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It now appears that businesses will no longer have to adhere to the stringent 1099 reporting requirements under the 2010 Patient Protection and Affordable Care Act (Health Care Reform), as noted last week on this blog.  Yesterday, the U.S. Senate passed a partial repeal of Health Care Reform that required burdensome 1099 reporting for businesses, despite the fact it was estimated that the government would have collected $17 billion in uncollected taxes.  Passed by 81 votes, the partial repeal has been deemed a sure thing as both parties have expressed a desire to do away with the reporting provision.  It will inevitably pass the House and be presented to the President for approval.

Should you need to consult with a professional as to the other impacts of Health Care Reform on your business, please contact the attorneys of Williams Teusink Larsen today and schedule a consultation.  404-373-9590.

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Posted under Business Law, Business Planning, Tax Law, Tax Planning

Due to the passage of 2010 Patient Protection and Affordable Care Act (Health Care Reform), many businesses will have to adhere to numerous laws and regulations in the coming years, but one goes into effect in 2011 that can prove to be an administrative burden for most businesses.  Anyone engaged in a trade or business has to file a 1099 (or similar return) with the IRS providing information relating to payments made to another business (or trade-person).  The threshold amount is $600 or more in payments made in one tax year, and such payments are aggregated.  There are a few exemptions, but those are limited to only tax-exempt corporations.

To learn more how this provision may effect your business, as well as learning to understand and comply with the new requirements under the recent Health Care Reform, contact the skilled attorneys of Williams Teusink Larsen today to schedule an appointment.  404-373-9590.

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Posted under Business Law, Tax Law, Tax Planning

A short note for anyone wishing to appeal their property tax assessments.  Pursuant to Senate Bill 346, O.C.G.A. 48-5-18 has been amended to provide that the due date for all property tax returns, both real and personal property, is April 1.  Previously, Georgia law allowed for certain Atlanta Metro counties to have a March 1 deadline, whereas other counties had an April 1 deadline.  Beginning in 2011, the filing deadlines will be uniform on April 1.  Should you need assistance and representation appealing the valuation and assessment of your residential or commercial property, please contact the skilled attorneys of Williams Teusink Larsen to schedule a consultation.  404-373-9590.

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Posted under Property Tax

The Georgia Supreme Court recently muddied the waters when determining whether a charity will be exempt from local property taxes.  In Nuci Phillips Memorial Foundation v. Athens Clarke County Board of Tax Assessors, the Supreme Court heard arguments regarding a building which provided a facility and space for musicians and others seeking help with anxiety, depression or other emotional problems.  The building also leased some its space out for a coffee bar, music rehearsal space, birthday parties, and weddings.  Clarke County had issue with these operations and sought to collect property tax on the land due to Nuci’s income-generating activities failing to be consistent with the charity’s purpose.  Most charities can be exempt from property taxes if they meet certain requirements under O.C.G.A. 48-5-41.

In a fractured opinion (4-3), the Supreme Court found that the income-generating activities by the charity on the property at issue did not warrant property taxation and was exempt.  In the plurality opinion, Justice Carley stated that as long as the income generating activity was an incidental use of the property by the charity, the charity would be able to retain its tax exempt status.  The primary purpose of the property cannot be for raising money.

In a concurring opinion, Justice Nahmias points out that the development of the tax exempt statute by the General Assembly clearly dictated that as long as the income generated from the property goes right back for the use of the operation of the charity, the charity should retain its tax exempt status.  According to Rep. Terry England, one of the revised statute’s sponsors, Nahmias is correct.  England told the Fulton Daily Report that the purpose of the statute was to allow a charity to retain its exempt status without any limitation on the amount or type of fundraising that the charity does. (December 21, 2010 issue of the Fulton Daily Report).

For now, unfortunately, Georgia’s charitable organizations are left in the dark as to whether they might qualify for property tax exemption.  An incidental use test favored by the plurality of the Court would turn every conflict into a facts and circumstances evaluation with too much discretion in the hands of tax assessors and judges.  However, the Nuci opinion may provide opportunities for existing entities to appeal and/or reinstate their tax exempt status.  If you own or operate a charitable entity and would like to learn more about your options with regard to property tax exemption, please contact the skilled attorneys of Williams Teusink Larsen to schedule a consultation.  404-373-9590.

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Posted under Charities and Tax Exempt Organizations, Georgia Supreme Court, Property Tax, Tax Law, Tax Planning

In the final installment of this series, we will discuss the considerations for a business to consider when conducting its operations as a limited liability company (”L.L.C.”).

