Federal Court Holds Florida Same-Sex Marriage Ban Unconstitutional

August 22nd, 2014

After several Florida trial courts ruled against Florida’s ban on same-sex marriage, The U.S. District Court for the Northern District of Florida held that Florida’s ban* on same-sex marriage violates the 14th Amendment of the U.S. Constitution and thus struck it down as unconstitutional.  The Court stressed that same-sex couples have a fundamental right to marry and that a state may not override that right.  It noted:

“The institution of marriage survived when bans on interracial marriage were struck down, and the institution will survive when bans on same-sex marriage are struck down. Liberty, tolerance, and respect are not zero-sum concepts. Those who enter opposite-sex marriages are harmed not at all when others, including these plaintiffs, are given the liberty to choose their own life partners and are shown the respect that comes with formal marriage. Tolerating views with which one disagrees is a hallmark of civilized society.”

 

*Article 1, § 27 of the Florida Constitution provides: “Marriage defined.—Inasmuch as marriage is the legal union of only one man and one woman as husband and wife, no other legal union that is treated as marriage or the substantial equivalent thereof shall be valid or recognized.”

Florida Statutes § 741.212 provides:

“(1) Marriages between persons of the same sex entered into in any jurisdiction, whether within or outside the State of Florida, the United States, or any other jurisdiction, either domestic or foreign, or any other place or location, or relationships between persons of the same sex which are treated as marriages in any jurisdiction, whether within or outside the State of Florida, the United States, or any other jurisdiction, either domestic or foreign, or any other place or location, are not recognized for any purpose in this state.
(2) The state, its agencies, and its political subdivisions may not give effect to any public act, record, or judicial proceeding of any state, territory, possession, or tribe of the United States or of any other jurisdiction, either domestic or foreign, or any other place or location respecting either a marriage or relationship not recognized under subsection (1) or a claim arising from such a marriage or relationship.
(3) For purposes of interpreting any state statute or rule, the term “marriage” means only a legal union between one man and one woman as husband and wife, and the term “spouse” applies only to a member of such a union.”

Florida Statutes § 741.04(1) provides: “No county court judge or clerk of the circuit court in this state shall issue a license for the marriage of any person . . . unless one party is male and the other party is female.”

 

Want to further discuss these issues?  Contact me at 954-944-3929 or nrumbak@rumbaklaw.com.

*This document contains legal information, but does not contain legal advice.

 

 

Sugar-Sweetened Beverage Tax Bill Introduced in Congress

July 31st, 2014

Thumbnail for version as of 07:36, 21 January 2013On July 30, 2014, Congresswoman Rosa L. DeLauro of Connecticut introduced  the “Sugar-Sweetened Beverages Tax Act of 2014” or the “SWEET Act”  (H.R. 5279) in the U.S. House of Representatives.  If enacted, this bill will impose a federal excise tax on sugar-sweetened beverages and will dedicate the revenues from the tax to the prevention, treatment, and research of diet-related health conditions, including obesity, diabetes, and tooth decay,  in priority populations, “and for other purposes.”  It will impose a tax of 1 percent per teaspoon (4.2 grams) of caloric sweetener (ex., sugar and high fructose corn syrup).  Exceptions to this tax include beverages with primary ingredients of milk, soy, or rice; fruit or vegetable juice; infant formula; and certain beverages that provide nutritional therapy, provide nutrition used due to a medical condition, or serve as an oral electrolyte solution for infants and children to prevent dehydration due to illness; and alcohol products that are already subject to tax.

Also see Mark Bittman’s July 30, 2014 New York Times op-ed , Introducing the National Soda Tax, on this bill.  Thanks to Mr. Bittman for providing the text to this bill.

 

Want to further discuss these issues?  Contact me at 954-944-3929 or nrumbak@rumbaklaw.com.

*This document contains legal information, but does not contain legal advice.

Interesting Recent Tax Advice from Florida Department of Revenue

July 23rd, 2014

1) Technical Assistance Advisement —TAA 118-296;  No. 14B4-003: A proposed deed will transfer unencumbered Florida real properties from a parent limited partnership to a subsidiary LLC.  The Department of Revenue (the “DOR”) held that documentary stamp tax will be due if the limited partnership holds the same percentage interest in the LLC after the transfer as it held in the LLC prior to the transfer (no transfer of a beneficial interest in the properties) AND no other consideration for the properties was transferred.  The tax is due on the total consideration for the property interest transferred.  In this case, because only nominal consideration will be paid, only $.70 of documentary stamp tax will be due.

