FTB imposing penalties for failure to pay electronically

The FTB has begun assessing penalties on certain taxpayers who fail to make tax payments electronically. Affected taxpayers are those who, since January 1, 2009, have incurred either a total California tax liability greater than $80,000 or any individual estimated tax or extension payment more than $20,000.

The law has been in effect since 2009 but for the past two years the FTB has not assessed any penalties, giving taxpayers time to understand and comply with the new rules. The penalty for failing to make a payment electronically is 1% of the payment amount, which can result in substantial penalties for taxpayers with large liabilities or payments. Read more

Client Organizers

The attached client organier is designed to help you gather tax information needed to prepare your 2010 personal income tax return.  Click on the link below to access the client organizer.

Blank Organizer

FBAR Amnesty (Again)

The IRS has recently announced a second period of amnesty for undisclosed foreign bank and financial accounts (FBAR). In order to disincentivize “holding out” the IRS has upped the potential penalties to 25% from 20% on the highest aggregate account balance between 2003 and 2010. Taxpayers must also file amended returns declaring all foreign income and pay the related taxes, penalties, and interest. The deadline for entering the amnesty program is August 31, 2011.

In exchange the IRS is promising not to pursue criminal charges. In addition to criminal charges, the penalties can be as high as 50% of the highest aggregate account balance as well as declaring all foreign income and paying the related taxes, etc.

The IRS has made it clear they are actively pursuing these perceived tax “loopholes” in an aggressive fashion. If you have undisclosed foreign bank accounts you need to know your rights and options. Please call our office immediately to speak with your trusted LMGW advisor.

1031 Exchanges – Follow the rules!

In a recent summary opinion by the US Tax Court (Ralph Crandall TC Summary Opinion 2011-14) the taxpayers were found to not qualify for nonrecognition treatment under Section 1031. The parties established two escrow accounts for the exchange but neither account limited the taxpayer’s right to receive, pledge, borrow, or otherwise obtain the benefit fo the funds.

As with many prospective tax transactions, it is of paramount importance that the rules and form of transactions be followed to the letter.

Up to a 95% tax break for employer provided child care

For those of you with small businesses out there, opportunity exists for an up to 95% tax savings for providing child care for your employees. The tax savings involves the following items: federal employer child care credit, California employer child care credit, federal income tax deduction, California income tax deduction, FICA savings.

The maximum credit can be obtained by paying up to $100 per month, per child in qualifying child care payments. Payments must be made directly by the employer to the qualifying child care provider. Care must be provided under the authority of a license when required by California law. Read more