California Tax Attorney Blog

To begin a probate in California, someone files a petition for probate so as to be appointed either as the executor or as the administrator. In California the word “Executor” is used when there is a Will and the word “Administrator” is used when the someone dies without a Will.

Who gets to serve as the Administrator in a California probate proceeding? Depending on a person’s relation to the decedent, the California Probate Code provides that those in the following order of priority are the first ones to be appointed by the probate court:

(a) Surviving spouse or domestic partner.
(b) Children.
(c) Grandchildren.
(d) Other issue.
(e) Parents.
(f) Brothers and sisters.
(g) Issue of brothers and sisters.
(h) Grandparents.
(i) Issue of grandparents.
(j) Children of a predeceased spouse or domestic partner.
(k) Other issue of a predeceased spouse or domestic partner.
(l) Other next of kin.
(m) Parents of a predeceased spouse or domestic partner.
(n) Issue of parents of a predeceased spouse or domestic partner.
(o) Conservator or guardian of the estate acting in that capacity
at the time of death who has filed a first account and is not acting
as conservator or guardian for any other person.
(p) Public administrator.
(q) Creditors.
(r) Any other person.

Want to discuss being appointed as the California executor or California administrator in a probate? Call Mitchell A. Port at 310.559.5259 for a consultation.

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The Sacramento (California) public law library has an organized and easy-to-use list of probate law resources that is extraordinary. In the index is a listing of information about probate law topics which include wills, trusts, estate planning, estate administration, conservatorships, and guardianships.

Specifically, the resources and references include:

Self-Help Books

Legal Encyclopedias & Law Summaries

Practice Guides

Forms

Statutes & Court Rules

Probate Assistance

Within each of these listed topics are numerous and very helpful sub-categories worth looking at.

If you need help with probate in California and want to speak with an experienced probate lawyer, call Mitchell A. Port at 310.559.5259.

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Avoiding probate when the value of the personal property is $100,000 or less is easy. The Los Angeles County Superior Court has a step-by-step explanation in addition to providing the appropriate form. Click here for the information.

If your circumstances do not fit this format, then you may require help from a Los Angeles probate attorney. Call Mitchell A. Port for probate help at 310.559.5259.

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The IRS has a full discussion of offers in compromise on its website. Click here for the full article. Here is what the article says:

An offer in compromise (OIC) is an agreement between a taxpayer and the Internal Revenue Service that settles the taxpayer's tax liabilities for less than the full amount owed. If the liabilities can be fully paid through an installment agreement or other means, the taxpayer will in most cases not be eligible for an OIC. For information concerning installment agreements, refer to Topic 202.

In most cases, the IRS will not accept an offer unless the amount offered by the taxpayer is equal to or greater than the reasonable collection potential (the RCP). The RCP is how the IRS measures the taxpayer's ability to pay. The RCP includes the value that can be realized from the taxpayer's assets, such as real property, automobiles, bank accounts, and other property. In addition to property, the RCP also includes anticipated future income, less certain amounts allowed for basic living expenses.

The IRS may accept an OIC based on three grounds. First, acceptance is permitted if there is doubt as to liability. This ground is only met when genuine doubt exists that the IRS has correctly determined the amount owed. Second, acceptance is permitted if there is doubt that the amount owed is collectible. This means that doubt exists that the taxpayer could ever pay the full amount owed. Third, acceptance is permitted based on effective tax administration. An offer may be accepted based on effective tax administration when there is no doubt that the liabilities have been correctly determined and no doubt that the full amount owed can be collected, but requiring payment in full would either create an economic hardship or would be unfair and inequitable because of exceptional circumstances.

When submitting an OIC, taxpayers must....

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The filing fee paid to the California Superior Court to open a probate and file a petition for probate has been changed for 2008. The initial filing fee is now $320.00 for California probate matters.

Until very recently, the Los Angeles Superior Court website and no other website provided any notice of the change. I’ve learned that some California probate lawyers were surprised.

The filing fee is based on the inventory value of the estate. The filing fee used to be calculated on the estimated value of the inventory and was paid at the time the petition for probate was filed. The filing fee schedule is set by Section 70650 of the California Government Code.

The fee structure that was replaced used to provide that when a probate case was opened:

The fee was $320.00 for estates or trusts under $250,000;

the fee was $385.00 for estates or trusts of at least $250,000 and less $500,000;

the fee was $485.00 for estates or trusts of at least $500,000 and less than $750,000;

the fee was $635.00 for estates or trusts of at least $750,000 and less $1,000,000;

Etc….

Now, the fee to file a petition for probate is $320.00 and when the estate closes the estate then pays the applicable filing fee amount based on the actual final inventory prepared during the probate.

