Join members of Henderson Franklin, HBKS Wealth Advisors, HBK CPAs & Consultants, and Kena Yoke Consulting on October 31, 2018, at the Hilton Naples as they present “Play YOUR Game: Creating and Running a Championship Business.” Click here to download the seminar brochure.
Sales taxes have always been major revenue sources to the states, including Florida which has a state-wide 6% sales tax. However, for years, consumers have turned to the Internet to make purchases in part to be able to avoid this because most Internet sales transactions were not subject to any state or local sales tax. This changed on June 21, 2018 when the United States Supreme Court issued a 5-4 decision in South Dakota v. Wayfair overturning earlier decisions and paving the way for states to collect sales taxes from online retailers for sales of goods to in-state residents.
Previously, a state could not require an out-of-state or online retailer to collect sales taxes from its customers if that retailer did not have an actual, physical presence within the state. Over the last 20 years or so, Internet commerce and retailing has become a major part of the U.S. economy. Since online retailers without a physical presence in a state were not required to collect sales taxes, this led to trillions of dollars in online sales transactions going basically tax free. This had a direct impact on states’ sales tax revenue.
Impact of Wayfair Decision
In Wayfair, the Supreme Court recognized how the Internet has changed the economy and how consumers shop and also the realities that these changes have wrought to many states’ budget shortfalls. Now, under Wayfair, an online retailer does not need to have any actual physical presence within a state in order to be required to collect sales taxes. It will be up to the individual state to determine whether it wants the online retailer to collect sales tax or not.
On one hand, consumers stand to lose a bit under Wayfair because now Internet purchases can be subject to sales taxes at the point of checkout. In Florida such purchases have been subject to tax all along, since the state technically requires the consumer to report and pay a “use tax” on any items where sales tax was not paid at the time of purchase. However, this regulation has not been vigorously enforced rendering Floridian’s Internet purchases essentially tax free. Going forward, if Florida requires online retailers to collect the sales taxes, those taxes will be added directly to the purchase price in the online shopping cart and paid by the consumer at checkout. This makes goods more expensive to the consumer.
On the other hand, many view this as a benefit to small business because small, local businesses with physical locations often lost sales to online retailers from consumers seeking to avoid sales tax. Post Wayfair, if the online retailer is required to collect sales tax at checkout, the playing field becomes a bit more level by making online purchases potentially little less attractive and bringing consumers back to local businesses, where at least they may not have to pay shipping costs as well.
Similarly, under Wayfair, states stand to benefit because they will be able to capture a tax revenue stream more efficiently than leaving it up to the consumer to voluntarily report and pay via use tax. This new revenue can help significantly to narrow budget gaps in some states.
Regardless how one looks at the costs or benefits of Wayfair, the decision does significantly alter the current sales tax environment. While it may be some time yet before we see how Florida—or any other state—will react and how it will implement any new sales tax scheme, the landscape is certainly going to change. Henderson, Franklin will continue to monitor how things may change and our attorneys are available to discuss how these changes might impact your business.
On June 21, 1788 the U.S. Constitution was ratified. It contains a clause in Article I, Section 8 providing that Congress shall have the power to
promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.”
This led to the Patent Act of 1790, signed into law by George Washington in April of that year. Since the founding, patent protection has been afforded to “new and useful” processes, machines, articles of manufacture, compositions of matter, ornamental designs and even plant strains. Patent protection provides inventors the right to exclude others from making, using, selling or importing an invention throughout the United States without the inventor’s consent.
Just in time for the start of the 2018 hurricane season, the Florida Department of Economic Opportunity (DEO) has launched a new website, FloridaDisaster.biz, to help Florida businesses prepare for and recover from hurricanes and other disasters.
Floridians understand the importance of being prepared for disasters, especially during hurricane season. This new website will help businesses make safe and informed decisions for themselves, their employees and their customers. Every Florida business can visit FloridaDisaster.biz, make a disaster plan and stay updated as we move further into hurricane season.”
