Navigating Tax Issues for Businesses and Employers
Dealing with tax issues can be daunting for any business owner or employer. If you discover that the IRS or a state tax authority is investigating your business, it is crucial to seek legal advice as soon as possible to prepare for the situation at hand. At The Wilson Firm, our team of experienced attorneys is equipped to handle various tax matters, including income tax, employment tax, sales and use tax, and other business taxes.
Payroll Tax Challenges and the Trust Fund Recovery Penalty
One of the tax issues we frequently deal with is payroll taxes. During difficult economic times, an unexpected tax obligation can threaten the survival of a business. The IRS has the power to convert unpaid payroll taxes of a business into personal debt by anyone deemed to be a "responsible person" of the business.
This process can result in the "Trust Fund Recovery Penalty," which cannot be discharged in bankruptcy. Our skilled tax lawyers defend potential "responsible persons" from these penalties and help our clients navigate the complicated tax laws to limit the impact on their business.
Worker Classification: Independent Contractor vs. Independent Contractor Employees
Another tax issue that we handle at The Wilson Firm is the classification of workers as independent contractors or employees. Employers may not be aware of the rules when it comes to determining the status of a worker, and the IRS has a voluntary compliance program to assist businesses in complying with these laws. Our tax attorneys can help clients make the appropriate determination and take the necessary actions to ensure that unexpected tax issues do not arise.
Sales and Use Tax Matters: Ensuring Compliance and Resolving Disputes
Texas imposes a 6.25% state sales and use tax on the sale of taxable items, with local jurisdictions adding up to 2% more, making compliance critical for businesses. Sales tax applies to tangible personal property and certain services, while use tax covers untaxed purchases used in Texas. At The Wilson Firm, we specialize in guiding businesses through these complexities, from routine compliance to high-stakes controversies with the Texas Comptroller of Public Accounts.
Common sales and use tax issues include :
Nexus and Remote Seller Obligations
Post-Wayfair, out-of-state sellers must collect tax if they exceed economic nexus thresholds ($500,000 in Texas sales annually). We help determine nexus, register for permits, and implement collection systems to avoid penalties.
Exemptions and Refunds
Disputes over exemptions for manufacturing equipment, resale certificates, or data processing services (recently updated in April 2025 to clarify a 20% exemption). We audit records to claim overlooked refunds and challenge improper denials.
Audits and Assessments
The Comptroller frequently audits for underreporting, over-collected taxes, or improper sourcing in destination-based systems. Non-compliance can lead to assessments, interest, and even criminal charges for felonies like evasion.
Loopholes and Retroactive Changes
Watch for Comptroller strategies like retroactive statute amendments or city-specific deals that shift tax burdens.
Our attorneys represent clients in audits, protests, SOAH hearings, and judicial appeals, often securing reductions or dismissals. Proactive advice prevents issues, like overpaying use tax that erodes profits.
Representation Before Tax Authorities
We represent our clients before the IRS, as well as Texas state agencies, such as the Comptroller of Public Accounts, in matters involving these crucial determinations. Our attorneys have extensive experience and knowledge of tax laws and regulations, enabling us to provide our clients with the best possible representation.
Frequently Asked Questions
The Trust Fund Recovery Penalty (TFRP) holds "responsible persons" personally liable for unpaid payroll taxes withheld from employees' wages. It's non-dischargeable in bankruptcy and can target owners or officers. At The Wilson Firm, we defend against assessments by proving lack of responsibility or reasonable cause, minimizing personal exposure.
The IRS uses a multi-factor test (behavioral, financial, relationship) under common law rules, while Texas follows similar guidelines. Misclassification leads to back taxes and penalties. We review your setup, advise on reclassification via the IRS Voluntary Classification Settlement Program, and ensure compliance to avoid audits.
Economic nexus applies if your Texas sales exceed $500,000 annually, requiring permit registration and collection. Physical presence also creates nexus. We help assess thresholds, file registrations, and defend against Comptroller audits to prevent assessments and interest.
Yes, Texas exempts equipment used directly in manufacturing, but documentation is key. Recent court victories affirm broad interpretations, but Comptroller audits scrutinize usage. Our team gathers evidence, files refund claims, and appeals denials to recover overpaid taxes.
Respond within 30 days to avoid default assessments. Gather records but consult an attorney first to avoid self-incrimination. We handle communications, challenge findings, and negotiate settlements or appeals through SOAH, often reducing liabilities significantly.
