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TAX, BUSINESS, WILLS & ESTATES
Wills and Estates
Protest of IRS and State Tax Audits
Innocent Spouse Relief
IRS and State Audits and Appeals
Tax Controversy Matters--Federal, State and Local
Offers in Compromise
Corporate, Partnership and Limited Liability Company organization and planning
IRS Criminal Investigations
Collection Due Process Hearings
Removing Tax Levies and Garnishments
FAMILY LAW--DIVORCE, CUSTODY & SUPPORT
Divorce-Contested and Uncontested
Custody and DHR
S Corporation Late Election Relief
A corporation may make the S election on Form 2553 as follows: 1) At any time during the preceding year; or 2) At any time during the tax year the election is to be effective as long as it is made by no later than the 15th day of the third month of that tax year. When the election is not filed, the corporation is treated as a C Corporation and its losses/gains are taxed to the corporation. When the corporation properly files an S Election, gains and losses are taxed to its individual owners.
There is limited relief for taxpayers who have failed to make the S election, but have reasonable cause. IRS guidance is provided in Rev. Proc. 2013-30 on late S election relief. Generally, there is limited relief available when the corporation fails to qualify as an S Corporation solely because it failed to file the Form 2553, but has filed all returns reporting income consistently as an S Corporation and seeks relief up to 3 years and 75 days from the election due date.
Gene M. Bowman, Tax Attorney & CPA
Alabama Tax Fairness Act
The Business Associations’ Tax Coalition (BATC), a coalition of 27 business trade associations, chaired by Alabama Retail Association President Rick Brown, has advocated for an independent tax appeals process for at least 15 years and is elated to see the new process put into action.
The new law does the following:
1) Abolishes the current Administrative Law Division of the Alabama Department of Revenue.
2) Transfers the personnel and equipment from the abolished division to the newly created Alabama Tax Tribunal.
3) Allows taxpayers to appeal final assessments of sales, use, rental, and lodgings taxes issued by self-administered cities and counties (and their private auditing firms) to the tribunal, unless the governing body of the city or county opts out. This provision works hand-in-hand with the Optional Network Election for Single Point Online Transactions, or ONE SPOT, e-filing program for local sales, use, and rental taxes.
4) Starts the 30-day time period for filing appeals of preliminary or final assessments at the date of the actual mailing to the taxpayer, or date of personal service, whichever occurred earlier. Previously, the appeals clock started at the date of entry.
5) Broadens the “innocent spouse” relief for paying tax, interest and penalties if your spouse (or former spouse) improperly reported items or omitted items on your tax return, which is consistent with federal changes. A bill passed in 2012 only partially conformed to the pro-taxpayer federal changes.
6) Increases the power of the Taxpayer Advocate, allowing the advocate to correct a final order issued by the tribunal if newly discovered evidence shows a taxpayer was incorrectly assessed.
7) Waives the bond requirement or payment of the disputed tax before filing an appeal for taxpayers with a net worth of less than $250,000 or less in cases where an assessment is appealed directly to circuit court or from the tribunal to a circuit court.
8) Makes no increases to existing penalties.
Child Support in Alabama
Bowman Law Firm, Divorce Attorney
You may need information on child support: a) If you are a parent going through a divorce; or b) If you have never been married to your child’s other parent and are separated or are now separating. A child's mother and father have a legal duty to support their children financially. Alabama has strict rules and tables on how to calculate child support. . If you have an question concerning the calculation of child support, please feel free to call and speak with a Family Law and Divorce attorney.
Rule 32 Guidelines: Alabama courts ordering child support follow the “Income Shares Model.” This model estimates the total amount that an intact two-parent family would likely spend on the children, and then splits the amount proportionately between the parents according to their incomes. Under this model, the parent with greater income is responsible for a greater percentage of support. The basic support amounts and the rules for dividing amounts between parents are set out in the Alabama Child Support Guidelines. See Rule 32 of the Alabama Rules of Judicial Administration and the attached forms and schedules, including the Child-Support-Obligation Income Statement/Affidavit (Form CS- 41), Child-Support Guidelines worksheet (Form CS-42) and Basic Child-Support Obligation Schedule.