The website focuses on three main areas: Continue Reading State Launches FloridaDisaster.Biz to Help Florida Businesses
The building once known as 5Pointz was a block-long warehouse structure in Queens, NY. During the ‘90s, the area was rundown and crime-riddled. As a way to discourage vandalism to the building, the owner allowed graffiti artists to paint on the walls, giving them a canvas to display their works. Ultimately, the 5Pointz building became well known among graffiti artists and tourists and artists traveling from all around the world to add their art to the structure. For almost 20 years the developer and the artists existed this way. However, wanting to take advantage of rising real estate prices, in 2010 the owner of the building decided to redevelop it as a residential complex. The owner ultimately obtained permits to demolish the buildings and redevelop the parcel.
Congratulations! You were awarded a judgment against the defendant in your lawsuit, all appeals are exhausted, and the judgment is now final. In theory, once the judgment is final, the defendant pays the judgment and the matter is resolved. This, however, rarely happens and additional steps are needed in order to obtain the monies owed.
Bank Garnishment in Florida
One way to collect the judgment is through garnishing the debtor’s bank account by the issuance and service of a “Writ of Garnishment.” The Writ allows a bank to freeze the debtor’s assets in its control and creates a lien upon the debt or property garnished at the time of service of the Writ. Below are the steps needed to take under Florida Statutes:
- Provide the location and name of the debtor’s bank;
- File a Motion for Garnishment and Writ of Garnishment Order with the Clerk of Court; and,
- Once the Order is issued, serve the Writ of Garnishment on the debtor’s bank (the “garnishee”) by a process server.
The garnishee must then file an answer within twenty (20) calendar days of being served, stating what sum and what tangible or intangible personal property of the debtor it has or had in its possession or control at the time of filing the answer. Failure to file an answer may entitle the creditor to judgment against the garnishee.
Notice to Judgment Debtor
Guest post by: Richard Akin, Esquire
Whether you are a realtor, a contractor, a health care professional or a licensed professional of any kind, maintaining your professional license is vital to your livelihood. While each type of license has different requirements for initial licensure and continuing education, certain types of conduct will inevitably subject your license to discipline no matter your professional field.
You likely know the big/obvious violations to avoid, but often times it’s the smaller violations that can cause problems for the average professional. Continue Reading Five Ways to Endanger Your Professional License
As the laws change, we strive to share how they will affect our clients and readers of this blog. Thus, we are pleased to share the following guest post by Florida Bar Board Certified Wills, Trust and Estate Planning Attorney Eric Gurgold.
The Tax Cuts and Jobs Act does not repeal the Federal estate tax. Instead, the Act doubles the amount of wealth that is exempt from the estate tax. In 2018, the new estate tax exemption will be $11,200,000 per individual. A married couple may be able to shield $22,400,000 from Federal estate taxes. The exemption is indexed to increase each year with inflation. However, the changes to the exemption will sunset and revert to today’s numbers after 2025.
Given the high estate tax exemptions, it is possible that not enough estate taxes will be paid to justify retaining the Federal estate tax; and Congress may repeal it.
Would Repeal of the Estate Tax be Good for Your Bottom Line?
Guest post by Beth T. Vogelsang, Esquire, Florida Bar Board Certified Divorce, Marital and Family Law Attorney
President Trump is expected to sign a sweeping tax overhaul into law this week. The final draft of the proposed tax bill was released by Congressional Republicans on Friday, December 15, 2017 at 5:30 p.m. One important provision of the tax reform that divorce lawyers and certified divorce financial analysts have been carefully monitoring is the proposed repeal of the alimony deduction.
Under the current tax code, amounts paid to a spouse or a former spouse under a divorce or separation instrument (including a divorce decree, a separate maintenance decree, or a written separation agreement) may be alimony for federal tax purposes. Alimony is deductible by the payor spouse, and the recipient spouse must include it as income. The latest bill eliminates the tax deduction for payment of alimony.
