Skip to main content

The Guards

QWED-Tax verifies logic deterministically. No probabilities, just rules.

🇺🇸 United States (IRS)​

1. ClassificationGuard (IRS Common Law)​

Goal: Prevent "Employee Misclassification" lawsuits. Logic: Uses the IRS Common Law test to determine if a worker is a W-2 Employee or 1099 Contractor.

  • Behavioral Control: Does the employer provide tools/instructions?
  • Financial Control: Does the employer reimburse expenses?
  • Relationship: Is it indefinite?

Rule: If you control how they work and pay their expenses, they are an Employee (W-2), even if the AI says "1099".

2. NexusGuard (Economic Nexus)​

Goal: Prevent Sales Tax Evasion. Logic: Checks local state thresholds for 2025.

  • NY/TX/CA: > $500,000 Sales
  • FL/IL/PA: > $100,000 Sales Rule: If YTD Sales > Threshold and AI says "No Tax", BLOCK.

3. PayrollGuard (FICA Limits)​

Goal: Verify Paycheck Math. Logic:

  • Gross-to-Net: Gross - Taxes - Deductions == Net (Exact Decimal match).
  • Soical Security Cap: Enforces 2025 Wage Base Limit ($176,100). Tax stops after this amount.

🇮🇳 India (CBDT)​

1. CryptoTaxGuard (Sec 115BBH)​

Rule: Losses from Virtual Digital Assets (VDA) cannot be set off against any other income (including other VDA gains). Verdict: Blocks any AI attempt to reduce tax liability using crypto losses.

2. GSTGuard (RCM)​

Rule: Certain services (GTA, Legal) require Reverse Charge Mechanism (Recipient pays tax). Verdict: Blocks invoices where AI failed to apply RCM logic.

3. InvestmentGuard (Trading)​

Goal: Prevent Set-Off Errors. Logic:

  • SpeculationGuard: Intraday Equity losses are "Speculative". They cannot be set off against F&O (Non-speculative) or Salary income.
  • CapitalGainsGuard: Enforces strictly defined holding periods (e.g. Equity > 12m = LTCG). Verdict: Blocks "Illegal Set-Off" claims.

4. CorporateGuard (Loans & Valuation)​

Goal: Corporate Governance (Sec 185/Valuation). Logic:

  • RelatedPartyGuard: Prohibits loans to Directors/Relatives/Holding-Co-Directors unless specific exemptions apply.
  • ValuationGuard: Deterministically calculates Convertible Note conversion prices (min(Cap, Discount)). Verdict: Blocks loans that risk "Deemed Dividend" or Section 185 violation.

5. RemittanceGuard (FEMA/LRS)​

Goal: Prevent Forex Violations. Logic:

  • LRS Limit: Enforces $250,000 annual limit per PAN.
  • Prohibited List: Blocks Gambling, Lottery, Racing, and Margin Trading.
  • TCS Logic: Applies 20% Tax for generic remittance, 5% for Education/Medical. Verdict: Blocks prohibited remittances and miscalculated TCS.

6. Accounts Payable Guards (Indirect Tax)​

Goal: Automate GST/VAT and TDS compliance. Logic:

  • InputCreditGuard: Checks Section 17(5) "Blocked List".
    • Food/Beverages: Blocked.
    • Motor Vehicles: Blocked (unless transport biz).
  • TDSGuard: Calculates withholding based on service type.
    • Professional Fees: 10% (Sec 194J).
    • Contractors: 1% or 2% (Sec 194C). Verdict: Blocks ITC claims on personal items and ensures vendor payments have TDS deducted.