2) Technical Assistance Advisement No. 14B4-001: Proposed deeds will transfer unencumbered Florida real properties from individuals to an LLC.  The DOR held that minimal documentary stamp tax will be due on the proposed deeds if each individual holds the same percentage interest in the LLC after the transfer as they held in the properties before the transfer of the properties and no other consideration will be transferred.

 

Want to further discuss these issues?  Contact me at 954-944-3929 or nrumbak@rumbaklaw.com.

*This document contains legal information, but does not contain legal advice.

New Telephone Numbers to Fax Powers of Attorney to IRS

July 22nd, 2014

This information is probably most helpful to tax practitioners.  I was planning to fax a couple of Forms 2848 (Power of Attorney and Declaration of Representative) to the IRS Central Authorization File (CAF).  I planned on using the fax numbers on the Form 2848 instructions, just as I had always done, but I happened to come across this page, which provides new fax numbers.

 

Want to further discuss these issues?  Contact me at 954-944-3929 or nrumbak@rumbaklaw.com.

*This document contains legal information, but does not contain legal advice.

Review of Online IRS Resources for Identity Theft Victims

July 10th, 2014

Over the past few years, I have had many clients who have become victims of tax-related identity theft, which takes a traumatic toll on emotions, finances, and credit scores.  I thus decided to review and summarize the information the IRS has provided online:

1. Taxpayer Guide to Identity Theft: Provides information on what is identity theft, how to know if your tax records have been affected, what to do if your tax records were affected by identity theft, how to protect your tax records, and how to minimize the chance of becoming a victim of identity theft.

    • What to do if your tax records were affected by identity theft:
      • If you received a notice from the IRS, respond immediately to the name and number printed on the notice.
      • Fill out the IRS Identity Theft Affidavit: Form 14039
      • If you have previously been in contact with the IRS and have not received a resolution, contact the IRS Identity Protection Specialized Unit, toll-free, at 1-800-908-4490

2. Identity Protection

    • Provides many resources on identity theft
    • Provides link to IRS Videos on Identity Theft:
      • IRS Identity Theft FAQ: Going After the Bad Guys (Video 1):
        • Law Enforcement Assistance Program
          • Obtain Form 8821-A (IRS Disclosure Authorization for Victims of Identity Theft) from local police office.  This is a waiver that allows the IRS to share tax information with local law enforcement so that law enforcement can investigate and prosecute these cases.
          • File police report and ask if that law enforcement agency participates in that program.
      • IRS Identity Theft FAQ: First Steps for Victims (Video 2):
        • If you received a letter from the IRS, respond immediately using contact info you received in your letter.
        • If you haven’t received a letter from the IRS, but still think you are at risk because of something like a lost wallet, fill out the Identity Theft Affidavit (Form 14039) so that the IRS can take steps to further secure your account.  Follow instructions on back of form.
        • Recommends that you:
          • file a police report with your local law enforcement agency and
          • contact the credit bureaus to place a fraud alert on your credit account.
        • Go to www.irs.gov.  Type “identity theft” in the search field.
      • IRS Efforts on Identity Theft (Video 3):
        • Background on IRS’s efforts against IRS identity theft.
        • IRS resolves most identity theft cases in less than 180 days.
      • Protect Yourself from Identity Theft (Video 4):
        • Provides suggestions to protect yourself from identity theft.
        • Notes that the IRS does not send emails out of the blue, especially emails asking for personal or financial information.
        • If you receive an email asking for personal or financial information, let the IRS know, and do not click on any links or respond to that email with any personal information.
      • Are You a Victim of Identity Theft? (Video 5)
        • Provides information for a person who received from the IRS a notice that says that the person already filed a tax return, but they person knows that he/she did not, or that the person received wages from an employer you don’t know.
        • Explains 2 types of identity theft involving tax information: (1) Someone uses your personal information (ex., social security number) to file tax return to get a bogus refund; (2) using your identity to get a job.
        • If you contact the IRS, the IRS can take steps to secure your tax account and match your social security number with the right person.
      • Phishing Malware (Video 6):
        • Advises taxpayers that an unexpected email that says that it is from the IRS is a scam.
        • Clicking a link or downloading an attachment from the email could download malicious software onto your computer.
        • This software could allow the sender to access your passwords, bank information, and other information on your computer, allowing them to steal the taxpayer’s identity or money.
        • Reiterates that the IRS does not initiate contact with taxpayers through email.

