[fname], I have
been made aware of several items that I want to make sure I pass along to
1) Inheritance or gifting of real estate in California
2) Misclassification of employees to independent contractors
3) Supreme Court ruling on Patient Protection Affordable Care Act
Let’s take inheritance or gifting
of real estate in California. Although California has on the books a
requirement to report a change in ownership in real estate to the
California Board of Equalization not many people know this requirement
exists and therefore changes in real estate ownership have not been
reported in California, estimated 80+ of changes in ownership are
Well guess what, California is now serious about this reporting
requirement and is assessing significant penalties for failure to report
changes in ownership of California real estate.
It does not matter if the ownership is in an LLC, partnership or you
inherit the property. If the property is just moving into a Family Living
Trust no reporting is required. Why is California starting to assess these
penalties you ask – reassessment of the value of the property for Real
Estate Taxes in California. California wants more tax money.
The penalties for non-reporting are up to 10% of the new property tax
value assessment. For example if the property is now valued at $1,000,000
and the tax on this is $12,000 the penalty is $1200 plus interest for each
year the change was not reported. California is going back 6 years to find
changes in title on California Real Estate and working with the IRS on
gift tax returns filed but no change in ownership in California has been
If you have inherited or gifted real estate in California you need to
file the change in ownership form 100B with the California State Board of
Now let’s discuss what is
happening with the IRS and California regarding the misclassification of
employees to Independent Contractors. Although proper classification of
employees and Independent Contractors is not new what is new is the
penalties on the employer for improperly classifying employees as
The IRS and California issued notices the beginning of 2012 that any
employer who has Independent Contractor who is later determined to be an
employee will be assessed with a $5,000 penalty a year for every
If the associate dentist is incorporated it does not mean you are OK. You
as the employer need to make sure you are following all the proper rules
to protect the associate dentist as an Independent Contractor. If
you have any questions please call our office.
Last but not least, let’s discuss
the US Supreme Court Ruling regarding the Patient Protection Affordable
Care Act, PPACA. The US Supreme Court Ruled that the PPACA is
substantially all constitutional. (I'm hosting a Conference Call
discussing this on Wed. July 11 @5:30 pm PT,
click here to register if you have not done so already.)
The justices determined that it is not a mandate that everyone buy health
insurance. The justices determined that individuals have the right not to
buy health insurance. However, if an individual does not have health
insurance that person is required to pay a “penalty” on their personal tax
return for failure to have health insurance beginning in 2014.
justices further determined that the “penalty” is not a penalty at all
but a tax. Therefore since it is a tax the justices determined that
Congress is completely able to enact taxes to change or encourage certain
Also the justices determined that because this penalty is a tax it is too
soon for any legal action to be taken about the appropriateness of the tax
because no one will pay the tax until 2015 – the year the 2014 tax returns
are filed and the tax is due.
Get ready for much higher insurance premiums and a lot more tax.
With the ability of individuals with pre-existing conditions to get health
insurance many companies selling health insurance now are leaving the
market. Even though health insurance will be available to everyone there
are no constraints in the law on the upper end of the price of the
If your business does not have 50 or more employees and you offer your
employees health insurance will, you be subject to the same new rules on
employers with 50 or more employees?
Several of the provisions of the PPACA include new Medicare Surtaxes on
income over $200,000 single and $250,000 married of .9% and 3.8% Medicare
Surtax on Interest, Dividends and Capital Gains beginning 2013.
There are many other hidden provisions of the PPACA that not many people
know. For example there is a 2.3% additional tax on manufactures of
medical devices. This 2.3% tax is now being passed on to dentist as
well as doctors who buy new equipment beginning this year, 2012.
This is in addition to expiring tax provisions from the Bush era such as
Capital Gains rates going up to 20% and in some cases 28%, the reduction
of itemized deductions and personal exemption based upon income levels, as
well as income tax bracket rates all going up all beginning 2013.
The lowest tax bracket – 10% - is gone. Therefore we all just got an
immediate 5% increase in tax.
With this Supreme Court ruling and the expiring tax provisions we all need
to accept this is where we are currently. With all these changes
addressing your situation and exploring options is more important than
I am putting aside a limited number of tax planning sessions. As my client
you will receive a reduced planning fee for the session.
Give my office a call at (714) 619-0667 and set a planning meeting.
Monica Rebella, CPA/IAR
507 E. First Street #A
ph (714) 619-0667
Fax (714) 544-0236
This document was not intended or written to be
used, and it cannot be used, for the purpose of avoiding U.S. federal,
state or local tax penalties.