L.L.C.s provide a unique opportunity for a new business venture.  In the case of multiple share owners, the IRS treats L.L.C.s as partnerships for taxation purposes.  In the case of only one share owner, the IRS treats L.L.C.s as disregarded entities.  In both circumstances, income generated from the L.L.C. is treated as passing from the business through to the owner(s).  Profits generated from the business are only taxed once at the level of the owner, unlike corporations (as noted in Part 2 of 3) which are taxed twice.  The only major distinction is that disregarded entities have more administrative and filing flexibility in having the profits of one business be offset by the losses from another.

Additionally, an L.L.C. allows for similar flexibility that is enjoyed by partnerships, but maintains protection against personal liability that is common with corporations.  However, to maintain this protection, L.L.C.s must function as a distinct entity that is separate from its owner(s) in the same manner as a corporation should.

If you wish to start your own business, convert your business to an L.L.C., or determine what steps your business should take from a taxation and personal liability standpoint, contact the attorneys of Williams Teusink Larsen and schedule a consultation.  404-373-9590.

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Posted under Business Law, Business Planning, Tax Law, Tax Planning

In the second installment of this series, we will discuss the benefits and disadvantages of choosing a corporation as the entity of choice through which to conduct its business.

Unlike Partnerships (as discussed in Part 1 of 3), corporations provide a business with a significant amount of liability protection for its owners.  A person seeking to sue a corporation can only sue the corporation itself, not the company’s shareholders.  The owners are shielded from having their personal assets subject to a judgment that is rendered against the company for its actions.

Generally, the only instance where a corporation’s shareholders can be held personally liable for acts of the corporation is when the business is deemed to be an “alter ego” or personal extension of the shareholder.  To prevent this scenario from happening, most businesses conduct themselves in a manner that would demonstrate that the corporation is a distinct separate entity apart from the owner(s).   One should consult with an attorney to determine what specific issues exist with your business and how to resolve them, as the solutions are numerous and unique each particular business.

One of the major flaws with corporations, however, is that the money earned by the business and is later transferred to the owners as dividends or salary ends up being taxed twice.  Federal and State tax laws treat corporations as an individual that is separate and distinct from its owner(s).  Corporations are taxed for their incomes (after taking in account for deductions and credits), and when businesses make dividends or pay salaries to its owners, those owners are then taxed again for personal income tax for those payments.

Certain businesses, however, are required to incorporate as corporations due to the nature of their businesses or the number and nature of its owners.  To learn more about whether a corporation is the right entity choice for your business, if you wish to convert your business to or from a corporation, or if you want to determine what steps your business needs to take for its owners to avoid personal liability, contact the attorneys of Williams Teusink Larsen and schedule a consultation.  404-373-9590.

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Posted under Business Law, Business Litigation, Corporate Law, Planning Law, Tax Law, Tax Planning

There are many issues to consider when starting a business.  One of them should involve creating a formal entity for your business through which it can operate.  There are several options, but the three main choices of entities are partnerships and sole proprietors, corporations and limited liability companies (L.L.C.’s).  In the first of a three-part series, we will discuss the pros and cons of partnerships.

Partnerships and sole proprietorships offer flexibility for businesses in terms of structure, management, and the addition of new partners/investors.  These entities are easily adaptable to meet the various needs and changes that a business may face.  Also, sole proprietors and partnerships allow for pass-through taxation treatment, where income derived and costs associated with the business are passed through and only taxed at the individual owners income tax rate.   This is beneficial, as what will be discussed in more detail with regards to corporations, this treatment prevents dividends and distributions from being subject to double taxation at the business level and then later at the individual level.

The main flaw of these entities, however, is they provide little legal protection for its owners in the event of a law suit.  Not only would the partnership or sole proprietorship be liable for negligent acts of the business as well as  for breaches of any contracts, but the owners would be personally liable as well, but only to the extent of the partner’s interest or share in the business.

Because of its poor protection from liability, partnerships and sole proprietorships are not the recommended choice of entity for a business under which to carry out it operations.  If you currently have a such an entity in place for your business, contact one of the skilled attorneys of Williams Teusink Larsen about alternatives that may afford you and your partners better protection under Georgia law.  404-373-9590

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Posted under Business Law, Tax Law

The enforcement of agreements in Georgia relating to covenants not to compete is now cast into serious uncertainty.  Pursuant to HR 178, the citizens of Georgia passed a Constitutional Amendment  (which was Referendum #1 on the November 2010 ballot) whose purpose is to allow the General Assembly to authorize contracts that limit competitive activities among employers and employees, partnerships and partners, distributors and manufacturers, and a whole host of other relationships that arise from business dealings.

