offense that will leave you with a court hearing, marks on your credit, and criminal record.

Even worse, if found guilty of tax evasion, you will be fined up to $25,000 dollars and can serve up to 1 year in prison.

Additionally, you risk losing your refund if you don’t file your return.

If you are due a refund for withholding or estimated taxes, you must file your return to claim it within 3 years of the return due date.

The same rule applies to a right to claim tax credits such as the Earned Income Credit.

To regularize past tax returns, you must first collect your past income information.

Gather as much information as you can about your income for the years you need to file.

You’ll need your prior W-2s and 1099s for those years. If you are missing a W-2 and cannot obtain a copy from your employer, you can request a substitute from the IRS by filing an IRS Form 4852.

If you sold any capital assets in those years, such as stocks, you need to report this income as well.

However, if your goal is to stop penalties and interest from accruing, you can always estimate your income and make a tax payment before receiving a copy of your 1099 or W-2.

Next, make sure to obtain the correct forms and instructions for the specific tax years you have missed.

Your past-due returns must be filed on the original tax forms. You can easily access prior year tax forms by contacting the IRS.

Don’t make the mistake of using current year tax forms or you may end up preparing the return again.

Since the tax law changes from year to year, it’s important that you use the instructions applicable for the tax year you are filing a return for.

Aside from the confusion it will cause, using the wrong instructions may cause you to underpay or overpay the amount of tax you actually owe.

Finally, mail your tax return and all supporting documents to the address listed in the forms’ instructions.

For more information about IRS penalties :

https://www.irs.gov/businesses/small-businesses-self-employed/understanding-penalties-and-interest

In some cases, the IRS will waive the penalties for filing and paying late. The IRS will usually consider the following:

Reasonable Cause – You have a reason for not filing or paying on time, including:

• • You exercised ordinary business care and prudence to determine your taxes;
  • You had matters beyond your control that left you unable to file or to determine the amount of deposit or tax due;
  • You didn’t receive necessary financial information;
  • You didn’t know you needed to file a tax return even though you made efforts to find out;
  • You had a death in your immediate family;
  • You or a member of your immediate family suffered a serious illness that kept you from handling your financial matters; or
  • You lost your tax documents in a fire or some other disaster.

First-Time Penalty Abatement – You may qualify for administrative relief from penalties for failing to file your tax return on time, pay your taxes on time, or to deposit taxes when due under the IRS’s First-Time Penalty Abatement policy if the following are true :

• • You didn’t previously have to file a tax return or you have no penalties (except the estimated tax penalty) for the three tax years prior to the tax year in which you received a penalty ;
  • You filed all currently required tax returns or filed a valid extension of time to file; and
  • You have paid, or have arranged to pay, any tax due.

051118 USA Tax Regularisation Requirements

Small business companies are henceforth exempted from establishing a management report at the end of each fiscal year.

More precisely, enterprises concerned by this m that, at the end of each fiscal year, do not exceed two of the three following thresholds :

-4 million euros balance sheet total ;

-8 million net turnover;

-50 employees (average).

This exemption applies to the fiscal years closed to counting from the 11th of August 2018.

Recall that hitherto, only small one-person businesses (EURL and SASU), whose sole partner, assumes stewardship or presidency, were exempt to establish a management report.

051118 The management report is no longer necessary in small trading companies

The next year, the weighty social charges on salaries will be lightened.

The start of the year and the fall of 2019 will be marked by the diminution of certain social patronage fees and salaries.

On January 2019

As planned by the law of finances for 2018, the credit tax for competitiveness and employment (CICE) will disappear on the 1st of January, 2019.

On this same date, it will be replaced by a decrease of 6 points of the patronal part of medical insurance fees owed on these salaries. The tax of this fee should fall to 7 percent.

This decrease will apply only on salaries that do not pass 2.5 “SMIC”, ie Minimum French national salary (being, in 2018, 44954 euro per year, an amount that should be revaluated in 2019).

On September 2019

As a promise of the campaign of presidential candidate MACRON, the lifting of owed salary fees on overtime hours was planned for 2020.

At the end of August, during his presentation of the budget for 2019; the prime minister announced that this measure will be finally effective as soon as next September.

Overtime hours that continue, on the other hand, will be subjected to the tax on revenue.

