Insight Law Insight Law 2026-07-15T17:46:33Z https://www.insightlawfirm.com/feed/atom/ WordPress /wp-content/uploads/sites/1304450/2020/12/Fav-icon-75x75.png On Behalf of Insight Law <![CDATA[Can you dispute the results of an IRS audit?]]> https://www.insightlawfirm.com/?p=49382 2026-07-13T06:24:38Z 2026-07-13T06:24:38Z Reasons to challenge the audit findings A dispute generally rests on one or more of these reasons:
  • Errors involving the facts: The examiner misunderstood or overlooked information relevant to your return.
  • Errors involving the law: The examiner incorrectly applied a tax law or regulation to your circumstances.
  • Errors involving the evidence: The examiner rejected an item that you can support with records that were not considered during the audit.
You generally bear the burden of demonstrating that the IRS made an incorrect adjustment. Under certain circumstances, that responsibility may shift to the agency if you satisfy federal recordkeeping requirements and cooperate with its requests.

Records to support your position

An audit challenge depends on records that address the specific adjustments in dispute. The relevant documents are often those created near the time of the transaction, including:
  • Bank statements and canceled checks tracing deposits and payments
  • Invoices, receipts and mileage logs recording business expenses
  • Appraisals supporting charitable gifts or disputed asset values
  • Third-party records, such as Forms 1099, brokerage statements and loan documents
  • Signed statements from people with direct knowledge of the transaction
If original documents are missing, reconstructed records may still help. Courts may accept reasonable estimates for some business expenses, but travel, meals and vehicle use require more detailed proof. Sorting records by tax year and disputed adjustment can also show how each document relates to the issue.

Ways to pursue a formal challenge

Before the IRS assesses additional tax, you may ask the Independent Office of Appeals to review the audit findings. Smaller disputes may qualify for a small case request, while larger disputes generally require a formal written protest. After receiving a notice of deficiency, you generally have 90 days to petition the U.S. Tax Court without first paying the disputed amount. If the IRS has already assessed the tax, you may request audit reconsideration based on new information. Alternatively, you may generally pay the liability in full, file an administrative refund claim with the IRS and, if the agency denies the claim or does not act within six months, submit a refund suit in a U.S. district court or the U.S. Court of Federal Claims. An attorney can review the findings, determine which path fits the stage of your dispute and prepare the required protest, claim or petition. Counsel can also present your position and track the deadlines that may limit your options.]]> On Behalf of Insight Law <![CDATA[How remote work affects your taxation as an employee]]> https://www.insightlawfirm.com/?p=49372 2026-06-19T09:22:36Z 2026-06-19T09:22:36Z What states levy personal income taxes? Washington does not levy a personal income tax on wages and salaries. As a remote worker, you do not have to pay a personal income tax to Washington. The state only imposes a tax on specific high-value capital gains. However, if your company is based in another state, you may be subject to the income tax laws of that state. Always check which state your company is based in. States which have “convenience of employer” rules may tax you, even if you are a non-resident. For example, New York and Pennsylvania tax personal income based on where employers are headquartered. The only exceptions are when reasons for remote work are for absolute necessity.

How else does WFH taxation affect you?

Even without a personal income tax, you will be subject to mandatory Washington payroll taxes and federal income taxes. Washington levies mandatory state payroll taxes such as WA Cares Fund for WFH employees. You are also required to pay federal payroll taxes like the Federal Insurance Contributions Act (FICA) taxes.

What happens with incorrectly withheld taxes?