3. IRS Page on Phishing

4. Taxpayer Advocate Identity Theft Page

    • Provides link to video: Protecting Against Identity Theft:
      • ID theft: #1 consumer complaint in the U.S.
      • IRS encounters identity theft when an individual intentionally uses the Social Security number of another person to file a false tax return OR fraudulently obtain employment
      • Possible consequences when tax accounts of identity theft victims are compromised:
        • Delayed or denied refunds;
        • Assessment of tax debt resulting from income reflected on the fraudulent filer’s tax return;
        • Victims may be required to prove their identities to the IRS year after year.
      • IRS may assign victims of identity theft a temporary IRS number called an IRSN to use for filing a tax return while determining the true owner of the compromised SSN.
      • Victims of identity theft should:
        • Report the incident to the Federal Trade Commission (FTC Complaint Asssistant);
        • File a report with the local police and get a copy of that report;
        • Contact the fraud departments of the 3 major credit rating agencies:
          • Equifax: 1-800-525-6285
          • Experian: 1-888-397-3742
          • TransUnion: 1-800-680-7289
        • Close any accounts that have been tampered with or opened5. fraudulently; and
        • report misuse of SSN to the Social Security Administration at 1-800-269-0271.
    • Advises taxpayers who have previously been in contact with the IRS and have not achieved a resolution to contact the IRS Identity Protection Specialized Unit at 1-800-908-4490.
    • Provides contact info for Taxpayer Advocate Service: 1-877-ASK-TAS1.

5. 2014 Identity Protection PIN (IP PIN) Pilot (January 2014):  For 2014, the IRS offers a limited pilot program to provide taxpayers who filed their tax returns from either Florida, Georgia, or D.C. in 2013 with an extra layer of protection from identity theft

  • If these taxpayers obtain an e-file PIN to submit their tax return in 2014, they may be invited to apply for an Identity Protection PIN (“IP PIN”).
  • Florida, Georgia and D.C. selected because they have the highest per-capita percentage of tax-related ID theft.
  • Do not have to be an ID theft victim to take part in this program (IP Pin usage before this program limited to ID theft victims)
  • IRS will not issue IP PIN unless the person’s identity has been verified via answers to a series of questions to verify identity

6. Direct Deposit Limits (July 1, 2014-release date):

  • IRS procedures effective January 2015:
    • Allow up to three refunds electronically deposited in a single financial account or pre-paid debit card
    • Any refunds after the first three refunds will convert automatically to a paper refund check and be mailed to taxpayer.
    • Taxpayers will receive a notice informing them that account exceeds direct deposit limits and that they will receive a paper refund check
    • Taxpayers can track refunds at Where’s My Refund?
    • Direct deposits must be made to accounts bearing the taxpayer’s name
      • Stops abuse by preparers who obtain payment for tax preparation services by depositing at least part of their client’s refunds into the preparers’ own bank accounts.
      • Preparer fees cannot be recovered by splitting the refund using Form 8888 or opening joint bank accounts with taxpayers.

 

Want to further discuss these issues?  Contact me at 954-944-3929 or nrumbak@rumbaklaw.com.

*This document contains legal information, but does not contain legal advice.

 

Sales Tax Exemption of Prepaid Meal Plans at FL Educational Institutions, Beginning July 1

July 8th, 2014

 

On June 27, 2014, the Florida Department of Revenue (the “DOR”), in TIP #14A01-09, explained the exemption from sales tax, beginning July 1, 2014, on the sale of certain prepaid meal plans at colleges andinstitutions of higher learning in Florida.

A. Qualification for Exemption:

In order to qualify for the exemption, all of the following requirements must be met:

1) Meal plan must be:

    • prepaid (a payment, whether in full or in installments, must be initiated in advance of use);
    • purchased from the educational institution (purchases made on student accounts or payment made directly to the educational institution will qualify);
    • purchased by a student (taking any number of credit hours) currently enrolled at the educational student; AND
    • for a defined quality of units (ex., number of meals per week, month, year, or term; a set monetary amount; or an unlimited number of meals for a defined number of days).

2) The balance of unused units must expire at the end of any academic term (can expire during an academic term other than the one in which the units were purchased).

    • Note that units can rollover from term to term, provided that they will eventually expire at the end of an academic term.

3)  The units cannot be refunded to the student at expiration

    • Refunds due to withdrawal from the educational institution, changing from a school meal plan to a meal plan provided by a sorority or fraternity, or other changes in circumstances do not disqualify a meal plan from the exemption.
    • Refunds at graduation are considered the refund of units at expiration and thus would disqualify a meal plan from the exemption.

4) The units can only be exchanged for food.

B. Application to “Hybrid” Meal Plans/Flex Dollars:

The DOR notes that many college plans have “hybrid” options that provide for a prepaid meal plan and provide a set amount of “flex” dollars that can be used for certain types of purchases.  For these types of plans, the portion of the plan that meets the requirement of a prepaid meal plan as described above can be exempt if the “flex” dollars are cash equivalents where the taxability is not determined until use.  If the “flex” dollars meet the requirements of a prepaid meal plan as provided above in A. Qualification for Exemption, the entire meal plan can be exempt.