Previously, most covenants not to compete were usually disregarded if the agreements were not narrow in scope, duration, and geographic area.  Those seeking to enforce these covenants were often out of luck when going before the courts.  With the new amendment to Georgia’s Constitution, however, there now exist new concerns as to what the legislature will allow with regard to these agreements.  Article III, Section VI, Paragraph V, (c)(2) and (c)(3) now provide the General Assembly the power to authorize and provide for judicial enforcement of agreements restricting or regulating competitive activities, such as non-compete agreements, and include powers to establish guidelines as to geographic area, scope of prohibited activities, and duration of the the restriction.

Expect to see a flurry of new laws next legislative session that will likely take advantage of the General Assembly’s new found power with regard to the regulation of contracts.  If you have an agreement that restricts competitive activities involving employment, leasing, distribution and manufacturing, partnerships, franchises, and/or the sales of business or commercial enterprises, your agreements are likely to be effected by the amendments to the Georgia Constitution.  To learn more about what options may be available to you, contact one of the skilled attorneys of Williams Teusink Larsen for a consultation.  404-373-9590.

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Posted under Contract Law

The idea of trust documents usually conjures up images of wealthy captains of industry going to great pains to preserve their legacies with the help of books upon books of legal drafting, so complex, an ordinary family would have no use or the means to afford such legal work.  Not true.

First, although many clients with considerable wealth rely on trusts to plan the passing of their legacies, trusts are a useful tool for clients with even a modest amount of assets.  The main reason: trusts provide the most amount of flexibility in planning for the unforeseeable.  For example, a revocable trust involving  a married or same-sex couple would allow for their respective assets to provide support and maintenance to each other, even during times of incapacity of both people.  In such an event, an independent trustee could be appointed ahead of time by the couple, and this transition of authority could occur without an intervention by a court.  Plus, when one spouse/partner dies, assets in the trust can pass to the other spouse/partner-beneficiary without the need to administer those assets through a probate court.

With a revocable trust, the creators of the trust are able to change or revoke the terms, the appointment of beneficiaries, and other clauses of the trust, should circumstances change.  Finally, most revocable trusts are not too costly for a client to obtain.  This is generally true with clients whose assets (including life insurance, retirement accounts, and personal residence) are less than $1.5 million dollars.  I should note, however, with assets greatly exceeding that amount, there arises the potential for one spouse/partner to incur estate tax liability, especially with highly appreciating assets.

To learn more about revocable trusts, as well as many other estate planning options, contact the skilled professionals of William Teusink Larsen, and schedule a consultation today.  404-373-9590.

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Posted under Estate Planning, GLBT Law, LGBT Law

Effective January 1, 2011, the Bush era tax cuts put into place in 2001 and 2003 will automatically expire.  Currently, it is unclear as to whether Congress and the President will reach a compromise and extend any portion of those tax cuts.  As such, you should know some of the individual consequences you, as a taxpayer, would face if no legislation was passed regarding the upcoming tax increases.

All marginal rates would increase, not just for the wealthiest taxpayers.  Although the highest income earners would see a tax increase from 35% to 39.6%, the lowest income earners would be hit with an increase from 10% to 15%.  Additionally, many people holding property or stock for investment would incur higher capital gains taxation rates, should they sell their investments after January 1, 2011 (Capital gains rates tax the gains from the sale of property that is held as investment for a period more than a year.  All sales of property held for a year or less are taxed at the taxpayers marginal ordinary income tax rate).  The highest capital gains rate will increase from 15% to 20%.  Additionally, any income received in the form of dividends will now be taxed at the taxpayers marginal income tax rate, as opposed to a capped level of %15.

Finally, what may effect more lower and middle income families (those who have no investments) the most is that the tax credit for children will decrease from $1,000 per child to $500.

With the help of a tax planning attorney, you can protect yourself and minimize your tax liability for the upcoming years.  Further, should Congress and the President implement new tax laws before the end of the year, you will need an attorney to help interpret those laws and determine what impact they will have on you personally and for your business and investments.  Contact the experienced professionals at Williams Teusink Larsen today to schedule a consultation.  404-373-9590.

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Posted under Tax Law, Tax Planning