Alabama Department of Revenue Individual & Corporate Tax Division Auburn Tax Seminars 2013 Ann Winborne, CPA Assistant Director, Individual & Corporate Tax Division Tamera Harrell, Training Manager Individual & Corporate Tax Division Andrea Wyatt, RE III Individual & Corporate Tax Division
Website • Lots of current information for our tax professionals. • Check out our website to find out all you need to know for the coming tax year!
What’s New? My Alabama Taxes (MAT) is the convenient and secure way to interact with the Alabama Department of Revenue to access a variety of online services. In MAT you can quickly and easily file tax returns, make payments, view letters, manage your accounts, and conduct other common transactions with the Department.
WWW.My Alabama Taxes.Alabama.Gov • New shortcut in MAT, Pay Your Tax Bill: • If you've received a letter, go to MAT and click on the Make a Billing Payment link. • All you need are your Account ID and Letter ID (which can be found in the upper right-hand corner of the billing letter) to initiate a payment.
My Alabama Taxes • ADOR is offering a FREE electronic filing option to individual Alabama taxpayers filing a state tax return. • No income limitations or other qualifications must be met to take advantage of this free online filing system.
Sign on to MAT • For individuals you will need: • Name • Social Security Number • Last year’s Adjusted Gross Income (AGI) from Alabama income tax return. • Valid E-mail address
Sign on to MAT • For businesses you will need: • Account Number – 10 digit ADOR account number from department correspondence. • Sign-on ID and Access Code – assigned when account is registered with ADOR. • Valid e-mail address
One Spot • Allows the filing and paying city, county, and state sales taxes can now be done at one electronic location, eliminating numerous tax reports. • MAT • Optional • Took effect 10/1/13. • Sales Tax Customer Service: • (334) 242-1490
Debit Cards • This is the last year taxpayers get a choice between a paper check and debit card. • 2014-Check box if you want refund on a paper check. • 2015-All “paper” refunds automatically go on debit cards • Except over $7000 • Income Tax Refunds
Debit Cards • FREE merchant transactions • NO-FEE cash back on merchant transactions • Shop Online/Pay Bills • FREE teller-permitted withdrawals at any bank that accepts VISA.
Debit Cards • Transfer money from your card to your checking account for FREE (online). • FREE withdrawals at participating ATM’s. • .50 charge at other ATM’s. • International fees. Chase Bank/Allpoint Networks
Business Privilege Tax Reminder • Business entities are liable for the Alabama business privilege tax for each taxable year that the entity is in legal existence • Regardless of the level of activity • Corporations • LLC’s • LLP’s
Business Privilege Tax Reminder • Business entities that legally exist, but are dormant in their business operations, are subject to the BPT filing and paying requirements until the entity is legally dissolved or withdrawn from SOS. • Not subject to BPT: • Sole Proprietors • General Partnerships • Non-Profit
Business Privilege Tax Reminder • BPT-IN 2/12 Months after beginning business or registering to do business. • Return is due annually. Payment alone not enough. • Make sure address is correct. Check change of address box if different from last year. • Indicate on envelope & return if return is being filed to obtain a Certificate of Good Standing. • Otherwise, up to 6 weeks processing.
Business Privilege Tax Reminder • LLE’s meeting the definition of “electing family limited liability entity” have a maximum tax of $500. • They have to meet the ownership test (Part I) and EITHER The Gross Receipts Test (Part II) • The Assets Test (Part II) of the Form BPT-E. • Entities wishing to take advantage of the $500 maximum tax due for Family LLE’s must attach a completed Form BPT-E to the BPT return by the due date of the return.
Act 2013-066 • Amends original bill to include a 5 year carry-forward of the credit. • Allows a pro-rata share of the credit to be passed through to partners, members, etc. of an LLE. • Original Bill: • Provides an income tax credit of 20% of the cost of purchase & installation of irrigation equipment. • $10,000 limit • Must be taken the year the equipment is placed in service.