So if the estate’s inventoried value is $751,000, the total filing fee is $635.00 and since $320.00 has been paid when the petition was initially filed with the court, the estate will pay directly to the probate court an additional $315.00 before the court will order the estate closed.

Those who file the petition for probate no longer have to advance large sums of money as used to be the case. Now, only $320 is required and later when money is available because the estate is to be closed, any unpaid filing fee will be due from the estate.

Want to start a California probate proceeding? Call a probate lawyer with experience. Call Mitchell A. Port at 310.559.5259.

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California probate law says that if the person who died left property worth $100,000 or less, then the proper person may claim the property without using the probate court in Los Angeles County, Ventura County, Santa Barbara County, Orange County or any other county throughtout California.

Here is what the California Probate Code Sections say to avoid probate:

If the gross value of the decedent's real and personal property in this state does not exceed one hundred thousand dollars ($100,000) and if 40 days have elapsed since the death of the decedent, the successor of the decedent may, without procuring letters of administration or awaiting probate of the will, do any of the following with respect to one or more particular items of property:

(a) Collect any particular item of property that is money due the decedent.

(b) Receive any particular item of property that is tangible personal property of the decedent.

(c) Have any particular item of property that is evidence of a debt, obligation, interest, right, security, or chose in action belonging to the decedent transferred, whether or not secured by a
lien on real property.

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Is your name on the list? Keep it off!

The California Franchise Tax Board is going after taxpayers who owe about $200,000 up to almost $27 million in back income taxes by listing their names and debts on the agency's website. California Revenue & Taxation Code Section 19195 directs the Franchise Tax Board to publish an annual list of the top 250 taxpayers with liened state income tax delinquencies greater than $100,000.

Of California's roughly 20 million taxpayers, about 250 owe huge debts. Before the FTB publishes the list, each taxpayer who may potentially be on the list gets a letter which provides them an opportunity to voluntarily settle their liability.

The notification letters, titled Notice of Public Disclosure, provide taxpayers 30 days to pay their debts or obtain FTB approval to make installment payments, pay the liability in full, enter into an Offer in Compromise, or substantiate a bankruptcy filing.

The California State Board of Equalization is also required by law to post similar information concerning back sales and use taxes every quarter, removing amounts that are being addressed through bankruptcy, payment arrangement, appeal or litigation.

Get tax help now! Call Mitchell A. Port, a California tax attorney experienced in resolving tax problems.

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While most tax return preparers are professional and honest, you can use the following tips to choose a preparer who will offer the best service for your tax preparation needs.

If you choose to use a paid tax preparer, it is important that you find a qualified tax professional. Taxpayers are ultimately responsible for everything on their return even when it’s prepared by someone else.

The most reputable preparers will request to see your records and receipts and will ask you multiple questions to determine your total income and your qualifications for expenses, deductions, and other items. By doing so, they have your best interest in mind and are trying to help you avoid penalties, interest, or additional taxes that could result from later IRS contacts.

Get References. Ask questions and get references from clients who have used the tax professional before. Were they satisfied with the service received?

Plan Ahead. Choose a preparer you will be able to contact after the return is filed and one who will be responsive to your needs.

Ask about service fees. Avoid preparers who claim they can obtain larger refunds than other preparers, or those who guarantee a refund or base fees on a percentage of the amount of the refund.

Research. Check to see if the preparer has any questionable history with the Better Business Bureau, the state’s board of accountancy for CPAs or the state’s bar association for attorneys. Find out if the preparer belongs to a professional organization that requires its members to pursue continuing education and also holds them accountable to a code of ethics.

Determine if the preparer’s credentials meet your needs. Does your state have licensing or registration requirements for paid preparers? Is he or she an Enrolled Agent, Certified Public Accountant, or Attorney? If so, the preparer can represent taxpayers before the IRS on all matters – including audits, collections, and appeals. Other return preparers can represent taxpayers only in audits regarding a return signed as a preparer.

Want a referral to a qualified tax return preparer from a California tax attorney? Call Mitchell A. Port at 310.559.5259.

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Did you believe you were an employee at your job rather than an independent contractor? Did your employer mistakenly treat you as an independent contractor perhaps because it was perceived as a way to save Social Security and Medicare Taxes on wages? If you were erroneously treated as an independent contractor, the Internal Revenue Service has developed a new form for employees who have been misclassified as independent contractors by an employer.

Form 8919, Uncollected Social Security and Medicare Tax on Wages, will now be used to figure and report the employee’s share of uncollected social security and Medicare taxes due on their compensation.

By using Form 8919, the worker’s social security and Medicare taxes will be credited to their social security record. To facilitate this process, the IRS will electronically share Form 8919 data with the Social Security Administration.

