Trust Fund Handling

Trust Fund Handling Questionnaire

1. Is the bank account used for trust fund handling in the name of the broker as trustee?

2. Is the bank account used for trust fund handling an interest-bearing account?

3. Are control records complete and accurate?

4. Are the separate transaction records complete and accurate?

5. Is monthly reconciliation of the control records and separate records performed and documented?

6. Are trust funds deposited in a timely manner?

7. Are authorized signatories either employed by the broker and licensed or unlicensed but bonded?

8. Are broker's funds commingled with trust funds?

Is the broker maintaining pest control documentation?

Correct Procedure:

In a real estate transaction subject to the provisions of Section 1099 of the Civil Code, the real estate broker acting as agent for the seller in the transaction shall effect delivery of the inspection report, certification and the notice of work completed, if any, to the transferee in accordance with said section.

If more than one real estate broker licensee is acting as an agent of the transferor in the transaction, the broker who has obtained the offer made by the transferee shall effect delivery of the required documents to the transferee unless the transferor has given written directions to another real estate broker licensee acting as agent of the transferor in the transaction to effect delivery.

If the agent cannot obtain the required documents to deliver to the transferee and does not have written assurance from the transferee that all of said documents have been received, the agent shall advise the transferee in writing of the transferee's rights under Section 1099.

The broker shall maintain a record of the action taken to effect compliance with this regulation in accordance with Section 10148 of the Business and Professions Code.

Section 1099 of the Civil Code sets forth the requirements for delivery of a Structural Pest Control Inspection Report and any Notice of Work Completed, if certification or preparation of a report is a condition of the contract effecting transfer, or is a requirement imposed as a condition of financing.

Does the broker have a license for each business location?

Correct Procedure:

A broker is authorized to conduct business only at the address listed on his/her license. If the broker maintains more than one place of business within the State, he/she shall apply for and procure an additional license for each branch office so maintained. The application for a branch office license must state the name of the person and the location of the place or places of business for which the license is desired.

Does the broker retain copies of all documents?

Correct Procedure:

A licensed broker must retain for 3 years copies of all listings, deposit receipts, canceled checks, trust account records, and other documents executed by him or her or obtained by him or her in connection with any transaction for which a broker's license is required. The retention period shall run from the date of the closing of the transaction or from the date of the listing if the transaction is not consummated. After reasonable notice, the books, accounts and records shall be made available for audit, examination, inspection and copying by a Department representative during regular business hours.

Do the documents disclose the negotiability of commissions?

Correct Procedure:

Any printed or form agreement which initially establishes, or is intended to establish, or alters the terms of any agreement which previously established a right to compensation to be paid to a licensee for the sale of residential real property containing not more than four residential units, or for the sale of a mobilehome, shall contain the following statement in not less than 10-point boldface type immediately preceding any provision of such agreement relating to compensation of the licensee:

Notice: The amount or rate of real estate commissions is not fixed by law. They are set by each broker individually and may be negotiable between the seller and broker.

As used above, "alters the terms of any agreement which previously established a right to compensation" means an increase in the rate of compensation, or the amount of compensation if initially established as a flat fee, from the agreement which previously established a right to compensation.

The broker must make certain that his/her agreements and forms are not preprinted with any amount or rate of compensation.

Does the broker have a written broker-salesperson agreement with each of his/her salespersons?

Correct Procedure:

Every broker must have a written agreement with each of his/her salespersons, whether licensed as a salesperson or as a broker under a broker-salesperson arrangement. The agreement shall be dated and signed by the parties and shall cover material aspects of the relationship between the parties, including supervision of licensed activities, duties and compensation.

Does the broker have a written broker-salesperson agreement with each of his/her salespersons?

Correct Procedure:

Every broker must have a written agreement with each of his/her salespersons, whether licensed as a salesperson or as a broker under a broker-salesperson arrangement. The agreement shall be dated and signed by the parties and shall cover material aspects of the relationship between the parties, including supervision of licensed activities, duties and compensation.

Does the broker notify the Department of Real Estate upon the hiring and termination of salespersons?

Correct Procedure:

Whenever a real estate salesperson enters the employ of a broker, the broker shall notify the commissioner of that fact within five days. This notification shall be given on a form prepared by the Department and shall be signed by the broker and the salesperson. The form of notification shall provide at least the following information:

1. Name and business address of the broker.

2. Mailing address of the salesperson, if different from the business address.

3. Date when the salesperson entered the employ of the broker.

4. Certification by the salesperson that he/she has complied with the provisions of Section 10161.8(d) of the Business & Professions Code.

