Hyden, Miron & Foster, PLLC Law Blog

Wednesday, April 1, 2015

Taxpayer Bill of Rights

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the Internal Revenue Service. Explore your rights and our obligations to protect them.

The “Taxpayer Bill of Rights” takes the multiple existing rights embedded in the tax code and groups them into 10 broad categories, making them easier to find and understand.

#1 The Right to Be Informed 

Taxpayers have the right to know what they need to do to comply with the tax laws. They are entitled to clear explanations of the laws and IRS procedures in all tax forms, instructions, publications, notices, and correspondence. They have the right to be informed of IRS decisions about their tax accounts and to receive clear explanations of the outcomes.

#2 The Right to Quality Service 

Taxpayers have the right to receive prompt, courteous, and professional assistance in their dealings with the IRS, to be spoken to in a way they can easily understand, to receive clear and easily understandable communications from the IRS, and to speak to a supervisor about inadequate service.

#3 The Right to Pay No More than the Correct Amount of Tax 

Taxpayers have the right to pay only the amount of tax legally due, including interest and penalties, and to have the IRS apply all tax payments properly.

#4 The Right to Challenge the IRS’s Position and Be Heard 

Taxpayers have the right to raise objections and provide additional documentation in response to formal IRS actions or proposed actions, to expect that the IRS will consider their timely objections and documentation promptly and fairly, and to receive a response if the IRS does not agree with their position.

#5 The Right to Appeal an IRS Decision in an Independent Forum 

Taxpayers are entitled to a fair and impartial administrative appeal of most IRS decisions, including many penalties, and have the right to receive a written response regarding the Office of Appeals’ decision. Taxpayers generally have the right to take their cases to court.

#6 The Right to Finality 

Taxpayers have the right to know the maximum amount of time they have to challenge the IRS’s position as well as the maximum amount of time the IRS has to audit a particular tax year or collect a tax debt. Taxpayers have the right to know when the IRS has finished an audit.

#7 The Right to Privacy 

Taxpayers have the right to expect that any IRS inquiry, examination, or enforcement action will comply with the law and be no more intrusive than necessary, and will respect all due process rights, including search and seizure protections and will provide, where applicable, a collection due process hearing.

#8 The Right to Confidentiality 

Taxpayers have the right to expect that any information they provide to the IRS will not be disclosed unless authorized by the taxpayer or by law. Taxpayers have the right to expect appropriate action will be taken against employees, return preparers, and others who wrongfully use or disclose taxpayer return information.

#9 The Right to Retain Representation 

Taxpayers have the right to retain an authorized representative of their choice to represent them in their dealings with the IRS. Taxpayers have the right to seek assistance from a Low Income Taxpayer Clinic if they cannot afford representation.

#10 The Right to a Fair and Just Tax System 

Taxpayers have the right to expect the tax system to consider facts and circumstances that might affect their underlying liabilities, ability to pay, or ability to provide information timely. Taxpayers have the right to receive assistance from the Taxpayer Advocate Service if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through its normal channels.

Friday, March 27, 2015

Farm Property, Estate Planning and Arkansas Probate Law

Can a Will along with Guided Business Planning and Administration Help Farm Families Pass Their Farms on to the Next Generation?

In Arkansas, almost 90 percent of farms are family-centered sole proprietorships passed from generation to generation. Yet, despite good intentions on the part of individuals who hold the deed, succession can go poorly without a Will and without sound business planning. 

The Advantages of a Will

Without a Will, Arkansas law determines how personal property and real property (including farm property) are divided. By creating a Will, a farm owner can devise property as he or she sees fit. The farm owner can use the Will to name someone to serve as personal representative of his or her estate and also name someone to operate the farm during the probate process.

The Advantages of Business Planning

Business planning can reduce property succession concerns by creating a corporate structure for the farm, thus allowing for the ownership and inheritance of shares in the family business to pass to the next generation. Unlike partnerships and sole proprietorships, other business structures (such as a corporation or limited liability company) do not end with a shareholder’s death. Bylaws and Operating Agreements can be drafted to place restrictions on the transfer of the ownership interest. This can help to ensure that the business interests remain in the family.  

With offices in Little Rock, Conway, and Hot Springs Village, the estate planning law firm of Hyden, Miron & Foster, PLLC is available to help families plan for business succession. Our team of attorneys can address your estate planning concerns via the creation of Wills, trusts, and entity formation.  To contact us, call (501)482-1787 or (888)770-1848.

