News and miscellaneous legal topics – 2012
In Letter Ruling No. 7156, dated October 1, 2012, the Missouri Department of Revenue discussed the amount that is subject to sales tax when a voucher such as Groupon or Living Social is used, finding that the amount depends on the nature of the voucher. If the voucher offers a specific dollar value that may be used toward the purchase of unspecified products or services, the face value of the voucher must be included in gross receipts even if the amount paid for the voucher is less than the face value. If the voucher offers a specific product or service for the price paid for the voucher, the voucher price paid must be included in gross receipts.
The ruling specifically discussed a taxpayer offering a $29 voucher for yoga classes through a third party deal company for one month of unlimited yoga classes valued at $110. The Department of Revenue determined that the taxpayer should collect and remit Missouri sales tax on the price paid for the voucher, explain that in this case, customers pay $29 for one month of unlimited yoga classes, not for a voucher worth $29 for anything the taxpayer may sell. Thus, the taxpayer must include $29 in gross receipts subject to tax.
The problems of poverty in Springfield and its impact on our children easily go unnoticed. The Springfield News-Leader recently published the third in a six part journalism project on poverty in Springfield and its impact on children, seeking to focus public attention and build on existing initiatives (see http://www.news-leader.com/section/everychild). Two local entities make a substantial contribution to improving children's lives of our and help them grow up to be responsible and productive citizens, andstand out especially because all the money they raise goes directly to benefit the recipients and administration expenses are covered by private funds.
Care to Learn (http://caretolearnfund.org, (417) 862-7771). In 2007, Care to Learn Executive Director Morey Mechlin gave her tradition community comments to the Chamber of Commerce on leaving the Board, and described issues of children in poverty and that over half of Springfield school children are on free and reduced lunch. Doug Pitt was skeptical, but convinced after he talked to school superintendent Dr. Norman Ridder. Dr. Ridder told Doug that what would help most was if he had $50,000 to meet immediate needs without red tape. Within 24 hours, Doug, his brother Brad through the Jolie-Pitt Foundation, and Jim D. Morris, stepped forward to provide funds, and then in 2008 formed the Care to Learn fund at the Community Foundation of the Ozarks.
Care to Learn provides immediate funding and action to meet any emergent health, hunger, or hygiene issue and restore a child's self-respect so they can get back in the classroom, usually on a same day basis, e.g., a toothbrush, coat, deodorant, or breakfast. They arrange transportation that parents can't provide to get children to needed dental care (a free dental care program is available, but you have to get there). Teenage girls stayed home one week a month because hygiene products can't be purchased with food stamps, so had approximately 25% higher absence than boys. Care to Learn provides funds to make hygiene products available at the schools, and girls' attendance figures improved dramatically. They provide funds for medication, e.g., asthma (there is an increasing population with asthma) so kids can be in school and learn.
Ten chapters have formed in surrounding communities, each raising funds that stay in the local chapter, and Morey has spoken to other communities as far away as Springfield's Mexico sister city, Tlaquepaque, on the program's success. The Springfield chapter had a $300,000 budget in 2011, and has a $1MM endowment fund started. Care to Learn has no overhead because fund management is handled by CFO, they rely on professionals such as teachers, nurses and counselors in the schools to spot and report needs, e.g., if a child arrives at school hungry, and the staff is lean and paid for privately, so that 100% of donor funds are used to meet the needs of students.
Help Give Hope (http://helpgivehope.org/, (417) 209-7027) Help Give Hope is a 501(c)(3) charitable organization, whose mission is to assist needy families, in particular children, in southwest Missouri.
In 1980 Wade Palmer, Joe Kremer and Jim Crumpley collected toys for Toys for Tots. In 1981 they began to adopt individual families. By 1990, Help Give Hope was adopting approximately 45 families at Christmas, increasing to roughly 110 families by 2000, and 228 families in 2011. During the late 1990's Help Give Hope also started offering year-round assistance to children in need. In 2006 Murray Beairsto was hired as Executive Director and brought many years of professional experience. Under her leadership, Help Give Hope has experienced tremendous growth and many new successes. The original core group of volunteers and supporters largely remains intact and has since grown to include a Help Give Hope 'family' of nearly 800 supporters. In 2011 Bobby Allison donated a new 30,000 sq. ft. office-warehouse building that greatly facilitates operations that previously had to be set up at different locations each year.
