California Tax Attorney Blog

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This blog was listed in the "101 Top Tax Policy Blogs" featured in Masters in Accounting.

Closing your California business? There’s much to do. The Internal Revenue Service provides procedures for getting out of business, including how to handle additional revenue received or expenses you may incur and what forms to file. Here are some useful links:

Closing a Business Checklist

Sale of a Business

Changing Your Business Structure

Declaring Bankruptcy

Terminating a Retirement Plan

See the Video

Need additional help? Call an attorney experienced in business transactions; call Mitchell A. Port at (310) 559-5259.

The IRS has a video on YouTube covering receipt of a notice in the mail. It's short but worthwhile. Click here.

Have you received a notice? Call a tax attorney about solutions to your tax problem. Call Mitchell A. Port at (310) 559-5259.

If you receive a letter or notice from the IRS, it will explain the reason for the correspondence and provide instructions. The notice you receive covers a very specific issue about your account or tax return. Generally, the IRS will send a notice if it believes you are due a larger refund, owe additional tax, there is a need for additional information or if there is a question about your tax return.

Redesigned notices are now being sent to us as taxpayers. Don't panic: instead, call a tax attorney. Call (310) 559-5259.

The redesigned notices cover these topics:

Balance Due

Additional Child Tax Credit

Refund

Overpayment

Direct Deposits

Tax Exemptions

Filing Requirements. You may no longer need to pay the Alternative Minimum Tax.

Filing Requirements. You may no longer need to file Form 941 and Form 940.

Payment Process

Filing Requirements. You may no longer owe excise tax.

By dying in 2010, George Steinbrenner, the billionaire and long-time New York Yankees owner’s wealth avoids the federal estate tax altogether.

Steinbrenner’s death Tuesday came during a year-long gap in the estate tax, the first in its history. As a result, the government does not collect billions of dollars in annual estate tax revenue. For those who inherit wealth, getting it tax-free is fantastic. A probate may still be required if any of the property was in California.

“If you’re wealthy, it’s a good year to die.” Forbes magazine has estimated Steinbrenner’s estate at $1.1 billion. The federal estate tax in 2009 was 45 percent, with the $3.5 million per-person exemption. If he had died last year, his estate could have faced federal estate taxes of almost $500 million, depending on how the estate was structured.

Remember, in California, just because you don’t owe the IRS any estate tax, your estate may still go through probate before your heirs can receive their inheritance. Moreover, the estate tax will likely come back. Call a qualified estate planning attorney to discuss avoiding probate and minimizing estate tax with a living trust. Call Mitchell A. Port at (310) 559-5259.

When someone in California dies, a family member should get a credit report to find out what accounts are still open and need to be closed, what debts are outstanding and to verify there has been no identity theft. Those who die are often targeted for identity theft. It can take a very ling before a family becomes aware of the fraud.

You can obtain a credit report on someone who has died by writing to the three big credit bureaus: Experian, Equifax and Trans Union. Give those bureaus information about the death with the decedent's full name, address, social security number and date of death. Include a copy of the death certificate and give your name and explain your relationship to the decedent. Ask for the decedent's most current copy of the credit report and that a notice such as "Deceased - Do not Issue Credit" be included in the public record. Be sure to request that any suspicious activity be reported to you. Send the letter certified mail.

If I can help with the death of someone in California, call me. I handle probate and trust administration and can assist with the legal process of administering a will or a trust or the probate of an individual without a will.

For more help, call probate attorney Mitchell A. Port at 310.559.5259.

In a recent decision (Olmstead v. FTC, Supreme Court of Florida, June 24, 2010), the Florida Supreme Court held that Florida’s general collection statute authorizing liens and levies on all assets was not limited by the charging order statute even though the plain meaning of the charging order statute provides that it is the exclusive remedy for a creditor pursuing an LLC membership interest.

The text of the decision follows:

Continue reading "No Charging Order Protection For Single Member LLCs" »

Do you have a tax dispute? If you are a California resident, you probably do. But since the IRS reaches across the world in its efforts to collect a tax debt, anyone anywhere can have a tax problem.

If so, then you need to determine if Appeals is right for you.

Appeals is the place for you if:

You received an IRS correspondence explaining you have the right to come to Appeals to dispute an IRS decision.

AND

You do not agree and are not signing an agreement form sent to you.

If you meet the above qualifiers listed above then you may be ready to request an Appeals conference or hearing.

If you've received an IRS correspondence and already know your case qualifies to be reviewed with Appeals then you should go to the Appeals homepage to determine your next steps.

You are ready to request an Appeals conference or hearing if you can explain why you disagree. If you believe the facts used by the IRS are incorrect, then you should have records or other support available to back up your position.

Appeals is not for you if:

Your only concern is that you cannot afford to pay the amount you owe.

The correspondence you received from the IRS was a bill and there was no mention of Appeals.

If you cannot identify the requirements, or if you do not meet the conditions for coming to Appeals as explained above, contact a qualified tax attorney for help. Call Mitchell A. Port at (310) 559-5259.

The deadline for the completion of qualifying First-Time Homebuyer Credit purchases has been extended. Taxpayers who entered into a binding contract before the end of April now have until September 30, 2010 to close on the home.

The Homebuyer Assistance and Improvement Act of 2010, enacted on July 2, 2010, extended the closing deadline from June 30 to Sept. 30 for eligible homebuyers who entered into a binding purchase contract on or before April 30 to close on the purchase of the home on or before June 30, 2010.

Here are five facts from the IRS about the First-Time Homebuyer Credit and how to claim it.

If you entered into a binding contract on or before April 30, 2010 to buy a principal residence located in the United States you must close on the home on or before September 30, 2010.
To be considered a first-time homebuyer, you and your spouse – if you are married – must not have jointly or separately owned another principal residence during the three years prior to the date of purchase.

To be considered a long-time resident homebuyer, your settlement date must be after November 6, 2009 and you and your spouse – if you are married – must have lived in the same principal residence for any consecutive five-year period during the eight-year period that ended on the date the new home is purchased.

The maximum credit for a first-time homebuyer is $8,000. The maximum credit for a long-time resident homebuyer is $6,500.

To claim the credit you must file a paper return and attach Form 5405, First Time Homebuyer Credit, along with all required documentation, including a copy of the binding contract. New homebuyers must attach a copy of the properly executed settlement statement used to complete the purchase. Long-time residents are encouraged to attach documentation covering the five-consecutive-year period such as Form 1098, Mortgage Interest Statements, property tax records or homeowner’s insurance records.

For more information about the First-Time Homebuyer Tax Credit and the documentation requirements, visit IRS.gov/recovery.