See “Florida DOR Explains Exemption of Prepaid College Meal Plans,” 2014 STT 130-16, July 8, 2014.

 

Want to further discuss these issues?  Contact me at 954-944-3929 or nrumbak@rumbaklaw.com.

*This document contains legal information, but does not contain legal advice.

 

Portions of Certain Bail Bond and Title Insurance Premiums Not Subject to Insurance Premium Tax in Florida Beginning in 2015

July 8th, 2014

On July 1, 2014, the Florida Department of Revenue (the “DOR”), in TIP No: 14B8-02, announced changes, effective January 1, 2015, to applications to insurance premium tax to bail bond premiums and title insurance premiums.

1) Bail Bond Policies or Contracts Written on or After January 1, 2015: The portion of direct written bail bond premiums retained by licensed bail bond agents or licensed managed general agents will no longer be subject to insurance premium tax.  But note that the portion of direct written bail bond premiums not retained by agents or managing general agents will remain taxable at 1.75%.

2) Title Insurance Policies Written on or After January 1, 2015 (through at least December 31, 2017): The portion of title insurance premiums retained by title insurance agents or title insurance agencies will no longer be subject to insurance premium tax.  But note that the portion of title insurance premiums not retained by agents or agencies will remain taxable at 1.75%.

 

See “Florida DOR Announces Changes to Taxation of Bail Bond And Title Insurance Premiums,” 2014 STT 130-17, July 8, 2014.

 

Want to further discuss these issues?  Contact me at 954-944-3929 or nrumbak@rumbaklaw.com.

*This document contains legal information, but does not contain legal advice.

Less Complex Process to Tax Exemption Now Available for Small Charities

July 3rd, 2014

The IRS, on July 1, 2014, in IR-2014-77, announced the introduction of a new, shorter application form (Form 1023-EZ) that will help small charities more easily apply for tax-exempt status under Section 501(c)(3). The new application is approximately 3 pages long, as opposed to to the standard 26-page Form 1023.  Most charities with gross receipts of $50,000 or less and assets of $250,000 are eligible. Organizations must complete a checklist, found in the Instructions for Form 1023-EZ before filing the form.  If the organization qualifies to file the form, it must file the form at pay.gov and must pay a user fee of $400.

The user fees for a standard  Form 1023 are currently $400 for organizations whose gross receipts do not exceed $10,000 or less annually over a 4-year period, or $850 for organizations whose gross receipts exceed $10,000 annual over a 4-year period.

See the following documentation for more information about the new form:

1) Information on Form 1023-EZ

2) Instructions for Form 1023-EZ

3) Revenue Procedure 2014-40

4) Treasury Regulations on Shorter Application Process

 

Want to further discuss these issues?  Contact me at 954-944-3929 or nrumbak@rumbaklaw.com.

*This document contains legal information, but does not contain legal advice.

IRS: ITINs Will Expire If Not Used on Tax Returns for Five Consecutive Years

July 3rd, 2014

On June 3o, 2014, the IRS, in IR-2014-76, announced that Individual Taxpayer Identification Numbers (“ITINs”) will expire if not used on a federal income tax return for five consecutive years, but that the IRS will not begin deactivating ITINs until 2016.  Thus, anyone with a valid ITIN may still use the ITIN to file a valid return during the upcoming tax-filing season.   This policy applies to any ITIN, regardless of when it was issued.

 

 

Want to further discuss these issues?  Contact me at 954-944-3929 or nrumbak@rumbaklaw.com.

*This document contains legal information, but does not contain legal advice.

IRS Plans to Audit More S Corporations for Worker Misclassifications

June 23rd, 2014

According to a June 19, 2014 Tax Notes Today article (Elmore, Wesley, “IRS Eyeing S Corps for Worker Misclassification Issues,” 2014 TNT 119-7), the IRS will be auditing more S corporations due to misclassifying employees as independent contractors.  The article referred to statements made by Gerry Kelly-Brenner, senior stakeholder liaison for the IRS Small Business/Self-Employed Division, at the IRS-San Jose State University Small Business Tax Institute on June 18, 2014.

Kelly-Brenner said that a corporate officer is always classified as an employee, whether  the officer is full or part time.  Nevertheless, a member of a corporation’s board of directors could be either an employee or independent contractor.

 

Want to further discuss these issues?  Contact me at 954-944-3929 or nrumbak@rumbaklaw.com.

*This document contains legal information, but does not contain legal advice.