Friday, March 20, 2015

Home Office Deduction

If you use your home for business, then you may be able to deduct expenses for the business use of your home on your income tax return. Check out the Top Six Tips about the Home Office Deduction provided by the Internal Revenue Service.

Friday, March 6, 2015

Effects of a Fraudulent Tax Return

The filing of fraudulent tax returns is an increasingly common form of identity theft. Thieves file a fake return in the victim’s name in order to receive a refund check. Both federal and state tax authorities are dealing with this problem and trying to come up with a solution.

If you are the victim of identity theft and a fraudulent tax return has been filed in your name, it may make the process of filing your taxes and collecting a refund more lengthy and difficult. Identity theft victims may need to wait months and sometimes years to have their refunds restored. Reduced IRS funding and staff levels could result in victims waiting even longer this year.

The FBI is investigating how fraudulent returns were filed in 19 states through TurboTax software. Intuit, Inc., manufacturer of the software, temporarily stopped sending state returns earlier this month after learning of attempts to use fraudulent identification information. In Arkansas, there has been no fraud yet detected, but a review of filed returns continues. Still, it has been reported that the Arkansas Department of Finance and Administration is accepting returns from TurboTax.

Intuit claims its system was not breached and that the stolen information came from other sources. The information could have come from various incidents of widespread hacking into millions of accounts held by retail chains and health insurance companies reported over the last couple of years. Once a Social Security number is obtained, creating fake W-2s is relatively easy because of personal information available on social media and other websites.

This is a multi-billion dollar problem, with the IRS paying an estimated $5.2 billion in fraudulent tax refunds in the 2013 tax season (while preventing $24.2 billion more from being paid) according to the U.S. Government Accountability Office. As bad as that is, state taxing agencies are less able than the federal government to detect the fraud. 

Filing early, before the identity thieves do, is one possible remedy. After it is established that a person has been the victim of tax return theft, the IRS issues a personal identification number that changes every year.

If you have been the victim of tax fraud or have general questions about income taxes, contact the attorneys at Hyden, Miron & Foster, PLLC, at (501) 482-1787.

Monday, February 23, 2015

What is the difference between an immediate and a springing power of attorney?

financial power of attorney is an important document that is beneficial for everyone to have. It allows others to handle your financial affairs if you are unwilling or unable to do so. The person with this ability, known as the agent, should be someone you trust completely. Anyone you designate as agent should be honest, dependable, and have the necessary skills to effectively manage your finances.

A financial power of attorney can be broad or narrow. You can allow your designated agent to have access to all of your financial accounts, holdings and investments, and make all financial decisions on your behalf, including selling real estate. Alternately, you can prepare a financial power of attorney authorizing an individual to have access to a checking account and pay only specific bills (perhaps mortgage, utilities, and insurance) in the event that you become incapacitated. This ensures that your house will be kept in order and that related accounts remain up to date while you are unable to manage them.

Your agent has a fiduciary duty to you, so the agent must act in your best interest and not abuse the power granted to him or her for self-benefit. If dishonest decisions are made, you can revoke the power of attorney, name another agent, and sue the former agent to get your money back.

Powers of attorney can be "immediate," which means they go into effect as soon as they are signed, or they can be "springing," which means they go into effect after a certain event. Typically, a "springing" power of attorney springs into effect when the person creating the document becomes incompetent, mentally or physically, and is no longer able to handle his or her financial affairs. This usually requires a doctor to certify the person as incompetent.

If you have questions about how a financial power of attorney could help you or a loved one, call estate planning attorneys Hyden, Miron & Foster, PLLC, today at (501) 482-1787 or (888) 770-1848.


Thursday, February 12, 2015

What do I need to do if I have not received my W-2?

By: Tiffany Parker Nutt

Most wage earners receive their W-2 forms for 2014 by the end of January 2015. You will need your W-2 in order to file an accurate income tax return. Your W-2 shows your gross income and the taxes withheld from your pay for the previous year. If you have not received your W-2 by mid-February you should contact your employer (or former employer) and request a copy. Also, make sure your employer has your current mailing address.

You can also call the IRS at 1.800.829.1040 if you do not receive your W-2 by February 23, 2015. After February 23, 2015, the IRS will send a letter to your employer on your behalf. When you call the IRS you will need the following information:

  • Your name, address, Social Security number and phone number;
  • Your employer’s name, address and phone number;
  • The dates you worked for the employer; and
  • An estimate of your wages and federal income tax withheld in 2014. You can use your final pay stub for these amounts.

