April 30, 2008

Closing Your California Business?

Want to dissolve, surrender or cancel your California-based business whether you operate as a domestic corporation, foreign corporation, limited liability company or partnership? The California Franchise Tax Board has a helpful brochure to tell you how. Click here.

Winding-down your Los Angeles County, Orange County, Ventura County or Santa Barbara County business can be done with the help of a qualified attorney. Call Mitchell A. Port at (310) 559-5259 if you would like assistance.

April 28, 2008

California's Enhanced Tax Revenue Collection Efforts

The California legislature is considering a bill that would allow the Franchise Tax Board (the FTB) to suspend occupational and professional licenses because of unpaid income tax liabilities and notify the applicable licensing agency of the suspension.

The bill would allow the FTB to suspend an individual’s occupational or professional license because of unpaid income tax liabilities. The FTB would suspend a license only after the following have been provided to the debtor:

Notice of State Income Tax Due,

Final Notice Before Levy,

Order To Withhold (OTW) is issued (if debtor’s bank information is available to the FTB),

Notice of State Tax Lien (issued when a state tax lien is recorded),

60-day preliminary suspension notice.

The FTB would be allowed The FTB to disclose to the licensing boards the reason for the suspension – unpaid taxes.

The FTB staff would provide a hearing, upon request, for license holders who would experience a financial hardship as a result of the suspension.

This bill would define the following:

“Hardship” means financial hardship, as determined by the FTB, where the licensee is financially unable to pay any part of their taxes including penalties, interest, and applicable fees and is unable to qualify for an installment payment arrangement pursuant to Section 19008 of the Revenue and Taxation Code.

“License” includes certificate, registration, or any other authorization to engage in a business or profession issued by a state governmental licensing entity.

“Licensee” means any individual authorized by a license, certificate, registration, or other authorization to engage in a business or profession issued by a state governmental licensing entity.

The bill would allow the Contractors State License Board and the FTB to have concurrent authority to suspend a contractor’s license.

This bill requires licensing boards to provide the FTB information at a time requested by the FTB.

This bill would allow a limited hearing for license holders with outstanding tax liabilities as of the date of enactment to substantiate that the license holder has paid the tax liability reflected in the notice of state tax lien.

ECONOMIC IMPACT

The revenue impact of this bill would depend on the number of delinquent taxpayers that possess an occupational or professional license. This estimate was calculated using the actual account balances of the department’s accounts receivables for the affected taxpayers, excluding accounts in bankruptcy and installment agreements. Taxpayers subject to this proposal are those with an outstanding liability of $1,000 or more and have owed that debt for one year or more.

It is estimated that 17,200 taxpayers with occupational and professional licenses will enter the collection process annually. Of the 17,200 taxpayers, it is estimated 38%, or 6,600, are expected to pay their delinquent debts upon notice from the FTB. Current departmental data indicates the average payment amount for compliant taxpayers would be approximately $2,000, resulting in an annual revenue increase of approximately $13 million (6,600 x $2,000 = $13.2 million). The average payment amount was calculated by the amount of payments made in response to filing enforcement notices.

Current departmental data also indicates unresolved cases of approximately 25,000 delinquent taxpayers with occupational and professional licenses in the collection process. Based on the 25,000 taxpayers, it is estimated that nearly 9,500 taxpayers would comply upon notice from the FTB resulting in a revenue increase of $19 million in the first year ($2,000 x 9,500 = $19 million). The revenue for fiscal year ending 2009-10 is estimated to total $32 million ($19 million + $13 million).

It is assumed that 50 percent of the $32 million would be collected in fiscal year 2009-2010, reducing revenue to $16 million. The remaining $16 million from fiscal year 2009-10 would be collected in 2010-11, in addition to the $13 million that is assessed annually, for a revenue impact of $29 million ($16 million + $13 million = $29 million) in 2010-11. Thereafter, the annual fiscal impact of $13 million would be collected. Because the revenue from this bill would be from tax liabilities from prior years, the estimates in the table are all accrued back one year.

If you are having an income tax collection problem with the FTB, call a tax attorney: call Mitchell A. Port at (310) 559-5259 for help.

April 21, 2008

California Taxpayer Advocate

Like the IRS, California's Franchise Tax Board has its own taxpayer advocate. (See my earlier posting on August 27, 2007 entitled "What Has The IRS' Taxpayer Advocate Done Lately?"). It claims that "The Taxpayer Advocate's office is available to provide an independent review of your unresolved tax problems."

Your rights as a California taxpayer are described on the Franchise Tax Board's Advocate's website in English, Spanish, Chinese, Korean and Vietnamese.

There is also a comparison of California law with federal law concerning the taxpayers' bill of rights.

Common California Advocate Responsibilities Include:

Resolve problems when normal channels don’t work

Protect taxpayers’ rights

Determine whether to suspend collections while case is in review

Ensure courteous treatment of the public

Maintain independent status

Identify inequities

Provide independent review

Adhere to agency tax laws

Identify trends and issues

Encourage public suggestions

Propose changes

Promote understandable and simple:

Tax laws

Regulations

Policies

Procedures

Publications

Finally, there is a link to a list of taxpayer advocates in the California Board of Equalization (BOE), Employment Development Department (EDD), Franchise Tax Board (FTB) and the Internal Revenue Service (IRS).

If you continue to have tax problems even when dealing with the taxpayer advocate, call tax attorney Mitchell A. Port for tax help at 310.559.5259.

April 18, 2008

Resources For Your Business

Attention California business owners: here is a list of some useful sites and links to provide you with solutions to some of your questions about operating your business in the California counties of Los Angeles, Santa Barbara, Orange and Ventura.

U.S. Customs and Border Protection
U.S. Customs and Border Protection is the unified border agency within the Department of Homeland Security.