Alabama Intestate Law
Gene M. Bowman, Tax Attorney and CPA
It’s best to find out quickly whether the deceased person left a valid Alabama Last Will and Testament. If not, the person is said to have died intestate. Intestate and intestacy are terms used to refer to the condition of having died without a will. Partial intestacy can also occur when a person has a will, but it does not dispose of all of his or her property. This is the result of poor drafting and comes up most often in wills prepared by non-lawyers.
When a person dies intestate, the Alabama laws of intestacy will kick in to provide for distribution of the intestate decedent’s assets. This scheme of distribution may be referred to as intestate succession, intestate distribution or the laws of intestacy. These laws represent the Alabama legislature’s best guess as to what most people would want to happen to their assets.
Under Alabama’s laws of intestate distribution, any part of an estate that is not effectively disposed of through a valid Last Will and Testament is distributed to the decedent’s heirs as follows:
If the decedent is survived by a spouse, the following rules apply:
If the decedent didn’t leave parents or children, the spouse gets everything. If the decedent was survived by parents but not by children, the spouse gets $100,000 and half of the balance of the decedent’s estate. The decedent’s parents get the remaining half. If the decedent had children who are also children of the surviving spouse, the surviving spouse gets $50,000 and one half of the balance of the decedent’s estate. The surviving children share the other half of the balance. If the decedent had living children that are not the children of the surviving spouse, the surviving spouse gets one half of the estate and the decedent’s children get the remaining half.
If the decedent is not survived by a spouse, the estate passes to decedent’s heirs at law in the following order of priority:
Children and their descendants; Parents; Brothers and sisters, or, if all are deceased, nieces and nephews; Grandparents, aunts, and uncles or, if all are deceased, to their descendants; and The State of Alabama.
Alimony in Alabama Divorce
Gene M. Bowman, Divorce Attorney
There are two general kinds of alimony in Alabama divorces, one constituting support of the spouse (referred to as "periodic alimony") and the other representing a property settlement (referred to as "alimony in gross") between the spouses.
Periodic alimony refers to payments that are made periodically for the support and maintenance of the other spouse. Periodic alimony has been described as "an allowance for the future support of the recipient payable from current earnings of the obligor." The purpose of periodic alimony is to preserve the economic status quo of the parties as it existed during the marriage, where possible. It is available to both sexes when warranted. Payments of periodic alimony are taxable to the recipient and deductible for the payor if they meet certain requirements: a) Payments must be in cash; b) Payments are made under a written divorce or separation order or agreement; c) Payments are made to or in behalf of a payee spouse; d) Payor and payee spouse are not members of the same household; e) Payment obligation of payor spouse terminates on death of the payee spouse; and f) The order or instrument does not eliminate the tax consequences of the payments. The determination of the amount of the award is discretionary with the court; however, case law has given us certain standards to evaluate: a) The standard of living during the marriage; b) The parties' future prospects; c) The parties' potential for maintaining their standard of living after their divorce; d) The parties' ages; e) the parties' health; f) The length of the marriage; g) The source or sources of their common property; and g) The conduct of the parties with reference to the cause of the divorce.
Tax Treatment of Pension Benefits and Retirement Assets
Pension benefits and retirement savings often constitute a client’s most valuable assets, and are viewed as a safety net. For that reason, many assume that such assets are beyond the reach of the tax authorities. Depending on the facts of the particular case, this may or may not be true. This article will give you a better understanding of the rules defining how these assets are treated by the Collection Division and the courts so that you can properly advise your clients and protect their legal and financial interests.
Tax Issues for the Divorced, Separated or Married
Gene M. Bowman, Tax Attorney, Divorce Lawyer
Posted 2/28/2014 What is “joint and several liability?”
When you sign an income tax return with your spouse (husband or wife), you are telling the tax agency that you agree to pay any tax due on that return, even if the tax is not caused by your own income or mistakes. You agree to pay the tax even if the tax is caused by your spouse. That is what “joint and several liability” means – you are liable for the tax as a married couple and as an individual person.
How do I get out of “joint and several liability?”
The easiest way to avoid joint and several liability is to file as “married filing separate.” Unfortunately, if you file “married filing separate” you will not be able to claim the Earned Income Credit. You may also end up paying more tax than you would if you filed jointly with your spouse. So some people will not want to file separately from their spouses.