Generally, a worker who receives a Form 1099 for services provided as an independent contractor must report the income on Schedule C and pay self-employment tax on the net profit, using Schedule SE. However, sometimes the worker is incorrectly treated as an independent contractor when they are actually an employee. When this happens, Form 8919 will be used beginning for tax year 2007 by workers who performed services for an employer but the employer did not withhold the worker’s share of social security and Medicare taxes.

In addition, the worker must meet one of several criteria indicating they were an employee while performing the services. The criteria can be reviewed at this site:

In the past, misclassified workers often used Form 4137 to report their share of social security and Medicare taxes. Misclassified workers should no longer use this form. Instead, Form 4137 should now only be used by tipped employees to report social security and Medicare taxes on allocated tips and tips not reported to their employers.

Whether you are an employee or the employer, tax help is available to be sure you comply with the new rule. Call Mitchell A. Port at 310.559.5259 for tax help.

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An IRS appeals officer is disqualified by statute from conducting a Collection Due Process (CDP) hearing regarding the taxpayers' 2001 and 2002 tax liabilities when the officer had previously considered those liabilities during a CDP hearing involving a prior year's tax liability.

The taxpayer had requested that the Internal Revenue Service appeals officer recuse himself from hearing the collection due process matter since he had already been involved with the same taxpayer on a related matter. The IRS refused to appoint someone else to hear the new tax matter. The U.S. Tax Court agreed with the IRS.

In a recent decision (Cox v. Comm'r Internal Revenue, No. 06-9004), the 10th Circuit Court of Appeals reversed the Tax Court in the Tax Court's decision upholding a levy for certain tax liabilities against petitioners-taxpayers as contrary to the provisions of Internal Revenue Code section 6330(b)(3).

The question the court was asked to answer was to define the use of the term “no prior involvement” in a taxpayer’s matter when assigning a hearing officer to a collection due process case. The law requires the appointment of an impartial appeals officer to hear CDP matters who “has had no prior involvement with respect to the unpaid tax specified in [the CDP Notice] before the first hearing”.

In it’s holding, the court of appeals said all that is required to recuse the Internal Revenue Service’ appeals officer is that he in fact did have prior involvement with the same liabilities for which the taxpayers sought another remedy.

If you think you should have a new hearing officer at your collection due process hearing and you are being denied your request, you ought to retain an experienced tax attorney to help preserve your legal rights. Call Mitchell A. Port at 310.559.5259 for help.

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The Truth about Frivolous Tax Arguments is the Internal Revenue Service’s response to anyone who contemplates arguing on legal grounds against paying their fair share of taxes. It discusses and rebuts many of the more common frivolous arguments made by individuals and groups that oppose compliance with federal tax laws.

This 74-page document is updated at least once a year by the IRS and is designed to help individuals and groups understand their responsibilities and not violate the law.

The document explains many of the common frivolous arguments made in recent years and it describes the legal responses that refute these claims. This document is available on IRS.gov and will help taxpayers avoid wasting their time with frivolous arguments and incurring penalties.

In 2006, Congress increased the amount of the penalty for frivolous tax returns from $500 to $5,000. The increased penalty amount applies when a person submits a tax return or other specified submission, and any portion of the submission is based on a position the IRS identifies as frivolous.

A section of this document explains the penalties that the courts may impose on those who pursue tax cases on frivolous grounds. It should be noted that the cases cited as relevant legal authority are illustrative and are not intended to provide an all-inclusive list relating to frivolous tax arguments.

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In November, 2007, the U.S. government sued the owners of a San Diego, California tax preparation firm, asking a federal court to shut them down and permanently bar them from preparing tax returns for others. The civil injunction suit was filed in San Diego, California against Roosevelt Kyle and Rebecca Tyree, both of San Diego, and their businesses—Century One Resorts Ltd., COA Financial Group LLC, and Eagle Financial Services LLC.

According to the government’s complaint, the defendants operate their business in National City, California, and have prepared more than 12,000 federal tax returns since 2000. The suit alleges that Kyle and Tyree understated their customers’ tax liabilities by preparing returns with fabricated business-expense and charitable deductions. The complaint alleges that the Internal Revenue Service estimates that the defendants’ misconduct has caused losses to the U.S. Treasury totaling $18 million.

According to the complaint, the IRS has penalized Kyle three times in the past for understating customers’ tax liabilities. In 2002 a federal jury found Kyle guilty of failing to file his own 1995-1998 tax returns.

Call Mitchell A. Port at 310.559.5259 if you would like a referral to a California tax return preparer who is fair, has integrity, is honest and helpful.

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