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Tag Archive for Texas

Texas Property Tax Legislative Update

Texas Property Tax Legislative Update

The Regular Session of the 87th Texas Legislature adopted a number of changes that were favorable to Taxpayers.

According to HB1090, effective 9/1/21, the appraisal districts have less time to pick up erroneously omitted real property. Previously, the districts had five years to discover and correct the roll (which includes the back taxes, penalties, and interest); this period has now been reduced to three years. The personal property time period remains unchanged, at two years.

Also effective 9/1/21, taxpayers will now have two years to correct their personal property rendition filings. These returns are filed in Texas by April 15 (or by May 15 with extension), and given the chaos of the busy season…mistakes are frequent. The courts have historically been mixed regarding the taxpayer’s ability to “correct” those filings – so the legislature has resolved any such confusion.

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Protective Refund Claims: Preserving The Right To A Tax Refund

Protective Refund Claims: Preserving The Right To A Tax Refund

When is a protective refund claim available?  Taxpayers often face uncertain outcomes in litigation or business transactions, giving rise to contingent tax refund claims.  For example, if a pending lawsuit ends in a favorable result, it may create new law that gives the taxpayer a more favorable tax position in an earlier year—creating a right to a tax refund.  A taxpayer may even be waiting for a hoped-for change in the tax laws that will result in a retroactive right to a refund.  But what if the taxpayer’s right to a refund claim will not become clear until after the statute of limitations expires on their ability to file a claim for refund with the IRS?

A protective refund claim may be the solution.

What is a Protective Refund Claim?

Protective refund claims preserve a taxpayer’s right to claim a tax refund when the taxpayer’s right to the refund is contingent on future events that may not occur until after the statute of limitations expires.  The “protective claim” concept is not contained in the Code or Treasury regulations but is instead established by case law.

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Challenging Testamentary Capacity In Texas

Challenging Testamentary Capacity In Texas

When an interested party contests the capacity of the testator, what standard do courts use to determine the validity of a will? The recent case of Neal v. Neal provides insight.  In that case, following her diagnosis of vascular dementia, a mother cut out two sons from her will, and left a third son left as the sole beneficiary. Neal v. Neal, No. 01-19-00427-CV, 2021 Tex. App. LEXIS 2051, at *1 (Tex. App. Mar. 18, 2021).

Background

In Neal, the decedent, Florene Neal, executed several wills throughout her life, devising her estate in different apportionments to her three sons: John, Randall, and David. Her first and third wills, executed in 2008 and 2011, divided her estate between John and Randall, explicitly excluding David, as he was to gain full ownership of a property that he owned as a joint tenant with right of survivorship. The second will, executed in 2009, left her estate to all three sons in equal shares. In her final will, which was executed in January 2012, Florene devised the entirety of her estate to David, and disinherited both Randall and John.

Florene died in 2015, and Randall opposed admitting the January 2012 will to probate. Randall alleged that Florene lacked testamentary capacity as a result of her vascular dementia diagnosis in August 2011. Ultimately, the court found that Florene was of sound mind when her final will was executed, and Randall appealed the probate court’s decision.

Analysis

On appeal, Randall contended that 1) Florene did not have testamentary capacity when she entered into the final will; and 2) David exerted undue influence to procure the execution of the final will.

Whether Florene had testamentary capacity

For a will to be admitted to probate, a party must first establish that the testator had testamentary capacity. A testator has testamentary capacity when, at the time of the execution of the will, she possesses sufficient mental ability to:

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The Statute Of Frauds In Texas

The Statute Of Frauds In Texas

The statute of frauds is an affirmative defense in a breach of contract suit that, where applicable, renders a contract unenforceable.[1] It exists to “prevent fraud and perjury in certain kinds of transactions by requiring agreements to be set out in a writing signed by the parties.”[2] In order to be enforceable, a contract that is subject to the statute of frauds must be in writing and signed by the person to be charged with the promise or agreement (or by someone lawfully authorized to sign for them).

