California Tax Attorney Blog

Creditor claims in Los Angeles County, Santa Barbara County, Ventura County and Orange County against the property of a decedent in California must file a timely claim with the county court where the probate proceeding is pending if the claim is to be addressed.

California Probate Code Section 19100 provides this rule about the time for filing claims:

(a) A creditor shall file a claim before expiration of the later of the following times:
(1) Four months after the first publication of notice to creditors under Section 19040.
(2) Sixty days after the date actual notice is mailed or personally delivered to the creditor. This paragraph does not extend the time provided in Section 366.2 of the Code of Civil Procedure.
(b) A reference in another statute to the time for filing a claim means the time provided in paragraph (1) of subdivision (a).
(c) This section shall not be interpreted to extend or toll any other statute of limitations, including that provided by Section 366.2 of the Code of Civil Procedure.

Are you a creditor with a substantial claim? Call Mitchell A. Port to discuss this or other probate matters in California.

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As a probate lawyer in Los Angeles, from time to time I am hired to handle the estate of a Los Angeles resident who dies without a will. To pass property to heirs and beneficiaries in California after dying without a California will is called intestate succession.

California Probate Code Section 240 provides a system of property distribution when there is no California will. Probate Code Section 240 says:

If a statute calls for property to be distributed or taken in the manner provided in this section, the property shall be divided into as many equal shares as there are living members of the nearest generation of issue then living and deceased members of that generation who leave issue then living, each living member of the nearest generation of issue then living receiving one share and the share of each deceased member of that generation who leaves issue then living being divided in the same manner among his or her then living issue.

Assume, for example, that my Los Angeles client had two children, A and B, both of whom predeceased my client. A leaves three children who survive my client, and B leaves one child who survives my client. Neither A nor B had any children who predeceased my client. Under this fact context, Probate Code Section 240 will have the following result:

The estate is divided at the nearest generation having living members. Each of my client’s four grandchildren receives one-fourth of the class gift. (The share of a deceased grandchild who left issue surviving would be divided among the children of the deceased grandchild.)

If this or other California probate questions arise, discuss your situation with Los Angeles attorney Mitchell A. Port. Call 310.559.5259.

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Unpaid individual income taxes and other unpaid federal taxes may be satisfied by the sale of property seized by the IRS.

Under authority of the Internal Revenue Code, the property described in the IRS website has been seized or acquired for nonpayment of internal revenue taxes and will be sold. The IRS posts legal notices covering the nature of title, redemption rights, effect of junior encumbrances, title offered, and forms of payment before making a bid.

The types of property sold are listed under the headings below and each state in the U.S. may contain some or all of these types of property for sale.

Internet Domain Names

Real Estate

Real Estate - Seeking Guaranteed Bids

Antiques, Art, Jewelry, Collectibles and Luxury Items

Misc. Property - Quick Notice Sales - Seeking Bidders

Household Goods - Personal Property

Commercial/Industrial Property, Equipment and Supplies

Financial Instruments, Notes, Patents

Automobiles, Motorcycles, Trucks and Boats

Liquor Licenses

Don't let your tax liability go unpaid. Call a California tax attorney for help. Call Mitchell A. Port at (310) 559-5259.

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The ABA Journal is surveying lawyers about the job market and the current state of the economy. I am letting readers know about the Journal's survey with a mention on my blog. Here is the link.

Survey results will be published in the January ABA Journal.

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Where should you keep estate planning documents prepared by your attorney licensed in California? Where should people expect to find your living trust, will, durable power of attorney and advance health care directive? You want to be sure that those documents stay safe and can be easily found when your family needs to find them.

Do not keep them in a safe deposit box at the bank.

The best place is in your home where they can easily be found when they are needed. Don’t lock them into a box for safekeeping inside your home since that would be as difficult to penetrate as a safe deposit box. Simply leave them in the open inside a desk, on a shelf or somewhere else that is obvious to anyone looking for them.

Your safe deposit box won’t be easy for your friends or family to open it if you’re not there. This is true even if they are co-owners of the box. Having the key isn’t enough to get the bank to open it up for them — the bank wants you to prove that you have the legal authority to require them to open it up. So here’s the conundrum: the document granting your friends or family the right to act on your behalf as an executor or as the power of attorney/agent is inside the box, and until the box is opened, they can’t prove that they have the authority to get the bank to open it…etc.

Safe deposit boxes are often inside a bank which may be closed over the weekend. If a durable power of attorney or advance health care directive is needed over the weekend, no one will be able to get to it until Monday. In a medical emergency, the advance health care directive should be easily accessible.

To speak with a tax attorney about your estate plan, call Mitchell A. Port at (310) 559-5259.

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New legislation doesn't change probate in California. It does change, however, the requirement for doctors to provide terminally ill patients with counseling and disclosure about their options for end-of-life care.

California’s health care providers are now required to let their patients know about their options when they've been diagnosed with a terminal condition, including:

their right to give individual health care instructions in their California Advance Health Care Directive

their prognosis with and without disease-targeted treatment

their right to continue such treatment with or without palliative care, and

hospice care

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The Internal Revenue Bulletin (IRB) is the authoritative instrument of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service and for publishing Treasury Decisions, Executive Orders, Tax Conventions, legislation, court decisions, and other items of general interest. It is published weekly and may be obtained from the Superintendent of Documents on a subscription basis. Bulletin contents are compiled semiannually into Cumulative Bulletins, which are sold on a single-copy basis.

