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California RCFE’s face a burdensome legal environment in which DSS regulations require “sufficient’ staffing 24-hours per day, California employment law has pinned unpaid wage claims on RCFE’s with live-in caregivers, and State and Federal tax obligations mandate frequent filings and costly payroll tax remittances. Unsurprisingly, some RCFE owners fall behind on their payroll tax withholdings and remittances, to which the EDD is quick to audit and assess penalties. For some owners, the consequent payroll tax debt coupled with interest and penalties becomes too much, forcing the assisted living facility to close. However, others are able to resolve back taxes through installment agreements.
To learn more about resolving payroll taxes and achieving tax relief, call the Law Office of Jin Kim at (916) 299-9913 for a free consultation. She can help your assisted living facility navigate EDD audits and resolve payroll tax debt for a flat fee.
EDD Audit – Payroll Taxes
RCFE’s have significant overhead, and for many care homes, the greatest expense is staffing. To make ends meet, some RCFE’s classify caregivers are “independent contractors,” and indeed, these caregivers may, in fact, work for other care homes as well. However, the Employment Development Department is sensitive to this strategy as it deprives the State of California of payroll taxes. Accordingly, many RCFE’s that employ “independent contractor” caregivers find themselves facing an EDD audit. Unfortunately, the EDD uses a multi-factored inquiry to differentiate employees from independent contractors, and for many RCFE’s, the end result is the reclassification of these caregivers as employees. Once that happens, payroll tax arrears may be assessed, necessitating tax relief strategies to continue the business.
There are popular tax relief strategies such as offers in compromise that sound good as they reduce the overall tax liability. However, tax law can be harsh concerning payroll taxes, especially where penalties are concerned. If the underlying tax debt is non-dischargeable in bankruptcy and continued non-payment threatens overwhelming interest and even forced closure of the business, an installment agreement may be the best solution. Your tax attorney may be able to secure an installment agreement with the tax agency so you can repay tax debt in a series of payments over time. Of course, not every business qualifies for an installment agreement, so consult with a tax attorney to evaluate whether an installment agreement is a viable option for your situation.
How Much Does An Audit Defense Attorney Cost?
Many California RCFE’s operate on a tight budget, so the cost of hiring a tax attorney during an audit is a very real concern. In brief, most tax attorneys charge a “retainer fee” that acts as a downpayment for future work. For example, a tax attorney may collect $5,000 as a retainer fee. Now, as the tax attorney works on the RCFE’s audit defense case the attorney charges an amount representative of their hourly rate multiplied by the number of hours actually worked. For instance, if the attorney’s hourly rate is $300 per hour, and the attorney worked 10 hours on the client’s case during January, they will charge $3,000. ($300 per hour x 10 hours = $3,000). The monthly billed amount will then be deducted from the retainer fee. At the conclusion of the case, the attorney will refund to the client the remaining balance of the retainer fee.
There’s no ‘one-size-fits-all’ fee for audit defense, but tax attorneys will usually charge several thousand dollars as a retainer fee. Hourly rates vary, but many local tax attorneys charge around $300 per hour. Some may charge less, whereas very experienced tax attorneys will easily charge much, much more.
The Law Office of Jin Kim represents numerous industries in tax controversies with the IRS and the State of California. In addition to representing assisted living facilities, Sacramento tax attorney Jin Kim represents cash-based cannabis retailers in sales and income tax audits, landscapers in EDD audits, and gas station operators in sales tax audits. To learn more about your audit or tax relief options, call the Law Office of Jin Kim at (916) 299-9913 for a free consultation.