Aside from special cases, your employer should generally not apply taxes from other areas. Check in with HR to ensure that your taxes are going to the right states. If you do spot errors in taxation, you will need to file a non-residency tax return to claim a refund. The refund process may take some time based on the state. In Washington, the main source of errors is when out-of-state employers apply taxes based on their headquarters. If you believe your employer has taxed you incorrectly, consider contacting a CPA or a tax law professional to determine your next steps.]]> On Behalf of Insight Law <![CDATA[Can bankruptcy help businesses with tax debt?]]> https://www.insightlawfirm.com/?p=49370 2026-05-22T09:52:22Z 2026-05-22T09:52:22Z What types of tax debt can bankruptcy address? Bankruptcy can potentially discharge qualifying federal income tax debts. For Washington businesses, state excise taxes like the business and occupation (B&O) tax may also qualify for discharge under strict circumstances. These follow different rules under federal bankruptcy law. Generally, the tax debt must meet specific criteria:
  • The tax debt is at least three years old from the original due date
  • The tax return was filed at least two years before filing for bankruptcy
  • The tax assessment is at least 240 days old
Federal bankruptcy law sets the rules for tax discharge. However, Washington State laws determine which state tax debts qualify as “trust fund liabilities” that cannot be discharged. Sales taxes your business collected also fall into this category and must be paid.

Which type of bankruptcy works for tax debt?

Different bankruptcy chapters offer different solutions for tax debt. The appropriate choice depends on your business’s legal structure. This includes:
  • Chapter 7: This chapter does not wipe out tax debt for coporations or limited liability companies (LLC). Instead, a Chapter 7 filing simply closes the business doors and hands all assets over to a court trustee to sell off. Tax debt is only completely discharged under this chapter if the business operates as a sole proprietorship. The process usually takes four to six months.
  • Chapter 11: This enables businesses to restructure their tax obligations into a manageable repayment plan. It allows the business to keep operating while addressing debt over time. The process can provide more time to make payments. Nevertheless, priority tax debts must be paid in full throughout the duration of the plan.
Chapter 7 works well when you have limited assets and qualifying tax debt. Alternatively, Chapter 11 allows you to manage operational challenges and tax obligations at the same time. You may benefit from talking to a legal professional to determine which chapter suits your situation.

Understanding bankruptcy options for tax debt relief

Bankruptcy offers potential relief for businesses struggling with tax debt. While not every tax obligation qualifies for discharge, many businesses find meaningful solutions through Chapter 7 or Chapter 11. The key is understanding your options and the specific requirements that apply to your circumstances.]]> On Behalf of Insight Law <![CDATA[What does SB 6347 mean for estate taxes?]]> https://www.insightlawfirm.com/?p=49364 2026-05-12T17:22:34Z 2026-05-12T17:22:34Z Estate planning requires a person to think about a variety of circumstances that might occur when they pass away. One of these is the ever-changing legal landscape surrounding estate planning and estate taxes.  For families in Washington, SB 6347 is one of the changes that’s occurring in 2026. The state’s top estate tax rate will drop to 20% on July 1, 2026. This means that individuals who die on or after that date will pay the 20% rate instead of having to pay the 35% that’s required prior to that date. 

SB 6347 raises challenges

The change in the law brings up some challenges for people who have taxable estates, such as those with real estate, farms, investment portfolios and other significant assets. While many people will focus heavily on the reduction in the tax rate, another concern is the exemption amount.  In 2025, changes increased in the amount of the estate that can be excluded. The rollback that’s coming in July raises questions about future inflation adjustments, which has some families closely watching the current threshold of $3 million. That exemption amount is frozen, so there’s no guarantee that it will increase in the near future. 

Estate plan review is critical

Now is the time to check estate plans to determine how to proceed. Because Washington’s tax is separate from the federal estate tax, it’s possible to owe state estate taxes even if there isn’t a federal estate tax due. This can be a shocking situation for people who believed that no estate tax would be due as long as there wasn’t a federal estate tax liability. Working closely with someone who can review the comprehensive estate plan and determine how to adjust for these changes may be beneficial for anyone in this position. Even though the date of the change is coming up fast, it’s best not to wait until then to check the estate plan to ensure that it still accurately reflects the creator’s wishes while taking the new law into account.   ]]> On Behalf of Insight Law <![CDATA[Washington SB 6346: Strategic planning for the 9.9% income tax]]> https://www.insightlawfirm.com/?p=49361 2026-05-09T00:17:37Z 2026-05-09T00:02:28Z What does the law now require? SB 6346 technically takes effect on January 1st, 2028. Those subject to the tax may need to make payments when filing their annual income tax return beginning in April 2029. The lookback period for residency and income-sourcing begins in 2026, which makes planning now critical. The revenue generated by this new 9.9% tax will fund public schools, health care programs and tax credits for lower-income families. SB 6346 does include provisions that extend credits to individuals who have paid other forms of taxes, such as capital gains taxes. The tax does not apply to assets, such as real property or business holdings. Married couples and domestic partners who cohabitate may be subject to the tax based on their joint income. The income of one spouse may push the couple over the $1 million threshold, resulting in both spouses facing financial obligations. Additionally, the law applies to part-year residents and non-residents who generate income in Washington.