Act 2013-088Red Tape Reduction Act • To provide for notification to the public of proposed rules on the agency website. • Text of rule on website • To require any agency to electronically notify any individuals who have registered to receive information regarding proposed rulemaking activity. • .
Act 2013-241 • Provides a tax credit against the tax liability of the taxpayer for the rehabilitation, preservation, and development of historic structures. • The amount of the tax credit will be approved by the Alabama Historic Commission and administered by the ADOR. • Will issue the taxpayer a “tax credit certificate”
Act 2013-064 Alabama Accountability Act of 2013 • Effective beginning the 2013-2014 school year; • 2013 tax year • 2 Tax Credits established by these Acts: • Section 8-Parent Tax Credit • Section 9-SGO Contribution Tax Credit
Act 2013-265Alabama Accountability Act of 2013 • Made changes to 2013-64. • Changes made retroactive to date of 2013-64. • No public or private school will be required to enroll a student.
Section 8 Parent Tax Credit • Refundable income tax credit to be paid utilizing sales tax revenue. • Currently enrolled private school students do not qualify. • Homeschooled students do not meet the criteria required for the tax credits established in the AAA.
Regulation 810-3-60-.01Eligibility for Parent Tax Credit for Students Enrolled in or Assigned To Attend a Failing School. • Eligible Student-A student who receives written notification from his or her local school system that the student is assigned to attend or enrolled in a failing public school.
Regulation 810-3-60-.01Eligibility for Parent Tax Credit for Students Enrolled in or Assigned To Attend a Failing School. • Creditable Costs-Tuition & other mandatory fees charged to the parent by the non-failing public school or private school to which the eligible student transferred. • Not included: • Transportation Costs • Optional Fees • Lunch Expenses, etc.
Regulation 810-3-60-.01Eligibility for Parent Tax Credit for Students Enrolled in or Assigned To Attend a Failing School. • Eligibility for Credit-A parent is eligible to claim an income tax credit if all of the following criteria are satisfied: • 1. Parent claims the eligible student as a dependent on his or her Alabama income tax return. • 2. Student is enrolled in or assigned to attend a failing school.
Regulation 810-3-60-.01Eligibility for Parent Tax Credit for Students Enrolled in or Assigned To Attend a Failing School. • 3. Parent chooses to transfer the student from the failing school to a non-failing public school or private school; and • 4. Parent incurs creditable costs related to the transfer of the eligible student.
Regulation 810-3-60-.01Eligibility for Parent Tax Credit for Students Enrolled in or Assigned To Attend a Failing School. • Example: Bobby attends a failing school. • Bobby’s parents are divorced. • His father transfers him to a non-failing school and incurs $5,000 of creditable costs associated with Bobby’s attendance at the non-failing school. • For income tax purposes, Bobby’s mother claims him as a dependent on her Alabama income tax return. • Neither parent is eligible for the parent tax credit since neither of them can meet all criteria for claiming the credit.
Regulation 810-3-60-.01Eligibility for Parent Tax Credit for Students Enrolled in or Assigned To Attend a Failing School. • Example: Carol has been enrolled in and has attended a private school for the past 2 years. • Based upon Carol’s physical residence, she is zoned for a failing school for the upcoming school year. • Carol’s parents choose to continue sending her to the same private school she has been attending. • Carol’s parents are not eligible for the credit because they have not transferred her away from a failing school to a non-failing school.
Regulation 810-3-60-.01Eligibility for Parent Tax Credit for Students Enrolled in or Assigned To Attend a Failing School. • Calculation of Credit-The maximum credit that may be claimed for each eligible student is the lesser of the following: • 80% of the average state cost of attendance for a public K-12 student during the tax year ($3564 for this year) or • The actual creditable cost, tuition, and mandatory fees, incurred to attend the non-failing public school or private school.