The repeal of the alimony deduction applies to any divorce or separation instrument executed after December 31, 2018. The House bill would have eliminated these alimony deductions a year earlier, starting in 2018. This gives some breathing room to try to get pending cases finalized, but spouses going through a divorce case involving alimony claims must conclude their cases before the end of 2018 to take advantage of the current tax law. While this may seem like a windfall for recipients of alimony going forward, eliminating the deduction will result in lower alimony awards and it will decrease the cash flow available. This is because alimony payors are generally in a higher tax bracket than recipients; so the amount of the tax savings to payors deducting alimony payments above-the-line is higher than the tax liability of the recipient.
Although divorces concluded prior to the effective date are grandfathered in, and the repeal will not affect those already paying alimony, the new legislation may be applied to divorce decrees which are modified after December 31, 2018 even if the original decree was entered before December 31, 2018, if the modification agreement or order expressly states that the new rule applies. This appears to leaves it in a court’s discretion whether to make future modifications of alimony non-taxable and non-deductible. The landscape is plainly changing when it comes to alimony, with the result that there will be less money in the pot to divvy up.
About the Author
Beth T. Vogelsang handles family law matters in a confidential, compassionate and professional manner. She represents clients in complex divorces, including matters involving international and interstate child custody disputes, intricate business valuations, and identification and tracing of marital assets and income. She also drafts and litigates matters involving prenuptial and postnuptial agreements. Beth has been Board Certified in Marital and Family Law since 1992.
Beth has received much recognition for her work in the divorce and family law field. She has been included in Florida Super Lawyers magazine (2012-2017) and named one of the Top 50 Women Attorneys in the State in 2014 and 2015. Beth has also been included in Best Lawyers in America (2013-2017) and was named the “Fort Myers Family Law Lawyer of the Year” in 2015 and 2017. She is also AV rated by Martindale Hubbell.
There is a change in the federal partnership audit rules that take effect for tax years on or after January 1, 2018, that may impact you.
Who is Affected?
All entities classified as partnerships for federal tax purposes. This includes, for example, multi-member LLC’s that have not elected to be taxed as corporations (C or S). If the entity files IRS Form 1065, it is a partnership. Certain partnerships may opt out of the new audit rules, but they must meet the eligibility requirements, including identity and number of partners (no more than 100 partners, all must be individuals, estates, C corporations and S corporations).
The new law and regulations proposed by the IRS will replace the current audit regime. The details of the changes to the audit regime are beyond the scope of this letter, but in general, under the new partnership audit rules, any adjustments to tax items for a partnership are generally determined, and the tax attributable to such adjustments is assessed and collected, at the partnership level, with the tax assessed at the highest tax rate then in effect. The adjustments relate to a prior year (the “reviewed year”), but the assessment and collection of the tax will affect the partners in the year of the assessment (the “adjustment year”). The partnership may be able to elect to “push out” the adjustments to the partners who were partners in the reviewed year, rather than assessing it at the partnership level.
In addition, the partnership is now required to designate a “partnership representative” on an annual basis. This designation replaces the appointment of a “tax matters partner” under the prior regime. Comparing the two, the requirements for who may serve as a partnership representative are broader (e.g., not required to be a partner) and the partnership representative has significantly more authority in dealing with the IRS on behalf of the partnership (i.e., sole authority to act and the other partners have no right to receive notice from the IRS or participate in the audit).
What Does This Mean For You?
All partnership agreements (or operating agreements, in the case of an LLC taxed as a partnership) should be reviewed and amended to adopt appropriate changes to reflect the application of the new IRS rules effective January 1, 2018. The nature of these amendments will differ among partnerships/companies depending on the specific situation. Changes may include:
- appointing the partnership representative, with a mechanism for appointing replacements and any contractual limitations on his authority;
- ensuring the partnership is eligible to opt out of the rules by restricting who can be a partner;
- providing for a method of allocating the adjustments in the event of changes in partners between the reviewed year and the adjustment year; and/or
- providing for an election to “push out” the adjustments to the reviewed year partners.
Please feel free to reach out to any of our tax attorneys to update your partnership’s and/or company’s agreements to remian compliant with these federal tax law changes:
- Guy E. Whitesman, 239-344-1180
- Erin Houck-Toll, 239-344-1296
- Robert Forman, 239-344-1239
- Paul Shuman, 239-344-1183