The statute, in other words, bars claims arising out of unenforceable oral promises, unless the defendant’s fraud prevented the necessary writing.[3] If contract provisions that are subject to the statute of frauds are not severable from those outside the statute, the entire contract is unenforceable unless it satisfies the statute.[4]The question of whether the statute of frauds applies is a matter of law.[5] The statute of frauds does not apply to a fully executed contract.[6] Generally, the statute of frauds applies to contracts regarding marriage, suretyship, sales of real estate, goods priced at $500.00 or more under the Uniform Commerical Code (UCC), and contracts that are not performable in one year. There are, however, a few applications that are specific to Texas.

Texas-Specific Statute of Frauds Considerations

In Texas, the statute of frauds is located in chapter 26 of the Texas Business and Commerce code. Section 26.01(b) applies the statute to contracts regarding: marriage (“or on consideration of nonmarital conjugal cohabitation”), suretyship, contracts that are not to be performed within one year from the date of making the agreement, promises by an executor or administrator to answer out of his own estate for any debt or damage due from his testator or intestate, certain medical arrangements, and sales of real estate or leases of real estate for a term longer than one-year,[7] and certain payments related to mineral interests.

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Fraudulent Transfers Under Texas Law

Fraudulent Transfers Under Texas Law

Texas law prohibits a debtor who is subject to a valid judgment from moving assets out of reach of creditors in order to hinder, delay, or defraud a judgment creditor. This legal restriction applies even if the transfer takes place before the entry of a judgment against them.  A fraudulent transfer is voidable under Texas law. So, one may ask, shat is a fraudulent transfer? The Texas Uniform Fraudulent Transfer Act (TUFTA) supplies an answer.

Texas Uniform Fraudulent Transfer Act (TUFTA)

The Texas Uniform Fraudulent Transfer Act (TUFTA) prohibits a debtor from defrauding creditors by placing assets beyond their reach. The TUFTA provides creditors with legal recourse when a debtor engages in a fraudulent transfer. Where a debtor engages in a fraudulent transfer,[1]a creditor may void the transfer.

What Is a Fraudulent Transfer?

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A Summary Of The IRS’ Streamlined Filing Compliance Procedures

A Summary Of The IRS’ Streamlined Filing Compliance Procedures

The IRS’ streamlined filing procedures were first offered by the IRS on September 1, 2012.  Since that time, the IRS has made several revisions.  A current summary of the IRS’ Streamlined Filing Compliance Procedures is discussed below.

Do I Qualify for the IRS’ Streamlined Filing Compliance Procedures?

To qualify for the IRS’ Streamlined Filing Compliance Procedures (either Domestic or Foreign), taxpayers must meet the following initial requirements:

  1. The taxpayer must be an individual taxpayer or an estate of an individual taxpayer.
  2. The taxpayer must certify in a narrative under penalties of perjury that the conduct was not willful. The relevant conduct requiring certification relates to not only the failure to report income and/or pay tax, but also to submit all required information returns, including FBARs (e., FinCEN Form 114).
  3. The IRS must not have initiated a civil and/or criminal investigation of the taxpayer for any tax year.
  4. The taxpayer must have a valid Taxpayer Identification Number (e., TIN).

For streamlined filings under the IRS’ Domestic procedure, the taxpayer must also meet the following requirements:

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What Are The Rules On Unreimbursed Employee Expenses? Freeman Law Tax Court In Brief

What Are The Rules On Unreimbursed Employee Expenses? Freeman Law Tax Court In Brief

PEEPLES v. Comm’r, Summary Op. | May 19, 2021 | Paris, J. | Docket No. 17117-17S.

Short Summary: Mr. Peeples deducted unreimbursed employee business expenses on his 2014 federal income tax return. The IRS disallowed the deductions and issued a notice of deficiency. Mr. Peeples filed a petition with the United States Tax Court challenging the proposed adjustments in the notice of deficiency.

Key Issues: Whether Mr. Peeples is entitled to deduct (1) certain unreimbursed employee business expenses and (2) tax preparation fees (under Section 162) for 2014.