Individual income tax returns are due on or before April 15, 2015. If you have not received your W-2 by this time you have two options. You may use Form 4852, Substitute for Form W-2, Wage and Tax Statement. You can estimate your wages and taxes withheld as best as possible (i.e., information from your final pay stub). Alternatively, you can submit Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. You will receive an additional six (6) months to file your tax return. Please note, Form 4868 is not an extension to pay any tax due; it is only an extension of time to file your income tax return. Payment is still due on April 15, 2015.

Friday, January 2, 2015

Can a court invalidate a will or trust?

It is unfortunate, but sometimes an individual goes through the trouble and expense of creating an estate plan only for their beneficiaries to end up in court facing a lawsuit – or contest.  A will or trust contest is a legal proceeding filed to challenge the validity of one of these documents.  If the challenge is successful, the court throws out the document and it is as if it never existed.  

Will and trust contests can be pursued for a variety of reasons.  While each state is different, there are some reasons, which are common across the country.  These include claims that the document was not executed pursuant to state law.  Also, a certain level of mental capacity is required to create a will or trust, so a challenge might include a claim that the person making the will or trust did not have the requisite capacity.  Another common basis for a contest involves a claim that the person making the will or trust was subject to undue influence or was the victim of fraud.  

Although not everyone has this ability, there are various people who can challenge a will or trust.  Beneficiaries, those who have been chosen to inherit from the current will or trust or a previous one, can bring a contest.  Also, heirs at law, or those who stand to inherit pursuant to state law, can challenge a will or trust.  

There is always a possibility that a will or trust may be challenged.  But, there are certain steps an individual can take to lessen the likelihood that this type of conflict will arise.  One way to avoid a contest is to disclose the estate plan to others.  Individuals should not keep the estate plan a secret and should, at the very least, let others know that it exists, without getting into all of the specific details.  Disinheriting a beneficiary is a common cause of conflict, and therefore, an individual might consider options other than cutting them out altogether.  For example, certain stipulations relating to the inheritance can be built right into the will or trust.  It is also important to update an estate plan frequently to ensure that changes to beneficiaries and assets are accounted for. Most importantly, individuals should always consult with an experienced estate planning attorney to have the best chance of avoiding conflicts. Contact the experienced attorneys at Hyden, Miron & Foster, PLLC at 501.376.8222. 

Friday, December 5, 2014

Married Without Children: Estate Planning for Couples With No Kids

When most people think of estate planning what usually comes to mind is passing wealth down to children or grandchildren.    But, more and more couples are getting married and remaining childless for various reasons. These couples, who are not spending money on raising children, sometimes amass large estates.  It is important for couples in this situation to do the appropriate estate planning so that their wealth passes according to their wishes after death.

Married couples without children have two main considerations.  First, they should put some thought into the possibility of incapacity.  Each spouse should think about who will handle his or her financial and medical affairs if he or she cannot.  Most spouses designate each other as a first choice.  But, since either could pre-decease or become incapacitated as well, it is always wise to designate a secondary appointee.  Each spouse should contemplate this and choose someone whom he or she fully trusts such as a niece, nephew, other family member, friend or even a professional.  The attorney will note all of the couple’s choices in the individual powers of attorney and advanced health care directives to be used in the event of incapacity, saving loved ones valuable time and money.

After dealing with incapacity, couples should consider who will receive their wealth after they die.  The problem with having no plan is that when one spouse passes away, his or her wealth will pass to the other spouse.  Then when the surviving spouse dies, all of the assets will pass to his or her family and not to the family of the other spouse. Luckily, planning can be done to avoid this.  One option is to create sweetheart wills where each spouse leaves everything to the other, but then designate who will receive the assets after the surviving spouse dies.  Another option is a joint revocable trust, which accomplishes the same thing as a will, without the time and expense of probate.  The problem with these two options is that they can be changed by the surviving spouse after the first spouse dies.  One way for each spouse to ensure that the assets will be distributed as he or she desires is to create an irrevocable trust.  This trust cannot be changed but has other implications which should be discussed with an attorney such as gift tax consequences.

No two situations are the same so every plan is different.  It is always in the best interest of a couple to seek the advice of an estate planning attorney before executing any documents.  Contact the Arkansas attorneys at Hyden, Miron & Foster, PLLC by calling (501) 376-8222 for a consultation today.