How can people plan?

Those concerned about this tax can explore their eligibility for deductions and evaluate their Washington-based sources of income carefully. Business owners may need to review their operating agreements and pass-through arrangements for entity income to make adjustments that may minimize tax obligations. Pending lawsuits could theoretically affect the implementation of the new law. For the time being, Washington residents and those who generate income in Washington may benefit from planning as though the law may take effect as enacted by the legislature. Business owners, tech executives and others worried about aggressive Department of Revenue collection efforts or audits likely need guidance as soon as possible. Those facing state tax collection efforts or concerned about state income tax compliance may benefit from consulting with a Washington state income tax lawyer. Planning in advance can help those potentially impacted by this new tax avoid underpayment and other income tax issues.]]> On Behalf of Insight Law <![CDATA[What happens if I can’t afford to pay the full tax amount the IRS says I owe?]]> https://www.insightlawfirm.com/?p=49322 2026-04-22T12:18:31Z 2026-04-22T12:18:31Z You open a letter from the IRS and see you owe thousands of dollars. Your bank account cannot cover that amount. The IRS understands that many taxpayers face this situation and offers several programs to help. Taking action quickly gives you more options than ignoring the problem.

IRS programs for taxpayers who cannot pay

The IRS provides different ways to handle tax debt when you cannot pay the full amount immediately. For example:
  • Installment agreements: The IRS may let you pay your debt over time through monthly payments that fit your budget, though interest and some penalties continue adding up.
  • Offer in compromise: You might settle your tax debt for less than the full amount if you can prove paying everything would create serious financial hardship for you.
  • Currently not collectible status: The IRS may temporarily stop collection efforts if paying anything right now would prevent you from covering basic living expenses like rent and food.
  • Penalty relief: You might qualify to reduce or remove penalties if you have a good reason for not paying on time, though you still owe the original tax and interest.
Choosing one of these options stops the IRS from taking more aggressive collection actions against you.

What happens if you ignore the tax debt

The IRS increases pressure on taxpayers who do not respond to tax bills or try to arrange payment.
  • Interest and penalties grow larger each month you wait
  • The IRS files a tax lien that appears on your credit report and attaches to your property
  • The IRS can garnish your wages or take money directly from your bank account
  • The IRS keeps any tax refunds you expect and applies them to your debt
Someone familiar with IRS procedures and payment programs might help you understand which option fits your financial situation and how to apply before collection actions begin. The IRS offers real solutions for taxpayers who cannot afford to pay their full tax bill. Responding quickly and exploring your tax payment options protects you from liens, levies and other enforcement actions that make your situation worse.]]> On Behalf of Insight Law <![CDATA[How will your inheritance change your taxes next year?]]> https://www.insightlawfirm.com/?p=49323 2026-03-16T11:44:24Z 2026-03-16T11:44:24Z Sort your assets to find potential taxes Not every gift from an estate carries the same tax bill. Cash usually arrives with no federal income tax attached. Other assets behave differently once they reach your hands. Stocks can trigger taxes when you decide to sell them. Rental properties create monthly income that you must report. Washington lacks a general state income tax. Still, a 7% tax applies to capital gains over $278,000. This rate jumps to 9.9% for gains above $1 million. List every item to track how it pays you.

Prepare for quarterly payments on new income

Assets that produce cash raise your tax bill quickly. You get rent, dividends and interest without having the tax deducted. So, you might need to send estimated payments to the IRS four times a year. If you inherit a rental house, set aside a portion of each check so you can track your repairs and insurance costs and lower your taxable total. Eventually, this habit will prevent large penalties when you file your final return.

