New Postage Rates

Just a friendly reminder: postage rates go up May 12.

For more information, check the US Postal System website.

Want Your Stimulus Check This Spring?

The IRS has announced the timeline for releasing the stimulus checks. The best way for you to get your payments early: file electronically with direct deposit information included, and do so early enough for the return to be processed by April 15.

The exact date that you will get your stimulus payment depends on the last two digits of your social security number or the first one, if filing jointly.

DIRECT DEPOSIT

Last Two           Payment
SSN digits:        Date:
 00 through 20     May 2
 21 through 75     May 9
 76 through 99     May 16
 
PAPER CHECK

Last Two           Payment
SSN digits:        Date:
 00 through 09     May 16
 10 through 18     May 23
 19 through 25     May 30
 26 through 38     June 6
 39 through 51     June 13
 52 through 63     June 20
 64 through 75     June 27
 76 through 87     July 4
 88 through 99     July 11

If you file near or after the April 15 deadline, expect an additional two weeks to the schedule above.

Sales and Use Tax on Services

I just received a call to action from the Georgia State Bar regarding Speaker Glenn Richardson's proposal for a constitutional amendment to repeal the collection of certain property taxes and to replace that revenue stream with an additional sales and use tax, this time on services. It has been hotly contested, in the newspapers, blogs, and other local media, throughout the fall.

Now, the House Ways & Means Committee has favorably reported HR 1246 and HB 979.

According to the email from the Georgia Bar, they oppose the new sales and use tax on services because it would interfere with the attorney-client relationship. (In some instances, just the fact that an attorney represents a certain client can be privileged information.) The Georgia Department of Revenue would have the ability, under its audit authority, to have access to a list containing the clients names and the fees paid. Additionally, businesses would be exempt from this tax, so only individuals seeking legal assistance would have to pay the sales tax. This is clearly a disparate treatment and could cause challenges to its constitutionality.

My practice is mostly geared to small businesses and their owners. Think about this from their perspective. Many of my clients will come to me for several issues, both personal and professional. For their company, I will write a buy-sell agreement or succession plan that has many estate plan implications. I will then write their Last Will and Testament and the rest of their estate plan. Part of their legal services will have a sales tax while the remaining part will not. There will be incentives for attorneys and clients to mis-categorize certain legal services in order to avoid the additional tax.

Think about what this will do for you and your attorney. Increased record keeping. More difficult and harder to understand bills. Increased costs for the individual consumers.

This tax does not apply just to your attorneys. It would also apply to many of the professionals that you see on a constant basis, including accountants and CPAs, dry cleaners, beauty technicians (nail, hair, massage), consultants, interior designers, doctors, dentists, and many more.

In addition to the burden on the professionals, remember that you pay your property taxes directly to your county, not the State. This proposed regime would remove almost all of a county's revenue collection authority and place it in the hands of the state government. Under the sales and use tax regime, all the sales and use taxes are paid to the State who then distributes the collected sales taxes to the individual counties. There is at least one current battle going on between a county and the state over the amount of sales tax that should be paid to the county. The State has also been known to rob one portion of its budget to pay for another portion of its budget. With the State handling the collection of sales tax instead of the county handling the property tax, do not be surprised if money would get cut off from the schools to fund another project, perhaps roads, water management, or public buildings or parks.

This is not a good deal for Georgia taxpayers, the counties, or the professionals that you deal with on a constant basis.

15 Costly Divorce Mistakes

There's currently an article on MSN Money about 15 Costly Divorce Mistakes. They are:

Becoming a financial victim
Not considering mediation
Hiring a combative lawyer as punishment
Failing to recognize your enemy: the IRS
Not producing an accurate budget
Not evaluating a divorce settlement on an after-tax basis
Failing to use computer models to evaluate settlements
Bringing an emotional attachment to assets
Using your lawyer as a financial planner, therapist or messenger
Accepting a settlement that isn't as good as it seems
Disregarding the impact of inflation
Not waiting until a wife is eligible for her husband's Social Security
Forgetting to update estate documents
Failing to adequately insure the divorce settlement
Failing to develop a financial plan

All of these are good points; one thing to consider when hiring an attorney is their effectiveness at negotiations and mediation. Can they effectively work outside the court system to get you a settlement that you can live with after the divorce? Remember, your costs will go up - where there was once one house, there are now two. Two rents or mortgages, two utility bills, two water bills, two internet service providers, and the list goes on and on. Add in child support and alimony, and it will take some adjusting to before you are back on your feet. Work to minimize legal fees to help with the transition.

Taking Stock Before The Divorce

Are you ready to file for divorce? Is your spouse threatening to file? No, I do not mean that you take any shares of stock that your spouse may own before you get divorced. But you do need to review where you stand before you file for divorce. Here are a few things that you should review as divorce becomes more imminent:

• Take stock of your career. Are you earning enough money to support yourself and your children? Do you have the necessary education and training to go back to work, if necessary?
  
  
• Take stock of your spouse's career. What is your spouse earning? Will he or she be able to support his or herself without support from you? Will he or she need additional training to return to work?
  