If the IRS is saying that you owe taxes for a year in which you filed a joint return with your spouse, you can file Form 8857, “Request for Innocent Spouse Relief,” if you fit into one of three situations, listed below. The IRS will either agree with you and not hold you liable for the tax, or it will deny your request for relief. When the IRS denies your claim for relief, you can appeal to an IRS Appeals Officer and even the United States Tax Court.
IRS–Offer in Compromise Tax Lawyer, Tax CPA Posted on December 6, 2013
An offer in compromise allows you to settle your tax debt for less than the full amount you owe. It may be legitimate option if you can’t pay your full tax liability. The Internal Revenue Service (IRS) will consider your facts and circumstances when reviewing your offer: 1)Ability to pay;2)Income;3)Expenses; and 4)Asset equity. The IRS will generally approve an offer in compromise when the amount offered represents the most that they expect to collect within a reasonable time period.
Alimony and Taxes
Family Attorney/Divorce Lawyer, Posted on December 10, 2013
Alimony is a payment to or for a former spouse under a divorce decree. It does not include voluntary payments that are not made under a divorce decree. If you are divorced and paying or receiving alimony under a divorce decree or agreement, you need to consider the tax implication for your income tax return. Alimony payments received from your ex-spouse are taxable to you in the year that you receive them.
Alabama Sales Tax on Successor When Buying Business or When Prior Owner Quits The Business
Gene M. Bowman, Tax Attorney and CPA
Most states maintain some sort of successor liability provision in their tax statutes. Those provisions allow the state taxing authority to collect the seller’s outstanding sales tax liability from the purchaser in a sale if some requirements are not satisfied. Most states require that either the seller or the purchaser provide the state taxing authority with notice of the proposed asset sale. That affords the taxing authority the opportunity to review the seller’s sales tax history and to collect any outstanding debts before the seller closes up shop. Those provisions are designed to prohibit sellers from selling their assets and absconding with the proceeds before satisfying their sales tax debts. And they protect purchasers from the sales tax liability of unscrupulous sellers.
In Alabama, Code of Ala. 1975, section 40-23-25 provides as follows: Section 40-23-25. Sale of business; taxation of sucessor.
Any person subject to the provisions hereof who shall sell out his business or stock of goods, or shall quit3 business, shall be required to make out the return provided for under '40-23-7 within 30 days after the date he sold out his business or stock of goods, or quit business and his successor in business shall be required to withhold sufficient of the purchase money to cover the amount of said taxes due and unpaid until such time as the former owner shall produce a receipt from the department of revenue showing that the taxes have been paid, or a certificate that no taxes are due. If the purchaser of a business or stock of goods shall fail to withhold purchase money as above provided the taxes shall be due and unpaid after the 30 day period allowed, he shall be personally liable for the payment of the taxes accrued and unpaid on account of the operation of the business by the former owner. If in such cases the department deems it necessary in order to collect the taxes due the state, it may make a jeopardy assessment as herein provided. (emphasis added)
If you need any help, please feel free to call us.
We have over 20 years of experience as an attorney and CPA providing our expertise to resolve client's legal concerns in an effective manner with dedication to client success. We offer clients expert service with a unique commitment to ensure their needs are met from start to finish. We realize that results are important.
We have extensive experience handling tax matters as a tax lawyer and CPA, including tax audits and appeals with the Internal Revenue Service (IRS), tax audits and appeals with the State of Alabama, tax litigation in U.S. Tax Court, Circuit Court tax debt relief, offers in compromise, tax fraud, release of levies and liens and other taxpayer relief.
Our experience includes serving as the following: Attorney in Bowman Law Firm; Tax Director for a Fortune 500 Corporation; Legal Counsel for a Fortune 500 Corporation; and Senior Manager for a "Big Four" Consulting and Accounting Firm.
Our depth of experience with legal and financial matters serves as a benefit to our clients going through a divorce or dealing with other family law matters. We have years of experience, as a divorce attorney and family lawyer, handling issues that impact families, including the following: a) contested divorce; b) uncontested divorce; c) child custody; d) child support; e) DHR custody challenges.