Haag Law Offices, P.A.
Outstanding corporate legal advice & services throughout the twin cities

August 2015 Archives

What is a Trust?

What is a trust, and how can it be used in your estate planning?  Think of a trust as an entity separate and apart from you.  It is a lot like a corporation in that it can have its own federal tax identification.  It can own property.  And it can be required to file a tax return.

Wills

There are several reasons why someone would want a will.  The first is to basically say "who gets what" when you die.  If you die without a will, the courts will determine this in accordance with state law; a situation most people would not prefer.  The second reason for a will is to more easily facilitate the process of transferring your assets to your proposed beneficiaries.  This process refers to the probate of your estate.  A well written will (and estate plan) can minimize the complications and expense around this process.  Lastly, a will (and estate plan) can be used to minimize the taxes that will be due to the government when you pass away.

Unpaid Taxes?

In the business of tax law, I often meet wonderful people with great businesses.  Unfortunately, my reason for meeting them is often due to some mistakes made in their tax filings.  If you or your business has failed to collect or pay sales taxes on taxable sales made in Minnesota, you could eventually see the tax converted to a personal liability which can be the basis for fairly aggressive collections actions.  Although it is stressful to think about these unpaid taxes, it is far better if you address them earlier before the penalties and interest have caused the amount to double.  At Haag Law Offices, we can help you get your affairs back in order.  The only way to make these problems go away is to start by taking that first step.  If we contact the Department of Revenue early, we can possibly get some of the penalties waived as well.

Are you in tax trouble?

If you have past due taxes to the IRS or local Department of Revenue, you may qualify for certain forms of relief that can reduce the liability, eliminate penalties, or put collections activities on hold.  These programs are not automatic, however, so be careful when someone says they can "settle your tax debt for pennies on the dollar."  The programs offered are Offer in Compromise and Currently Non-Collectible.  The Offer in Compromise (OIC) program is one where the government will be willing to discuss settling for something other than the full amount due.  The Currently Non-Collectible (CNC) program is where the government just agrees to leave you alone while you sort out your financial issues.  The IRS has issued a pronouncement warning taxpayers of unscrupulous companies that are overselling these programs and their availability.  Before agreeing to write a check to anyone offering to help you qualify for these programs, ask that they explain the likelihood of getting the relief promised, then consider getting a second opinion.

Overview of Employment Taxes

Withholding the right amount of federal and state taxes, and remitting the same to the respective agencies is one of the most important aspects of running a business. Many businesses fold each year from the pressure of payroll tax audits and the subsequent tax assessments. In recent years the auditors have become more aggressive, and the tax assessments have grown. Also, the IRS has become more inclined to disregard the business entity and personally assess the owners and officers of a business under the "responsible person" rules. Under these rules, the IRS can attack pensions, trust funds, homes and cabins for collection purposes.

Should Churches Seek 501(c)(3) Nonprofit Status?

As an attorney representing churches, I have had this question come up a number of times over the years. Should our church seek Section 501(c)(3) nonprofit status? My initial response is usually, "why would you want to do that?" As a church, you are already deemed to be a de facto charitable organization in the sense that you are exempt from taxes and you can take tax-deductible donations. These are the two primary reasons an organization would seek 501(c)(3) status. As churches, you are also constitutionally shielded from government scrutiny, so you don't have to worry about annual reporting to the federal or state government. So you now have the best of both worlds.