Tuesday, November 25, 2014

Small Business Health Care Tax Credit

By: Carrie E. Bumgardner 

Small business employers providing health insurance coverage to their employees need to check out the small business health care tax credit and then claim it if they qualify. Small business employers are defined as having fewer than 25 full-time equivalent employees and pay an average wage of less than $50,000 per year.

The small business health care tax credit was included in the Affordable Care Act (“ACA”) enacted in 2010. Under the ACA, eligible small employers can claim the credit for 2010 through 2013 and for two additional years beginning in 2014. For 2010 through 2013, the maximum credit is 35% of premiums paid by eligible small businesses and 25% of premiums paid by eligible tax-exempt organizations. In 2014, the maximum credit rate rises to 50% for small businesses and 35% for tax exempt organizations.

Small employers that pay at least half of the premiums for employee health insurance coverage under a qualifying arrangement may be eligible for this credit. The credit is specifically targeted to help small businesses and tax exempt organizations provide health insurance for their employees.

More information is available on the Small Business Health Care Tax Credit

Tuesday, November 18, 2014

Tax Tip Tuesday - Attention Volunteer Firefighters

By: Tiffany Parker Nutt 

Arkansas Act 1452 of 2013 created a state income tax deduction for volunteer firefighters. Volunteer firefighters are now entitled to a deduction for amounts paid and not reimbursed by the fire department for required equipment and for the loss of value of personal property damaged or destroyed (ex. damage to clothing) in the course of participation as a volunteer firefighter. This act is known as the Volunteer Firefighter Tax Protection Act and is effective as of January 1, 2014.

This volunteer firefighter expense deduction is claimed on Form AR 3 Itemized Deduction Schedule, Line 26 under other miscellaneous deductions. This deduction is not subject to the 2% AGI floor. However, the volunteer firefighter expenses deduction is an itemized deduction, which means that the taxpayer’s total itemized deductions must be greater than the taxpayer’s standard deduction of either $2,000 or $4,000, depending on the filing status.

The statute defines “volunteer firefighter” as a member of a fire department or firefighting unit who (1) actively engages in fire suppression, rescue, pump operation, or other firefighting activity and (2) receives less than five thousand ($5,000.00) in total compensation during the taxable year from the volunteer fire department or unit.

This deduction is an itemized deduction and subject to the same recordkeeping requirements as the other amounts listed on the tax return. The Arkansas Department of Finance and Administration recommends keeping receipts from equipment purchases and a memo-style list of items that were damaged in order support this deduction.

Monday, November 17, 2014

Six IRS Tips for Year-End Gifts to Charity

Many people give to charity each year during the holiday season. Remember, if you want to claim a tax deduction for your gifts, you must itemize your deductions. There are several tax rules that you should know about before you give. Here are six tips from the IRS that you should keep in mind:

1. Qualified charities. You can only deduct gifts you give to qualified charities. Use the IRS Select Check tool to see if the group you give to is qualified. Remember that you can deduct donations you give to churches, synagogues, temples, mosques and government agencies. This is true even if Select Check does not list them in its database.

2. Monetary donations.  Gifts of money include those made in cash or by check, electronic funds transfer, credit card and payroll deduction. You must have a bank record or a written statement from the charity to deduct any gift of money on your tax return. This is true regardless of the amount of the gift. The statement must show the name of the charity and the date and amount of the contribution. Bank records include canceled checks, or bank, credit union and credit card statements.

3. Household goods.  Household items include furniture, furnishings, electronics, appliances and linens. If you donate clothing and household items to charity they generally must be in at least good used condition to claim a tax deduction. If you claim a deduction of over $500 for an item it doesn’t have to meet this standard if you include a qualified appraisal of the item with your tax return.

4. Records required.  You must get an acknowledgment from a charity for each deductible donation (either money or property) of $250 or more. Additional rules apply to the statement for gifts of that amount. This statement is in addition to the records required for deducting cash gifts. However, one statement with all of the required information may meet both requirements.

5. Year-end gifts.  You can deduct contributions in the year you make them. If you charge your gift to a credit card before the end of the year it will count for 2014. This is true even if you don’t pay the credit card bill until 2015. Also, a check will count for 2014 as long as you mail it in 2014.

6. Special rules.  Special rules apply if you give a car, boat or airplane to charity. For more information visit IRS.gov.

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