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Voluntary Classification Settlement Program Form 8952 – Paul Gaulkin CPA

Workers that are on a construction site

It is a known fact that millions of workers are misclassified by employers are independent contractors when reality, they are actually employees. This problem deprives the federal government of huge sums of tax revenue because of underreporting income and related unpaid employment taxes. In order to combat this problem, the IRS has established a few ways in which to correctly classify workers. Voluntary Classification Settlement Program The voluntary classification settlement program is a program designed to provide relief to eligible … Read more

Tax Assessment Appeal – Paul Gaulkin CPA


Generally, different assessments can be appealed at different times. Below we will list these assessments and when they can be appealed by a taxpayer. Pre-Assessment Appeal The following penalties can be appealed by a taxpayer prior to assessment by the IRS: 1. Penalties asserted by the IRS in the course of examining a taxpayer’s return. This is generally considered the accuracy related penalties subject to the deficiency assessment procedures. 2. Trust fund recovery penalties and preparer penalties. 3. Intentional disregard … Read more

Substantial Understatement Penalty – Paul Gaulkin CPA


In the case that a substantial understatement of income tax is evident on a tax return, a 20% penalty will be imposed according to IRC Sec. 6662(b)(2). There are however, a few defenses that can be used against the 20% penalty, these defenses include: 1. Insubstantial understatement defense 2. Substantial authority defense 3. Adequate disclosure defense 4. Reasonable cause/good faith defense In most cases, the best defense in the disclosure defense. In order to use the disclosure defense, the disclosure … Read more

TurboTax Error Defense – Paul Gaukin CPA

Court room

The Tax Court has determined that relying on commercial tax software to prepare a tax return is not a viable defense against any negligence penalty. Therefore, if a taxpayer is negligent on their tax return, they cannot simple blame commercial tax software for their own errors. TurboTax Error Defense The Tax Court has ruled that tax software is only as good as the information that is being inputted into it. A taxpayer is fully responsible for any material misstatements that … Read more

Penalty for Not Reporting An Employee’s SSN

When an individual initially becomes an employee, it’s the employer’s responsibility to request the employee for their social security number. This can either be by itself or through a completed W-4 form that each employee is required to complete for employment. The employer can assume that the social security number is correct and still be able to waive the penalty later for using an incorrect number. You must keep a record of the initial W-4 to verify later that you … Read more

Not Filing Your Tax Return Will Cost You Money

If you fail to file your tax return and that tax return has tax that is due, the IRS will actually issue a penalty against you. This penalty can apply to any type of tax return but is reserved for taxpayers who willfully neglect to file. This basically means if you have a very good reason for not being able to file your tax return, the IRS will forgive you. Cost of a Delinquent Tax Return If you fail to … Read more

Employee Misclassification Can Become an IRS Penalty

If you are an employer it is a good idea to know how to classify your workers. The IRS has estimated that millions of workers are not being classified correctly and therefore the IRS is losing large sums of revenue dollars that it could be bringing in. If an employer miss classifies an employee as an independent contractor, the employer will not withhold employment taxes and the income that was given to the misclassified employee may never be reported. Employee … Read more

IRS Trust Fund Recovery Penalty

The trust fund recovery penalty is a penalty that is given to an entity that is not directly responsible for a tax but is responsible for paying the IRS the taxes that are owed to the IRS by a third party. For the trust fund recovery penalty to be viable the person must be responsible for collecting, accounting for and paying that tax over to the IRS. Next that person must fail to pay the IRS the tax that it … Read more