Businesses entangled in tax disputes should know their options

| Feb 17, 2021 | Business Litigation |

Established California businesses know that taxes, both paying them and taking the steps to calculate them correctly, are just part of the cost of running an operation.

Those in sales, for instance, will have to be sure to remit the correct amount of California sales tax. Other California taxes will also apply to the vast majority of private for-profit businesses.

State and local taxes aside, businesses will also have to remit federal taxes to the Treasury.

Sometimes, conflict over state-level taxes can boil over into legal disputes

Not surprisingly, there are frequently disagreements between California’s taxing authorities, who have an incentive to collect as much revenue as possible, and individual businesses in Orange County that are trying to hang on to the enterprise’s earnings.

These disagreements can boil over into litigation or administrative action. Sometimes, they can involve tax bills amounting to millions of dollars as well as hefty interest and penalties.

A business facing this situation has legal options available aside from simply coming up with the money to pay the tax.

For example, a starting point may be asking the Appeals Bureau to review the matter further. Although a branch of the California’s Department of Tax and Fee Administration, the Bureau is set up to review a taxpayer’s concern independently and without partiality to other Administration decisionmakers.

A business may also consider trying to negotiate an agreement with the authorities. The Administration does have programs in place through which, in the right circumstances, it may accept a partial payment in full satisfaction of a tax liability.

Unfortunately, sometimes a business may just to have to formally challenge the Administration’s decisions about taxes by appealing to the Office of Tax Appeals or taking other legal steps.

The right choices for a business will depend on the applicable law and the facts of a situation. An experienced business counsel can help stakeholders decide what course of action is best for a business.

 

 

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