Environmental Protection Agency
The mission of the U.S. Environmental Protection Agency is to protect human health and to safeguard the natural environment--air, water and land--upon which life depends.

U.S. Tax Court
Congress created the Tax Court to provide a judicial forum in which affected persons could dispute tax deficiencies determined by the commissioner of Internal Revenue prior to payment of the disputed amounts.

Small Business Administration
The mission of the SBA is to maintain and to strengthen the nation’s economy by enabling the establishment and viability of small businesses and by assisting in the economic recovery of communities after disasters.

Business.gov
Business.gov guides you through the maze of government rules and regulations and provides access to services and resources to help you start, grow, and succeed in business.

USA.gov
The U.S. government's official Web portal.

Department of the Treasury
The mission of the Department of the Treasury is to promote the conditions for prosperity and stability in the United States and encourage prosperity and stability in the rest of the world.

Department of Commerce
The Commerce Department’s mission is to create the conditions for economic growth and opportunity by promoting innovation, entrepreneurship, competitiveness and stewardship.

Social Security Administration
The Social Security Administration is the nation's primary income security agency. It pays retirement, disability and survivors benefits to workers and their families, administers the Supplemental Security Income program, and issues Social Security numbers.

Department of Agriculture - Office of Small and Disadvantaged Business Utilization (OSDBU)
The mission of the OSDBU is to provide maximum opportunities for small businesses to participate in USDA contracting activities by establishing and attaining small disadvantaged business program goals.

Department of Labor: Occupational Safety & Health Administration (OSHA)
OSHA's mission is to assure the safety and health of America's workers by setting and enforcing standards; providing training, outreach, and education; establishing partnerships; and encouraging continual improvement in workplace safety and health.

Court Rulings
This page provides links to various federal, state and private sites that provide legal information for the small business owner.

Department of Education
The Education Department’s mission is to ensure equal access to education and to promote educational excellence throughout the nation.

State Links
A collection of links to State government Web sites with useful information for businesses. Whether you're already in business, just starting or expanding to a new state - there's something here for you!

State and Local Contacts
The State and Local Government on the Net directory provides convenient one-stop access to the Web sites of thousands of state agencies and city and county governments.

U.S. Census Bureau
The Census Bureau serves as the leading source of quality data about the nation’s people and economy.

U.S. Department of Labor
The department administers a variety of federal labor laws including those that guarantee workers’ rights to safe and healthful working conditions, a minimum hourly wage and overtime pay, freedom from employment discrimination, unemployment insurance and other income support.

U.S. Equal Employment Opportunity Commission
The mission of the EEOC is to eradicate employment discrimination at the workplace.

SBTV.com
SBTV.com is a television network on the Web devoted exclusively to providing engaging streaming video content to small businesses. It provides technical information on how to run your business, inspirational stories from entrepreneurs across the country, information about small business conferences and events, and resources to help solve day-to-day business challenges.

GobiernoUSA.gov
El portal oficial en español del Gobierno de los EE. UU (The U.S. government's official Spanish-language Web portal)

For tax and business help for your California based enterprise, call Mitchell A. Port at (310) 559.5259.

April 11, 2008

Military Personnel May Qualify For New Tax Rebate

On March 20, 2008, the Internal Revenue Service issued a release which advises U.S. military taxpayers, serving in a designated combat zone, that their nontaxable combat duty pay will qualify as income for purposes of eligibility for the tax rebate payable under the Economic Stimulus Act of 2008. The tax rebate is available in either 2008 or 2009.

Service members who would not otherwise file a federal income return, as a result of their nontaxable combat zone income, must now file Form 1040A, U.S. Individual Income Tax Return, with the IRS by October 15 in order to receive the economic stimulus payment in 2008.

To receive the rebate, the service member must:

(i) show at least $3,000 in qualifying income (earned income, combat zone pay, Social Security benefits or Veterans Affairs benefits) on their tax return;

(ii) file their 2007 federal income tax return on or before Oct. 15, 2008 (a service members federal income tax filing deadline is extended by 180 days after leaving a combat zone) to receive the tax rebate in 2008; and

(iii) file Form 1040A with the IRS (report the nontaxable combat duty pay on Line 40b of Form 1040A).

April 7, 2008

Release of Lien Or Discharge Of Property

The Internal Revenue Service published final regulations related to the release of a Federal tax lien and discharge of property under sections 6325, 6503, and 7426 of the Internal Revenue Code. These regulations update existing regulations and contain procedures for processing a request made by a property owner for discharge of a Federal tax lien from his property under section 6325(b)(4).

These regulations are effective January 31, 2008 and apply to any release of lien or discharge of property that is requested after January 31, 2008.

Basis for Release of Lien:

1) Liability satisfied or unenforceable.

2) Bond accepted.

3) Certificate of release for a lien which has become legally unenforceable.

4) Satisfaction of tax liability.

5) Proof of full payment.

6) Notice of a Federal tax lien which lists multiple liabilities.

7) Taxpayer requests discharge of specific property from the lien.

If you have tax liens that should be released, call Mitchell A. Port.

April 2, 2008

Frivolous Tax Claims To Avoid

Songwriter and performer Paul Simon sang about the 50 ways to leave your lover. The IRS has identified about another 50 ways to take frivolous tax positions to avoid compliance with the federal tax laws.

Congress passed recent legislation amending the Internal Revenue Code requiring the Treasury Secretary to prescribe, and periodically revise, a list of tax positions identified as frivolous. Notice 2007-30, 2007-14 I.R.B. 883, contained the prescribed list. The list was recently revised to add more positions identified as frivolous.

Frivolous Positions. Positions that are the same as or similar to the following are frivolous:

Continue reading "Frivolous Tax Claims To Avoid" »