On October 2019

The Minister of Economy announced, always in the frame of the project of law on the 2019 budget, that the supplementary decline of patron fees of 4 points on salaries equivalent to the “SMIC” (i.e. Minimum French national salary), initially intended for the 1st of next January, would be postponed to the 1st of October 2019. According to him, this should allow the state to save 2 million euros.

Technically, this report concerns a measure already included in the financial law of social security for 2018.

In effect, in January 2019, the general reduction of patron fees on lower salaries at 1.6 “SMIC” should have been extended to the unemployment insurance fees (no AGS fees) and to the fees of complementary pension (Agirc-Arrco and AGFF fees).

051118 Lower social expenses on French salary in 2019

Upon reading your tax notices, if you see an oversight or an error in your declaration of income in 2017, you can still correct it.

And as such, if you are an online tax filer, you can proceed to correct it directly online.

This service, accessible through your personal account, is open until the 18th of December 2018.

After this date, you must resort to the claim. A claim is possible until the 31st of December 2020 for the declaration of revenues in 2017.

What corrections?

Taxpayers can rectify their revenues, their charges, their reductions and credit taxes or the relative elements to real estate fortune tax (IFI), but not their address, their civil status or their family situation (marriage, “PACS”…).

And if you simulate withholding tax

Doubt is no longer allowed: withholding tax on review will begin well next January.

Also, it will belong to the employers to deduct the tax on the consideration of their salaries and to reverse it to the French IRS.

A practice far-off from their business management and one therefore necessary to anticipate.

To do this, employers can, on salaries paid from the 1st of September to the 31st of December 2018, simulate withholding tax.

And this, using, for each employee, the tax that is transmitted to them by the administration through the business report following the DSN filed at the month of September.

Informative for employees, their payment sheet (or an annex or other equivalent document) will contain all or part of the following: the amount of the remuneration on which the tax will be calculated, the tax of applied withholding the amount of the tax that will be retained and the sum that which would be paid to them after withholding.

No sum will be really levied on the remuneration of employees nor given to the fiscal administration before January 2019!

FILE : Withholding: last line-item!

According to recent polls, it seems expected by a majority of the French, the reform of withdrawing is not favorable with business leaders. And for reason ! Who looks forward to, without counterpart, playing the role of collector for the account of the State?

Nobody. But it’s there, after an ultimate psychodrama, the doubts of the President of the Republic seemingly lifted, the withdrawing will be entered good and well in vigor on the 1st of next January.

He will come back to you, from this date, to take, on the remunerations of your salaries, your income taxes and reverse it to the Public Treasure.

The amount of withdrawal is dependent on a tax that, for each of your salaries, you will be communicated by the administration through the famous nominative social declaration.

Stay assured that everything is working well and that your employees have understood that this reform is going to have an impact on their pay slip.

Also stay hopeful that the inevitable bugs will not be too many and will not put certain difficulties on your salaries.

In any case, the Cabinet is at your side to help you to manage this new constraint and, if you wish, to learn with you the possibility to indicate withdrawal, that is to say, to simulate the impact of this restraint on payslips of the last months of the year before the start of January 2019.

051118 Withholding, last line-item

Deductibility of the loan and acquisition interests on the bare ownership (nue-propriété) on the part of the property society (SCI): a missed appointment for equalizing harmonization

On the combined legal basis of the articles 8, 13, 1o и 31,I, 1o, d of the General Taxation Code of France (CGI) the loan interests are acquired personally by the holder of the bare ownership(nue-propriété) to finance the acquisition of the bare ownership (nue-propriété)  from its part, within SCI as a holder of the rented real estate, the property interests are not deductible if the interested person would receive them for other property or property rights since those interests cannot be considered as the exposed obligation for the acquisition or the conservation of the estate income in conformity if the administrative doctrine prescriptions.

On the other hand, on this very same legal basis the loan interests supported by the usufruct holder from the part of society to finance this acquisition since it the only subject to the income tax for the quota corresponding to the right in the social Income that he receives.

Finally, the loan interests actually paid by the bare ownership holder of the rented property (not a part of the SCI) and intended to finance either acquisition of the bare ownership either expenses of repairing, maintenance or improvement of such property are deductible from the property income coming from their other property if necessary.

CE, 8e et 3e ch., 24 févr . 2017, no 395983, Frank, concl. B. Bohnert, note P.-Y. Di Malta: JurisData no 2017 -004184.