Look at the value before you sell property

The Seattle market often encourages heirs to sell homes immediately. If you choose to do so, you must first confirm the value on the date the owner died. This amount serves as your starting point for calculating gains.
  • Request a professional appraisal to document the fair market value.
  • Gather all original purchase records from the estate executor.
  • Compare the current price to the date-of-death value.
  • Choose a sale date that fits your current income level.
Remember that Washington exempts direct real estate sales from its state capital gains tax and clear records help you keep more of the sale price for your family.

Watch out for retirement account rules

Inherited IRAs and 401(k) plans require careful timing allowing most people to withdraw all funds within ten years. Take note that these payouts count as regular income and will move you into a higher tax bracket. You must also take annual distributions if the original owner already started them. For a single parent, this extra income could reduce your Child Tax Credit. To balance your cash needs with your long-term goals, it would be wise to create a plan. Smart timing ensures these retirement funds last much longer for your kids.

Take the initiative and seek guidance

A proactive approach can help you be in control of your financial future and the future of your loved ones. Here is a simple timeline to stay organized:
  • Start by making an inventory of all assets during the first month.
  • Request official statements and death certificates to prove the values.
  • By the third month, estimate your new income to set a savings rate.
  • Review your sale plans midyear to see if you must adjust your work withholding.
  • Confirm all tax forms arrive by the end of December.
Legal support is also one more thing to help you stay on top of any tax processes or requirements that need attention.]]> On Behalf of Insight Law <![CDATA[Maybe the IRS will just forget about my audit… right?]]> https://www.insightlawfirm.com/?p=48689 2026-02-13T10:50:32Z 2026-02-13T10:50:32Z Wishful thinking will not make an IRS audit disappear. When that audit letter arrives, some taxpayers convince themselves that silence is a viable strategy—that maybe the agency will simply lose interest or run out of time. The government has established procedures specifically designed to handle non-responsive taxpayers, and each step escalates the financial and legal consequences you may encounter.

The IRS never forgets

The IRS uses automated systems that flag unresponsive taxpayers and move cases forward on set timelines. Silence does not stop the process. When you miss responding to an audit notice, the examiner proceeds without your documentation or explanations. The auditor will likely disallow the deductions you claimed and assess additional taxes based on their own findings. The IRS then issues a statutory Notice of Deficiency, which gives you 90 days to challenge the assessment in U.S. Tax Court. If you fail to take action during this period, the assessment becomes final and legally binding.

Collection actions follow immediately

Once the IRS finalizes your tax assessment, the agency will likely take these enforcement steps:
  • Record a federal tax lien against your real and personal property
  • Freeze and seize funds directly from your bank accounts
  • Garnish your wages by contacting your employer
  • Confiscate business equipment, inventory, or receivables
  • Apply future tax refunds to your outstanding balance
  • Revoke your passport if your debt exceeds $64,000
These actions can destroy your financial stability in an instant. Penalties and interest continue to grow every single day. The failure-to-pay penalty alone adds 0.5% per month, and interest compounds daily at rates set by federal law.

Washington property faces federal liens

In Washington, residents and business owners may have federal tax liens attached to their property. The IRS files these liens with the county auditor or recorder where you live or own assets. A tax lien gives the federal government a legal claim to your property. This includes your home, car, bank accounts and business interests. Washington follows community property laws, which means a lien against one spouse can affect jointly owned assets. The lien remains on public record and appears on background checks and credit reports. You cannot sell or refinance property with a federal tax lien without satisfying the debt or getting IRS approval.

