IRS APPROVED ERO SERVING ALL 50 STATES
RAPID REFUNDS - TAX REFUND LOANS - VERY LOW FEES
OVER 15 YEARS EXPERIENCE
IRS APPROVED ERO SERVING ALL 50 STATES
RAPID REFUNDS - TAX REFUND LOANS - VERY LOW FEES
OVER 15 YEARS EXPERIENCE
IRS (FEDERAL) AND STATE NOTICES AND DENIALS
* ARE YOU IN A STATE THAT IS DENYING YOUR INCOME TAX EXEMPTION TREATY?
* ARE YOU READY TO KNOW YOUR RIGHTS AND TAKE A POSITION TO APPEAL IF
YOUR STATE DENYS THE INCOME TAX TREATY?
* WHAT IF YOUR STATE AND RECALCULATES YOUR TAX RETURN WHICH RESULTS IN YOU GETTING A REDUCED REFUND?
* WHAT IF YOUR STATE CAUSED YOU TO OWE TAXES BY NOT HONORING THE TAX
TREATY... NO FAULT OF YOUR OWN?
* DO YOU KNOW WHICH STATES CLEARLY STATE AND POST THAT THEY DO NOT
HONOR FEDERAL TAX TREATIES?
GENERALLY, IF THE TAX TREATY DOES NOT COVER A PARTICULAR KIND OF INCOME, OR IF THERE IS NOT A SPECIFIC TREATY BETWEEN YOUR COUNTRY AND THE STATE YOU RESIDE IN, THEN YOU MUST PAY TAX ON THE INCOME IN THE SAME WAY AND AT THE SAME RATES SHOWN IN THE INSTRUCTIONS FOR THE APPLICABLE U.S. TAX RETURN.
MANY OF THE INDIVIDUAL STATES OF THE UNITED STATES TAX INCOME WHICH IS SOURCED IN THEIR STATE. THEREFORE, YOU SHOULD CONSULT THE TAX AUTHORITIES OF THE STATE FROM WHICH YOU DERIVE INCOME TO FIND OUT WHETHER ANY STATE TAX APPLIES TO ANY OF YOUR OINCOME. IT IS WELL KNOWN, THAT SOME STATES OF THE UNITED STATES DO NOT HONOR THE PROVISIONS OF TAX TREATIES.
BELOW IS A PICTURE TAKEN FROM THE IRS WEBSITE WHICH SHOWS WHO IS ON FILE WITH THE IRS DISCLOSING THAT THEY DO NOT HONOR FEDERAL TAX TREATIES.
DO STATES CONFORM TO THE FEDERAL TAX TREATIES
The States are not bound to honor Federal tax treaties, but most do.
State income tax forms usually start with federal taxable income, or federal adjusted gross income, and require a few adjustments. Income excluded by US treaties are usually excluded from States income tax.
However, several States "DO NOT HONOR" Federal Tax treaties: if you live or work in one of these states, you will most likely owe State income tax even though your income is exempt from Federal income tax by a treaty.
Those are:
- Alabama
- Arkansas
- Connecticut
- Hawaii
- Kansas
- Kentucky
- Maryland
- Mississippi
- Montana
- New Jersey
- North Dakota
- Pennsylvania
- Occasionally in specific situations - California. (It may be excluded for California Tax only if the treaty specifically excludes the income for state purposes. If the treaty does not, California requires the reporting of adjusted gross income from all sources.)
The states that do not impose an income tax on individuals are:
- Alaska
- Florida
- Nevada
- South Dakota
- Texas
- Washington
- and Wyoming
States that do not impose an income tax on wages are:
- New Hampshire
- and Tennessee
Many states use federal taxable income as the starting point for determining state income tax liability.
As a result, if there is no federal taxable income there may also not be any state taxable income.
However, a number of states define federal taxable income by reference only to the U.S. federal income tax rules without regard to treaty rules and require an “add-back” to federal taxable income for any income that is excluded under a treaty.
EXAMPLE: TAX RETURN CALCULATIONS AND STATE AUDIT
THIS HAWAII CLIENT'S TAX RETURNS WERE PROPERLY PREPARED
AND ALL CALCULATIONS ARE 100% ACCURATE.
BOTH FEDERAL AND STATE TAX RETURNS WERE EFILED AND ACCEPTED.
SUMMARY:
THE STATE OF HAWAII HAS SENT THIS TAXPAYER CLIENT AN ADJUSTMENT NOTICE CLAIMING THAT THE FIGURES ARE WRONG.
