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San Jose, CA business tax attorney use taxesA recent U.S. Supreme Court case has prompted California legislators to change a state use tax law that affects out-of-state sellers. Under the new law, some retailers outside of California must register with the California Department of Tax and Fee Administration (CDTFA) and collect California use tax.

The law applies to remote sellers who have total sales of $500,000 in tangible personal property for delivery in California in the preceding or current calendar year. The law went into effect on April 1, 2019, so these sellers are required to collect and remit taxes on sales which occurred on or after this date. 

Examples of out-of-state sellers that may be affected by this change include online merchants, mail-order catalogs, or telephone salespeople. Retailers with a physical presence in California will continue to have the same registration and use tax obligations as before the new law was passed.

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San Jose retirement plan tax attorney self-correctionThe administration of retirement accounts is notoriously technical, and mistakes by plan sponsors can occur. Furthermore, since an account holder will be maintaining and contributing to a retirement account for many years, there are often changes that must be made. Tax issues may arise when 403(b) and 401(a) retirement plans need to be corrected, and the IRS must typically be notified of any corrections. Fortunately, the IRS has several self-correction mechanisms in place that allow plan sponsors to resolve errors or mistakes on their own.

The IRS has three correction programs:

  1. Self-Correction Program (SCP): Used to amend certain plan failures without communicating with the IRS or paying a user fee.
  2. Voluntary Correction Program (VCP): Used to rectify failures not eligible for the SCP or get the IRS’s statement in writing that specified failures were correctly resolved.
  3. Audit Closing Agreement Program (CAP): Used to correct failures found in the course of an IRS audit that cannot be self-corrected.  

The IRS recently announced an expansion of the self-correction program to allow additional types of failures to be remedied through the SCP instead of requiring parties to make a VCP submission to the IRS. The VCP process can often be expensive and lengthy.

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San Jose retirement plan tax attorneyRetirement should be a carefree time for those who have earned the chance to enjoy the later years of their life. When you no longer have to work, you are probably looking forward to spending time with family and pursuing hobbies, and you will be able to use the money you have saved throughout your career to provide for your needs. However, one thing that retirees are often surprised by is the fact that the funds coming out of their retirement accounts may be subject to taxes.

Because retirees are on a fixed income, every dollar counts, and these taxes can cut into the amount of money you will be able to comfortably withdraw from your retirement savings. Fortunately, an experienced tax attorney can help you understand how you will be taxed during your retirement years.

Taxation on Retirement Income

Here are some common income streams for retirees and how each is taxed:

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San Jose property tax attorneyProperty taxes are an issue that affects many taxpayers in California, and changes to these taxes may be coming in the near future. In the 2020 election, voters will be able to decide if Prop. 13 should continue to apply to businesses. The measure would increase property taxes that businesses have to pay the state of California.

What is Prop. 13?

Prop. 13 is a ballot measure approved by California residents in 1978 that placed a limit on real property tax reassessment on all types of properties allowing reassessment only on completion of construction or when properties are sold. This means that currently, property owners pay taxes that are based on the value of a property when it was purchased, regardless of the property’s current market value. In effect, Prop. 13 prevented increases in property tax rates on homes, businesses, and farms by about 57 percent. 

The proposed measure calls for businesses to have their properties reassessed to market values every three years or less. The reassessments would result in higher taxes on commercial properties. The laws regarding residential property taxes would remain unchanged. This setup is called a “split roll,” since commercial property would be treated differently than residential property.

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San Jose, CA estate tax lawyerThere are several ways the IRS will be involved in the estate of someone who has died (known as a “decedent”). The IRS is notorious for enforcing payment of the taxes it claims it is due, including in situations involving a deceased person’s estate. 

Tax issues will be important to a deceased person’s personal representative, executor, successor trustee, and heirs, because the estate must pay all taxes due before the estate’s assets can be distributed to the beneficiaries. The IRS can even audit the tax returns of a dead person.

The estate will have to pay any income taxes due for the year of the person’s death (as well as for any year that the decedent did not file). Just like a taxpayer filing his or her income taxes each year, the estate administrator will file a Form 1040 for the estate. Depending on how organized the estate is, the estate administrator may need to file a Request for Transcript of Tax Return in order to get needed documents related to the deceased person’s income and taxes.

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