5. Name and business address of the real estate broker to whom salesperson was last licensed and the date of termination of that relationship.

6. Certification by the salesperson that the predecessor broker has notice of the termination of the relationship.

As an acceptable alternative to 5 and 6 above, the form may be utilized by the predecessor broker to give notice of the termination of the broker/salesperson relationship as required by Section 10161.8(b) of the Business & Professions Code if this notice is mailed to the commissioner not more than ten days following such termination.

Reference:
Real Estate Law Book, Section 10161.8; Regulation 2752

Service wide Approach to International Tax Administration

The IRS will improve tax administration to deal more effectively with the increase of globalization of individual and business taxpayers. This will be accomplished through Servicewide cross-functional cooperation in addressing emerging international issues. The priority will be to improve voluntary compliance with the international tax provisions and to reduce the tax gap attributable to international transactions. Our approach to international tax administration includes the following components:

Strategic Goal 1: Improve Taxpayer Service

International tax law is extremely complex. Providing international taxpayers and taxpayers in the U.S. territories (American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands) with assistance and clear and accurate information before they file their tax returns helps avoid unintentional errors and reduces unnecessary contacts afterwards. To achieve this, we will improve service options for international/U.S. territories taxpayers, enhance outreach, provide tools for earlier certainty on complex issues, and strive for burden reduction in the international/U.S. territories tax law arena.

Strategic Initiatives:

1. Enhance customer service options for international/U.S. territories taxpayers to encourage voluntary compliance with complex international/U.S. territories tax laws.

2. Deliver targeted education and outreach to taxpayers with international/U.S. territories transactions and enhance our partnership with tax practitioners involved in the preparation of international/U.S. territories returns.

3. Explore opportunities for expanded e-filing of international/U.S. territories forms.

4. Identify opportunities for burden reduction through forms revisions, legislative proposals, and procedural changes.

5. Provide earlier certainty to taxpayers on international/U.S. territories tax issues through pre-filing tools and achieving greater currency of audits.

6. Contribute to identifying and developing guidance on priority international issues.

Strategic Goal 2: Enhance Enforcement of Tax Laws

As globalization continues to grow, tax planning is increasingly focused on minimizing the worldwide effective tax rate. In this context, international/U.S. territories non-compliance is a significant area of concern and focus. We are challenged by a lack of information reporting on many cross-border transactions. The ease of utilizing complex international structures and cross-border transactions results in constantly evolving compliance issues. To properly identify, address, and pursue such emerging issues, we will strengthen reporting requirements; enhance IRS access to international data; ensure adherence to professional standards by tax professionals; and, increase industry and global issue focus by aligning resources to cases and issues with the highest compliance risk.

Strategic Initiatives:

1. Improve examination coverage, identify emerging compliance issues, and increase issue specialization to address complex transactions.

2. Strengthen our information reporting and withholding systems to ensure we receive the appropriate information and use it effectively in our compliance and withholding tax efforts.

3. Improve cooperation with treaty partners to identify and address inappropriate tax arbitrage and abusive schemes, achieve greater transparency on cross-border transactions, and identify and address process improvements in the mutual agreement program.

4. Encourage tax professionals to adhere to professional standards and provide effective oversight to ensure accountability of professional responsibilities.

5. Detect and deter financial criminal activity and abusive transactions that involve offshore entities and cross border transactions.

Strategic Goal 3: Modernize the IRS through its People, Processes and Technology

As the flow of trade and capital moves more easily across borders, the global marketplace is developing at an ever increasing rate. The fast pace of change in the global economy requires an equally fast pace of change within our organization. We must strategically manage resources, associated business processes, and technology systems to effectively and efficiently meet international service and enforcement missions. To achieve this, we will improve our resource capabilities to leverage international expertise throughout the IRS and modernize information systems to improve service and enforcement.

Strategic Initiatives:

1. Identify workforce skills needed to address emerging international/U.S. territories issues and develop a training plan to address the needed skills.

2. Provide IRS employees the tools needed to accurately and timely respond to taxpayer inquiries.

3. Improve the systems for capturing and utilizing information reported by treaty partners to enhance compliance of U.S. taxpayers.

4. Identify opportunities to improve international/U.S. territories forms and the related processing systems to ensure appropriate information is available for risk assessment and issue identification.

5. Assess system and resources devoted to referrals of international/U.S. territories issues to ensure high risk issues are addressed in a timely manner.

6. Identify and develop baselines and measures to better assess the international/U.S. territories tax gap and our progress in reducing it.