THIS IS NOT TRUE. THE RETURN WAS PRPPERLY PREPARED AND NO ERRORS WERE MADE.
THE STATE OF HAWAII IS SIMPLY ELECTING TO NOT HONOR THE TAX TREATY WHICH HAS EXEMPTED THE TAXPAYERS TAX LIABILITY.
THE STATE OF HAWAII HAS MADE ADJUSTMENTS TO THE ORIGINAL TAX RETURN FILED. THESE AJDUSTMENTS SHOW THAT THE TAXPAER HAS A TAX LIABILITY AND HAS REDUCED THE TAXPAYERS REFUND ACCORDINGLY.
WE AS A COMPANY AND OUR TAX PREPARES HAVE NO CONTROL IF THE IRS OR STATE TAX AGENCY ELECTS TO MAKE ANY ADJUSTMENTS TO YOUR RETURN.
WE AS A COMPANY, MYSELF AS AN ERO, NOR ANY OF OUR TAX PREPARERS
ARE OBLIGED TO REPRESENT YOU IN THESE MATTERS.
WE ARE NOT OBLIGED FILE AMENDMENTS OR CONTACT THE
IRS/STATE TAXATION AGENCIES ON YOUR BEHALF.
OUR SERVICES WERE COMPLETE WHEN YOU RECIEVED YOUR TAX RETURN FILE.
YOU CAN ELECT TO RETAIN OUR FIRM OR REQUEST
ADDITIONAL SERVICE FOR A FEE.
INTRODUCTION TO FILING AN APPEAL AND CHALLENGING
YOUR STATE TAXATION AGENCY
One frequent question that arises is the extent to which U.S. income tax treaties can apply to reduce state income tax.
The prevailing opinion is that income tax treaties are limited to “federal income taxes imposed by the Internal Revenue Code” as stated in the treaty, but that opinion is incorrect.
This incorrectness is especially true regarding States that Defer to Section 61.
Regarding States that Defer to Section 61; which most states (but not all) do in fact defer to Internal Revenue Code section (herein “Section”) 61 for the definition of “gross income.”[1] Section 61 states “Except as otherwise provided in this subtitle, gross income means all income from whatever source derived.” The key phrase here is “[e]except as otherwise provided in this subtitle.”
This phrase means that other provisions in Title 26, Subtitle A, of the U.S. Code modify Section 61. One such provision under Subtitle A is Section 894
Section 894(a)(1) mandates that all “provisions of [the Internal Revenue Code] shall be applied to any taxpayer with due regard to any treaty obligation of the United States which applies to such taxpayer.”
In other words, Section 61 is statutorily modified and to be applied consistent with any treaty obligation that applies to a taxpayer.[2] By operation of Section 894(a)(1), Section 61 is modified to the extent there is an applicable income tax treaty.
Therefore, if the state defers to Section 61 for the definition of gross income, which is modified by any applicable income tax treaty in accordance with Section 894(a)(1), then it logically follows that any income excluded from an individual U.S. federal income tax return pursuant to an applicable income tax treaty is excludible on said individual’s state individual income tax return.
States that Do Not Defer to Section 61, Where federal and state statutes and regulations are substantially identical, the interpretation and effect given to the statute by federal courts is highly persuasive. [3] That being said, even in states where state tax law does not expressly defer to Section 61 yet defines gross income in a substantially identical manner, there is legal authority for the proposition that income tax treaties apply.
There are more specifics to the IRS tax Codes, Case law and other relevant details that we will reference which are not listed here on this page. Those details will be added to and addressed in any letter that we draft on your behalf.
IF YOU HAVE RECEIVED A NOTICE FROM THE IRS OR FROM YOUR STATE TAXATION DEPARTMENT; YOU CAN UPLOAD THE NOTICE AT THE LINK BELOW.
IF YOU WOULD LIKE TO HAVE A PERSONALIZED LETTER FROM US TO SEND IN TO THE IRS OR TO YOUR STATE TAX DEPARTMENT; WE WILL DRAFT ONE FOR A PREPAID FEE OF $75 PER LETTER.
BE ADVISED, WE DO NOT MAIL ANY NOTICES TO THE IRS NOR TO ANY STATE TAXATION DEPARTMENT ON YOUR BEHALF. THAT IS YOUR RESPONSIBILITY TO REPLY AND SEND THEM WHAT THEY ARE ASKING FOR ON THE NOTICE.
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