  
• Take stock of your finances. As part of the taking stock of your career, you will need to look at the current status of your finances. Get copies of your recent tax returns, bank statements, and retirement and investment account statements. Catalog all the major assets that you and your spouse currently have. Did you or your spouse have any of them (pre-marital assets) before you got married? Do you and your spouse have any credit card debt? How much is left to pay on the mortgage? Any car loans?
  
  
• Take stock of insurance plans. After you are divorced, you may no longer be eligible for your spouse's health insurance. Figure out if your employer can provide insurance if your spouse has been providing the insurance. Remember, if you will soon be a single parent, you will probably want to provide your children with adequate life insurance. You may also want to investigate disability insurance in case you cannot work due to injury or disability.
  
  
• Take stock of major assets. The house, the car, the furniture, the big-screen television. List them all. Do you have valuable pieces of artwork, collections, or jewelry? What about a boat, airplane, vacation home, timeshare, or any other assets?
  
  
• Take stock of your legal options. Most often, you will need to consult with an attorney. Often times, you may have rights to the marital home, bank accounts, and temporary alimony and/or temporary child support while the divorce is pending. Consult with an attorney to determine what, if any, additional steps you need to take.

Most of these options refer to your finances. That is because you will have to pay for all your own household expenses, without much help from your former spouse. During the divorce proceedings, you will need this information, much of it when you initially file or answer a complaint for divorce. It is often times easier to gather the information before you tell your spouse that you want a divorce.

In any event, if there has been domestic violence, do not wait to take stock of anything. You must protect your physical safety first and foremost.

Florida Joins Clemson, Auburn on Georgia Roadways

The University of Florida is joining the ranks of Clemson University and Auburn University as the only out-of-state colleges with Georgia license vanity plates.

Hopefully, the Gator faithful can help defray the impact of the reduced state tax collections. In January, tax collections were down 7.1% or about $140 million from a year ago. Sales and income taxes account for the majority of the State's tax revenues. If tax collections do not increase, then the state could be looking at not being able to meet its budget for the fiscal year. The budget is approximately $20 billion for the fiscal year July 1, 2007 - June 30, 2008.

Quarterly Payroll Tax Reminder

Don't forget to mail in your quarterly and annual payroll tax reports today. This includes your IRS 941 and 940 forms and Georgia state withholding and state unemployment quarterly reports. There are two state withholding reports this quarter - your quarterly report, G-7 and the annual report, G-1003. If your taxes were prepared by a CPA, then they will probably electronically file your W-3 with the IRS, but check the instructions from your CPA, as your individual CPA may handle things differently.

You also need to distribute to your employees their W-2s and to your contractors their 1099s today. The 1096 with the IRS copies of the 1099s needs to be filed by the end of February.

Where Do We Sue?

One of the questions that I get most often is "where do we file the lawsuit?" The simplest and most basic answer to this is: where the defendant is. Generally speaking, the court where the lawsuit is filed must have jurisdiction over the defendant, also known as personal jurisdiction.

There are several ways for a court to get personal jurisdiction, but the easiest and most obvious way is for the defendant to live in the territorial limits of the court. For a business, this includes the county in which the principal offices are. In the case of multiple defendants, you can pick any court that has jurisdiction over any one of the defendants.

There are other ways for a court to get personal jurisdiction over a defendant. Another common way that courts get jurisdiction is by agreement. In many contracts, particularly in the business contetxt, the parties agree to the personal jurisdiction of a given court. This is often determined by the stronger or bigger party to the contract or whoever drafts the contract.

Georgia also has a long-arm statute that allows the courts of Georgia to have personal jurisdiction over out-of-state residents when they have some sort of connection to this state. Generally, that involves situations where the defendant was once in the state - think a motorist driving through the state that gets in a car wreck - or has significant connections to the state - think a business advertising for sales in a state. In those cases, you have to follow the statute to determine where the lawsuit will be filed, but it is most often filed in the county where the harm occurred.

The above aren't the only ways for a court to get personal jurisdiction over a defendant, but are the most common ways.

Employment Forms for 2008

For 2008, the Georgia employment forms remain the same. However, the IRS W-4 and the Immigration I-9 have changed. All four forms are available through the DeCarrera Law, LLC website in the forms section.

Important Numbers for 2008

The highest estate tax rate remains at 45% and the exemption amount (the tax free part) also remains at $2 million. Meanwhile, in an effort to reduce your estate, you may give $12,000 under the annual exclusion.

For retirement plans, you can defer up to $15,500 through a 401(k) and $10,500 through a SIMPLE plan. Meanwhile, the IRA contribution limits increase to $5,000. All three retirement plans have higher limits if you above 50 ($20,500 for 401(k), $13,000 for SIMPLE, and $6,000 for IRA). Remember that you must have earned income to be eligible for those plans.

Speaking of earned income, the Social Security taxable wage limit has increased to $102,000. It'll be a little later in the year, if ever, before you see those taxes disappear from your check. If you are under the age of 65 and retired (lucky you!), you can earn up to $13,560 without losing your benefits.

Meanwhile, the kiddie tax is coming after your little ones that don't actually work for their income. The threshold increases to $1,800 for children up to the age of 19 unless they are full-time students, in which case the age limit is 24 years old.

But if you have a nanny or household help, you have to withhold taxes on wages over $1,600.