Primary Holdings: No, Mr. Peeples is not entitled to deduct either because he failed to provide the Court adequate documentation or information that would have substantiated either the application of the Cohan rule for the deductions or the tax preparation expense.
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Tax Treaties: United States And Romania

Tax Treaties: United States And Romania

Quick Summary.  Romania taxes resident companies on their worldwide income.  Non-resident companies are taxed on Romanian-source income.  Micro-companies–defined based upon total prior-year revenue of no more than 1 million euros–are subject to a special, micro-company tax regime.

Romania is a semi-presidential republic.   It is governed by a prime minister and president.  Romania is divided into 41 counties and the municipality of Bucharest. The Romanian Constitution provides for the right to ownership of private property.

Residents are taxed on worldwide income with certain exceptions, including salaries from abroad for work performed outside of Romania.  Non-residents are subject to tax on Romanian-sourced income.  Romania generally employs a flat personal income tax at a rate of 10%.

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Tax Treaties: United States And Hungary

Tax Treaties: United States And Hungary

Quick Summary.  Hungary is a parliamentary republic.  It is comprises of 19 counties.

In 2019, Hungary introduced a group taxation regime.  With certain restrictions, the regime promotes cross offsetting of operating losses.  As of 2020, Hungary implemented EU’s Anti-Tax Avoidance Directive (ATAD II), providing for hybrid anti-abuse rules.  In addition, Hungary imposed an exit tax and anti-avoidance rules.

Other recent development for individuals subject to Hungarian taxation include removal of cash benefits as fringe benefits and developments with respect to the economic employer rules.

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Tax Treaties: United States And Austria

Tax Treaties: United States And Austria

Quick Summary.  Austria is a member country of the European Union (EU).  Its economy is primarily driven by the services industry, which accounts for approximately 75% of its labor force. Austria is comprised of nine states and its capital, Vienna, and is bordered by Italy, Switzerland, Germany, Czechia, Slovakia, Hungary, and Slovenia.

Under the Tax Amendment Act 2020, Austria implemented the Digital Tax Act (‘Digitalsteuergesetz’).  In addition, pursuant to the Reform Act 2020 (‘Steuerreformgesetz 2020’), Austria implemented changes to its Value-added tax (VAT), an exit tax, controlled foreign company (CFC) provisions, and affiliate-deduction rules.

The European Union (EU) Tax Dispute Resolution Act (‘EU-Besteuerungsstreitbeilegungsgesetz’ or EU-BStbG) became effective in September of 2019.

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Tax Treaties: United States And Norway

Tax Treaties: United States And Norway

Quick Summary.  Norway is a constitutional monarchy with a parliamentary, democratic form of government consisting of three branches: a legislature, the Storting; an executive, the Council of State; and a judiciary.

In 2016, the Government of Norway (GON) initiated tax reforms, gradually reducing the individual income and corporate tax rates.

Norwegian companies are subject to tax on worldwide income.  Non-residence companies are subject to tax on certain Norwegian-source income or when engaged in business managed in, or conducted in, Norway.

Resident individuals are subject to tax on their worldwide income.  Non-resident taxpayers are taxed on specified categories of Norwegian-source income.  Norway introduced a PAYE system in 2019 that applies to certain non-resident workers.  The PAYE system applies a 25% flat tax rate.

Norway bases individual tax resident status on a days-of-presence test, which is satisfied where an individual is present more than 183 days during a 12-month period or, alternatively, 270 day during a 36-month period.

Norway is a member of the North Atlantic Treaty Organization (NATO).  While not a member of the European Union, Norway is a member of the European Economic Area (EEA).

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Tax Treaties: United States And Finland

Tax Treaties: United States And Finland

Quick Summary.  Located in Europe’s Nordic region, Finland shares a border with Sweden, Russia and Norway. Officially the Republic of Finland, Finland is a parliamentary republic.

Finland obtained independence in 1917.  Finland consists of five regions and approximately 310 municipalities, with a capital at Helsinki.

The Constitution of Finland provides for a representative democracy through its parliamentary republic, which established a unicameral Parliament of Finland (Eduskunta).  The President serves as the head of state.

Finland’s legal system is a civil law system with an independent judiciary.

Finland implemented hybrid mismatch rules and mandatory reporting pursuant to the EU Directive on cross-border tax arrangements.

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