The 2011 Christmas Project provided clothing, toys, furniture, appliances, food and automobiles to 228 families, including over 800 children. Help Give Hope also provides crisis assistance throughout the year to 40 to 70 families each month, helping with utility bills, rental assistance, gasoline vouchers and educational help, and assists families to obtain reliable transportation so they can to be employed and take care of life's daily tasks, operating one of the largest used car gifting programs in the Midwest. Since 2007, they have given away over 93 vehicles.
Help Give Hope receives no governmental assistance or funds, and all donations are private. It has no rent or mortgage, and all staff and workers are volunteers or are paid for privately, so 100% of all donations go directly to help the families in need. They home visit 430 families to identify the 230 or so families selected for each holiday season, striving to help people who are making an effort to improve their situation. Help Give Hope averages spending $1,000 to $1,500 per family and addresses all the family's needs, including furniture, appliances, clothing, toys, food, transportation, and more.
The Missouri General Assembly adjourned on May 30, 2012 without passing H.B. 1639 that would have reduced taxes on corporate and pass-through entity income; provided an amnesty from the assessment or payment of penalties, additions to tax, and interest with respect to taxes administered by the Department of Revenue; and provided new sales and use tax exemptions.
IRS Summertime Tax Tip 2012-02 provides additional information on the new more flexible offer-in-compromise terms to help taxpayers make a fresh start 7/12/12
- Revise the future income calculation to 1 year (from 4) for OIC paid in 5 or fewer months; and 2 years (from 5) of future income for OIC paid in 6-24 months. All OICs must be paid in full within 24 months after accepted.
- Taxpayers can make minimum payments on post-high school student loans guaranteed by the federal government . Proof of payment must be provided.
- Allowing monthly payments to state tax authorities in certain circumstances if the taxpayer can't pay them in full.
- Expanding the Standard Living Expense allowances incorporate average expenses for basic necessities for citizens in similar geographic areas, including to cover expenses such as credit card payments and bank fees and charges.
Missouri Department of Revenue and Division of Employment Security Assert LLC Members are Liable for Unpaid Entity Level Tax 6/8/12
The Missouri Department of Revenue ("DOR") and Missouri Division of Employment Security ("Division") position is that members of LLCs taxed as partnerships are personally/individually liable for unpaid LLC taxes to be paid or collected by the LLC, i.e., DOR withholding and sales tax, and Division unemployment contributions, without resorting to responsible person personal liability.
IRS Announces More Flexible Offer-in-Compromise Terms IR-2012-53, May 21, 2012 5/24/12
Changes announced include:
- The IRS will now calculate a taxpayer's reasonable collection potential looking only at 1 year of future income for offers paid in 5 or fewer months, down from 4 years, and 2 years of future income for offers paid in 6 to 24 months, down from 5 years. All offers must be fully paid within 24 months of the date the offer is accepted (Longer term deferred OICs apparently no longer available).
- Taxpayers may repay their student loans.
- Taxpayers may pay state and local delinquent taxes.
- Allowable Living Expense allowance category and amounts are expanded, and national standard expenses can include credit card payments and bank fees and charges.
- Narrowed parameters and clarification of when a dissipated asset will be included in the calculation of reasonable collection potential.
- Equity in income producing assets generally will not be included in the calculation of reasonable collection potential for on-going businesses.
- Guidance has also been clarified to allow payments for loans guaranteed by the federal government for the taxpayer's post-high school education. In addition, payments for delinquent state and local taxes may be allowed based on percentage basis of tax owed to the state and IRS.
The Missouri House of Representatives approved H.B. 1639, on May 3, 2012, 5/16/12
reducing taxes on corporate and pass-through entity income, providing amnesty from assessment or payment of penalties, additions to tax, and interest with respect to taxes administered by the Department of Revenue, and providing new sales and use tax exemptions.
It looks like there will again be no tax amnesty bill coming out of the Missouri legislature. 5/24/12