Prompt response protects your options

The tax system provides multiple opportunities to contest audit findings and negotiate resolutions. You can present documentation, request appeals and propose payment arrangements. These opportunities are typically unavailable when you miss statutory deadlines. Once the 90-day petition period expires, you cannot take your case to Tax Court unless you pay the full assessment first. The IRS also denies installment agreements and settlement offers to taxpayers who ignore audit notices. The sooner you seek help and respond, the more options you have to resolve your audit favorably. ]]> On Behalf of Insight Law <![CDATA[Washington tax issues to consider during business restructuring]]> https://www.insightlawfirm.com/?p=48684 2026-01-14T14:35:10Z 2026-01-14T14:35:10Z Restructuring a business often marks a period of growth. You might plan a merger, bring in new owners or reorganize how the company operates. At the same time, Washington tax rules can shape these decisions in ways that are not always obvious. Understanding a few key tax issues early can help you evaluate risks and avoid surprises before documents are signed.

Evaluating ownership changes and capital gains exposure

A change in ownership can affect taxes in several ways. Washington does not have a broad personal income tax. However, the state does impose a capital gains tax. In general, if you sell certain long term assets such as stocks or business interests and your annual gain exceeds $250,000, the state may tax the excess at a rate of seven percent. That cost can influence how and when a sale makes sense. If you are acquiring a business, the structure of the deal also matters. Asset purchases can sometimes carry added risk. In some situations, Washington may look to the buyer for unpaid state taxes tied to the assets under the general administrative provisions. Careful review of the seller’s tax history often helps reduce that exposure and keeps the transaction on firmer ground.

Reviewing business activity classifications after a merger

Mergers often bring together different lines of work. Washington’s business and occupation tax applies based on what you do, not just how much you earn. Each type of activity can fall under a different tax rate. For example, a service based company that merges with a manufacturer may report income under more than one category. Proper classification becomes important to avoid errors. In addition, higher revenue levels may trigger surcharges once certain thresholds are reached. A merger can also create tax obligations in new locations if operations expand. Reviewing these issues ahead of time can help you understand how the combined business fits within Washington’s tax system.

Considering sales and use tax on internal transfers

Reorganization does not always involve outside buyers. Even transfers within a group of related companies can raise tax questions. Washington sales and use tax laws under may treat some internal transfers as taxable events. Moving equipment, vehicles or other property between entities can look like a sale for tax purposes, depending on how the transfer occurs. Clear documentation and thoughtful planning may help limit unexpected tax costs when assets move inside a company structure.

Planning ahead supports smoother growth

Business restructuring often aims to improve efficiency or position the company for future opportunities. With early review and careful consideration, restructuring can remain a positive step toward long term business goals rather than a source of business tax issues.]]> On Behalf of Insight Law <![CDATA[Sudden Wealth: Taxes on Lottery Wins and Large Inheritances]]> https://www.insightlawfirm.com/?p=48683 2026-01-12T15:33:18Z 2026-01-12T15:33:18Z Taxes for lottery winners The federal government imposes a significant tax on lottery winnings. State authorities in Washington and elsewhere report lottery winnings as income to the government. The winner generally needs to pay at least 24% in mandatory taxes. Typically, the lottery authority withholds that 24% from the amount paid out to the winner. Depending on whether the winner requests a lump-sum payout or regular payments through an annuity, the lottery winnings could potentially push them into a much higher income tax bracket. In some cases, the tax rate that applies could be as high as 37%. Washington State does not assess either a lottery tax or an income tax. However, the state may conduct a check to validate that the winner does not owe debts to the state, such as child support. The state may intercept a portion of the winnings to cover financial obligations.

Taxes for heirs and beneficiaries

Those who inherit a sizable amount may worry about taxes. However, neither Washington State nor the federal government directly taxes inherited assets. Instead, tax obligations fall to the estate itself. Multi-million dollar estates may need to pay both Washington state and federal estate taxes. That occurs prior to the heir or beneficiary receiving their portion of the estate. That being said, beneficiaries could theoretically owe other taxes based on what they inherit. There could be income taxes due if the assets generate revenue. Both profit from investments and rental income could contribute to income tax obligations. Additionally, the sale of major assets could lead to capital gains taxes. People hoping to preserve as much of their financial good fortune as possible may need help planning to properly address their tax obligations. Working with a tax lawyer can help lottery winners and those inheriting property ensure that they fulfill all of their tax obligations and may even help them minimize what they’re required to pay.]]>