It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application of the tax laws, including all rulings that supersede, revoke, modify, or amend any of those previously published in the Bulletin.

All published rulings apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management are not published; however, statements of internal practices and procedures that affect the rights and duties of taxpayers are published.

Revenue rulings represent the conclusions of the Service on the application of the law to the pivotal facts stated in the revenue ruling. In those based on positions taken in rulings to taxpayers or technical advice to Service field offices, identifying details and information of a confidential nature are deleted to prevent unwarranted invasions of privacy and to comply with statutory requirements.

Rulings and procedures reported in the Bulletin do not have the force and effect of Treasury Department Regulations, but they may be used as precedents. Unpublished rulings will not be relied on, used, or cited as precedents by Service personnel in the disposition of other cases. In applying published rulings and procedures, the effect of subsequent legislation, regulations, court decisions, rulings, and procedures must be considered, and Service personnel and others concerned are cautioned against reaching the same conclusions in other cases unless the facts and circumstances are substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code.

Part II.—Treaties and Tax Legislation.

Part III.—Administrative, Procedural, and Miscellaneous.

Part IV.—Items of General Interest.

Interested in knowing more about how the IRS works? Call a tax attorney with experience working with the IRS. Call Mitchell A. Port at 310.559.5259.

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The Government Accounting Office (GAO) was asked to review and report on the Internal Revenue Service's (IRS) processes and procedures to prevent and collect unpaid payroll taxes. Specifically, GAO was asked to determine (1) the magnitude of unpaid federal payroll tax debt, (2) the factors affecting IRS’s ability to enforce compliance or pursue collections, and (3) whether some businesses with unpaid payroll taxes are engaged in abusive or potentially criminal activities with regard to the federal tax system.Over 1.6 million businesses owed over $58 billion in unpaid federal payroll taxes, including interest and penalties as of September 30, 2007. Payroll taxes consist of your income tax withheld, social security and Medicare contributions, and the employer’s contributions.

Some of these businesses “abuse” the federal tax system and took advantage of the existing tax enforcement and administration system to avoid fulfilling or paying federal tax obligations. Over a quarter of payroll taxes are owed by businesses with more than 3 years (12 tax quarters) of unpaid payroll taxes. Some of these business owners repeatedly accumulated tax debt from multiple businesses. For example, the IRS found 18 individuals were responsible for not remitting payroll taxes for a dozen different businesses and over 1,500 individuals to be responsible for nonpayment of payroll taxes at three or more businesses.

IRS has not always promptly filed liens against businesses to protect the government's interests and has not always taken timely action to hold responsible parties personally liable for unpaid payroll taxes.

Although IRS has tools at its disposal to prevent the further accumulation of unpaid payroll taxes and to collect the taxes that are owed, IRS's current approach does not provide for their full, effective use. IRS's overall approach to collection focuses primarily on gaining voluntary compliance - even for egregious payroll tax offenders - a practice that can result in minimal or no actual collections for these offenders.

If your business has payroll tax problems you are at risk of the IRS putting you out of business, and assessing the trust fund recovery penalty resulting in owners, and officers having substantial personal tax liability. If you would like assistance in dealing with these, and other types of tax problems contact Los Angeles tax attorney Mitchell A. Port at 310.559.5259.

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The University of Chicago Hospitals (“UCH”) brought a refund action (in an appeal entitled "University of Chicago v. USA", Case No. 07-3686, decided October 29, 2008 by the 7th Circuit Court of Appeals) against the United States to recover taxes it paid in 1995 and 1996 under the Federal Insurance Contributions Act (“FICA”), §§ 3101-3128, on behalf of its medical residents. UCH maintained it was entitled to a refund because its residents qualified for the “student exception” from FICA tax under the Internal Revenue Code (“IRC”), 26 U.S.C. § 3121(b)(10), and the controlling Treasury Regulation in place during the relevant time period, § 31.3121(b)(10)-2.

After the IRS took no action in response to the refund claim, UCH filed this refund action, seeking $5,572,705 it had paid in FICA contributions for its residents in those years.

The district court agreed initially to entertain the government’s motion on the question of whether medical residents are categorically not “students” under § 3121(b)(10) and therefore not exempt from FICA tax as a matter of law. If the answer to this question was “no”—that is, if residents may qualify for the student exception—then the case would proceed on the question of whether UCH’s residents were students within the meaning of § 3121(b)(10).

The district court rejected the government’s argument that residents were per se ineligible for the student exception.

The U.S. Court of Appeals for the Seventh Circuit granted the government’s petition and affirmed the U.S. District Court holding that the student exception under § 3121(b)(10) is not per se inapplicable to medical residents as a matter of law; rather, a case-by- case analysis is required to determine whether medical residents qualify for the statutory exemption from FICA taxation. The implementing Treasury Regulation applicable at the time set forth a method for determining eligibility for the student exception— one that focused on the character of the employing organization as a school, college, or university and the relationship of the employee-student to that organization. This necessarily implies a case-specific analysis, not a categorical ineligibility for certain classes of employee-students.

Have a FICA tax problem? Speak with a Los Angeles tax attorney about it and call Mitchell A. Port at (310) 559-5259.

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Simply put:

"Provide America’s taxpayers top quality service by helping them understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all."

In carrying out its mission, the IRS creates tax problems for which you may need help from a qualified tax attorney. Call Mitchell A. Port at (310) 559-5259 and discuss how to fix your tax trouble.

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