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Mark Douglas Kimball

Mark Kimball’s Answers

5 total

  • Single Member LLC Tax Legal Advice

    I have a single member LLC, I understand I need to report all the profit and loss on my personal via a 1099. This year I'll turn a small profit.. So questions is - If i leave the money in the LLC and pay taxes on it via my 1099, do I get double t...

    Mark’s Answer

    I agree with most of the comments posted so far. As a pass-through entity the general rule is that you are taxed on income (in this case profit) whether or not you take it out of the LLC's bank account. I am unsure why you would report this income on a 1099-- most single-member LLC's can report on Schedule C unless there is a different tax ID number.
    There are too many unknowns to offer any more of a response. As just one example, if you have elected to be taxed as a C-Corporation, the answers posted (including this one) would be very different.

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  • Trade secret theft

    I recently had an employee leave and go to work for one of my competitors. I am afraid she is selling me out and giving her new employer proprietary information and trade secrets. How can I stop her from telling these things and prevent my competi...

    Mark’s Answer

    Washington's Trade Secrets Act provides protection for confidential and proprietary business information even in cases where employees and former employees did not sign confidentiality or non-disclosure agreements. The courts often focus on the steps that the employer took to protect (or attempt to protect) the information.
    Where the information is protectable to the employer and where either the Trade Secrets Act or a Nondisclosure or Confidentiality Agreement applies, obtaining injunctive relief --the Court ordering a person or company not to engage in certain activity-- can often be obtained.

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  • Ex-husband and IRS debt

    My ex-husband owes $125,000 to the IRS. He didn't pay all of his taxes while we were married. Can the IRS come after me? Is there anything that I can do to protect myself?

    Mark’s Answer

    Although as a general rule a husband and wife are liable jointly and individually for the entire tax obligation on a joint tax return, under some circumstances relief from the general rule is available to an "innocent spouse". In order to claim the relief, the innocent spouse must file Form 8857 no later than two years after the IRS commences collection of a tax deficiency or assessment. There are three general bases for relif, including what is called "innocent spouse", separate liability and other equitable relief.
    If, in this case, the taxpayer did not know about the understatement of tax, then the "innocent spouse" rule may applicable. In that case, the spouse would need to show that at the time that the return was signed, she did not know about the understatement of tax and that it would be unfair to hold her liable for the understatement of tax after all of the facts and circumstances are considered.

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  • I didn't file a tax return, now what?

    I didn't file a tax return from 1998-2001, and I haven't heard anything about this from the IRS. What should I do? They probably owe me a refund because lots was taken out by my employer.

    Mark’s Answer

    All United States citizens and residents are required to file tax returns if they meet certain income threshhold levels. Although these have changed over the years, and although the income levels vary slightly depending on the age of the citizen or resident, each year's requirement can be found on IRS' website (, or in Section 6012 of the Tax Code. Failure to file can be a criminal or non-criminal violation, and can subject the taxpayer to penalties and interest.
    In cases where no refund was filed, Section 6511 of the Tax Code states that a claim for refund must be filed within two years from the time that the tax was paid ir withheld; these deadlines may be extended in cases where the taxpayer was "disabled"-- as that term is defined in the Tax Code and as it has been interpreted by the Courts.

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  • Sales tax

    Why do I not have to pay sales taxes when I buy stuff from out-of-state over the Internet?

    Mark’s Answer

    Your question draws upon nuances in the law that are very old (about a state's ability to tax an out of state transaction), and relatively new (laws designed to promote and, more recently rein in, internet-based business activity. As a general rule, one state cannot compel a business in another state to collect sales taxes on transactions made by businesses in the first state to a resident of the latter state unless that business has some sort of presence in both states. This is why a small company in South Dakota, for example, with no presence in Washington will not be required to collect sales taxes for Washington even though the purchaser lives there. Where the business --such as a national retailer-- has a presence in Washington, sales taxes made through an Internet storefront located in another state will be taxed.
    Out of state Internet-based purchases that escape local state sales taxes may be a thing of the past very soon. While the Internet Tax Freedom Act passed by Congress in 1998 sought to promote tax-free web commerce, more than 44 states have since signed on to the Streamlined Sales & Use Tax Agreement, which will require uniform collection of sales taxes among member states.
    Keep in mind that most states still require residents to pay so-called "use" taxes where sales taxes were not collected. Have these laws been extensively enforced? To date, not widely, at least on individual small and non-business purchasers.

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