This column gives you the opportunity to tap into the expertise of attorneys who are members of the Carlsbad Chamber of Commerce. If you'd like to submit a question for consideration, send it to [email protected]. The responses provided in the article are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. A response in this article by an attorney does not create an attorney-client relationship between the attorney and the reader. The opinions expressed at or through this article are the opinions of the individual author and may not reflect the opinions of the Chamber, its employees, agents, directors or members
? Lee Sterling, guest editor
TAX LAW
IRINA N. GOLDBERG | Law Office of Irina N. Goldberg
Q. What should I know if I have a
foreign bank account?
A. U.S. citizens are subject to tax on income they have around the world. They also must disclose their financial interests in and authority over foreign bank, security or financial accounts if the aggregate value of each account exceeds $10,000 at any time during the year.
This disclosure requires the filing of Form TD F 90-22.1 (commonly called FBAR), an information return filed separately from the income tax return by June 30th.
If the IRS determines that a taxpayer's failure to file this form is willful, the IRS shall impose a penalty which is the greater of $100,000 or 50 percent of the value of the account for each violation.
A willful violation also subjects the taxpayer to five years in prison and/or a maximum fine of $250,000.
For those taxpayers who have not reported income from their foreign accounts, there is hope.
The IRS has implemented the Offshore Voluntary Disclosure Program to help these taxpayers become current with their US tax obligations. Currently there is no deadline to participate in this program.
For those who choose to participate in this program, the IRS promises that significant civil penalties and criminal prosecution will not be imposed. In order to participate, the taxpayer must do the following three things:
1) file FBARS and amended income tax returns for the last eight years
2) pay all income tax, penalties and interest owed to the U.S.
3) pay 27.5 percent of the highest aggregate balance in the undeclared foreign account during the past eight years (with exceptions).
Taxpayers who are currently under investigation by the IRS may not participate.
Goldberg can be reached at [email protected]
HR LAW
LouIS A. Storrow | Storrow Law, APC
Q. My mother refuses to move to a nursing home, but she needs daily care. We’ve hired a young woman to shop, cook, help her dress and do light chores. Jessica comes every day for three hours in the morning and three hours in the evening, and she's agreed to a salary of $350 a week, which is more than the minimum wage of $8 an hour for the 42 hours each week. My neighbor said she thinks we're doing something illegal, but my husband insists it's fine, since Jessica signed an agreement saying she's an "independent contractor" and not an employee. Who is right?
A. Your neighbor wins this one. Signing an agreement doesn't make Jessica an independent contractor in California. The law assumes that someone you hire is an employee, unless you can show that they're not. There are numerous "factors" an agency or judge would consider, including whether the person is engaged in their own business, whether you have the right to tell them how to do the job, whether you provide the location and supplies they need, and how much skill is needed. In this case, it looks like Jessica is an employee, not a contractor.
If you've misclassified Jessica as an independent contractor, California can fine you thousands of dollars and both the state and the IRS can demand back-tax withholding. Normally, from the hours you describe, Jessica would also be entitled to overtime and penalties, but a special exemption for "personal attendants" might apply. If it does, you could pay about the same wage and still comply with the law. Better to treat her as an employee, and budget accordingly. But get advice to make sure the exemption applies, or it could get very costly.
Storrow can be reached at [email protected].
? Lee Sterling, guest editor
TAX LAW
IRINA N. GOLDBERG | Law Office of Irina N. Goldberg
Q. What should I know if I have a
foreign bank account?
A. U.S. citizens are subject to tax on income they have around the world. They also must disclose their financial interests in and authority over foreign bank, security or financial accounts if the aggregate value of each account exceeds $10,000 at any time during the year.
This disclosure requires the filing of Form TD F 90-22.1 (commonly called FBAR), an information return filed separately from the income tax return by June 30th.
If the IRS determines that a taxpayer's failure to file this form is willful, the IRS shall impose a penalty which is the greater of $100,000 or 50 percent of the value of the account for each violation.
A willful violation also subjects the taxpayer to five years in prison and/or a maximum fine of $250,000.
For those taxpayers who have not reported income from their foreign accounts, there is hope.
The IRS has implemented the Offshore Voluntary Disclosure Program to help these taxpayers become current with their US tax obligations. Currently there is no deadline to participate in this program.
For those who choose to participate in this program, the IRS promises that significant civil penalties and criminal prosecution will not be imposed. In order to participate, the taxpayer must do the following three things:
1) file FBARS and amended income tax returns for the last eight years
2) pay all income tax, penalties and interest owed to the U.S.
3) pay 27.5 percent of the highest aggregate balance in the undeclared foreign account during the past eight years (with exceptions).
Taxpayers who are currently under investigation by the IRS may not participate.
Goldberg can be reached at [email protected]
HR LAW
LouIS A. Storrow | Storrow Law, APC
Q. My mother refuses to move to a nursing home, but she needs daily care. We’ve hired a young woman to shop, cook, help her dress and do light chores. Jessica comes every day for three hours in the morning and three hours in the evening, and she's agreed to a salary of $350 a week, which is more than the minimum wage of $8 an hour for the 42 hours each week. My neighbor said she thinks we're doing something illegal, but my husband insists it's fine, since Jessica signed an agreement saying she's an "independent contractor" and not an employee. Who is right?
A. Your neighbor wins this one. Signing an agreement doesn't make Jessica an independent contractor in California. The law assumes that someone you hire is an employee, unless you can show that they're not. There are numerous "factors" an agency or judge would consider, including whether the person is engaged in their own business, whether you have the right to tell them how to do the job, whether you provide the location and supplies they need, and how much skill is needed. In this case, it looks like Jessica is an employee, not a contractor.
If you've misclassified Jessica as an independent contractor, California can fine you thousands of dollars and both the state and the IRS can demand back-tax withholding. Normally, from the hours you describe, Jessica would also be entitled to overtime and penalties, but a special exemption for "personal attendants" might apply. If it does, you could pay about the same wage and still comply with the law. Better to treat her as an employee, and budget accordingly. But get advice to make sure the exemption applies, or it could get very costly.
Storrow can be reached at [email protected].