Regulation 810-3-60-.02Eligibility for Parent Tax Credit for Students Attending a Private School • A private school is any private school, including parochial schools, that is accredited and • Has notified the Department of Revenue of its intent to participate in and comply with the requirements of the Section 9 scholarship program established by the Alabama Accountability Act.
Section 9SGO Contribution Tax Credit • Provides a credit for individual & corporate contributions to organizations that provide education scholarships to qualifying schools. • SGO = Scholarship Granting Organization • 501 C-3 • These scholarships will be used for low-income students.
Section 9SGO Contribution Tax Credit • $25 million maximum available each year for tax credit. • Credits are reserved on a first come, first served basis, subject to verification by the SGO’s. • Must reserve using ADOR tracking system (MAT).
Section 9SGO Contribution Tax Credit • Allowable credit for C Corporations is 100% of donation, • Subject to 50% of AL tax liability (current year) of the donor, • or the amount of the donation, whichever is less. • Any unused allowable credit may be carried over for up to 3 tax years.
Section 9SGO Contribution Tax Credit • Allowable credit for individuals is 100% of donation, or $7500, whichever is less; • Subject to 50% of AL tax liability (current year) of the donor, • or the amount of the donation, whichever is less. • Any unused allowable credit may be carried over for up to 3 tax years.
Section 9SGO Contribution Tax Credit • Credits may only be claimed by the donating individual or corporate entity. • Credits may not be assigned or transferred to any other taxpayer. • A taxpayer may not claim credit for a donation made by any other entity, including an entity taxed under Subchapter S or Subchapter K, of which the taxpayer is an owner, shareholder, partner, or member.
Section 9SGO Contribution Tax Credit • Donations to SGO will be tracked in MAT. • 30 day window for SGO to verify the donation. • If unverified, money becomes available again for reserve. • There are less than 10 SGO’s qualified at this time.
810-3-61-.02Credits for Contributions to Scholarship Granting Organizations (SGO’s) • Credits will be limited to scholarship donations which are bona fide gifts. • The donor may not receive anything of value from the SGO in return for the gift. • Allowable scholarship donations must be in cash. • Not services, forgiveness of debt, barter, or non-cash assets. • Effective 9/27/13.
810-3-61-.02Credits for Contributions to Scholarship Granting Organizations (SGO’s) • No relative of the donor may receive a scholarship from the SGO to which the donation was made. • A child, grandchild, sibling, • Or a child or grandchild of a sibling, parent or grandparent are considered relatives.
Alabama Accountability Act of 2013 • Our website contains the following information regarding the AAA: • ADOR guidance for AAA Sections 8 & 9. • Copies of Acts 2013-64 and 2013-265. • List of qualified SGO’s. • List of participating private schools.
MAILED FORMS • The Department will only mail income tax booklets to Libraries and TPSC’s this year. • E-file most tax forms from our website or • Download and print all tax forms from our website.
Pass Through Entities • Will have their own tax type (PTE) and voucher (PTEV) for the 2013 year and forward. • Previously used BIT (Business Income Tax) and the BIT-V. • Must now register in MAT as tax type “PTE”.
PASS THROUGH ENTITIES • FDT-V Voucher will remain in effect for payments on the fiduciary returns.
Individual Income Tax Forms • Form 40- Line 18 Schedule NTC- Net Tax Calculation • Line 34 – Box to Check for Refund to be issued on a Paper Check. • Schedule DC (Donation Check Offs) • Added- Alabama State Historic Preservation Fund, Archives Services Fund, Alabama Firefighters Annuity and Benefit Fund, and Victims of Violence Assistance.
Individual/Corporate Forms Forms Added due to AAA Act • Schedule AATC-Alabama Accountability Tax Credit
Form 2848A/Power of Attorney • Alabama is following the Federal change to the Power of Attorney. • Therefore, the POA is now only valid for one taxpayer. • Husbands & wives will have to complete separate POA’s.