Saturday, November 14, 2009

California Annual Minimum Franchise Tax Repeal Proposed

A bipartisan commission appointed by Governor Schwarzenegger has recently proposed sweeping overhauls of California's tax laws, including reduction of personal income tax rates, the elimination of the corporate tax, and the elimination of the $800 per yaer minimum annual franchise tax levied on corporations, LLCs, and LLPs doing business in the state. The committee did, however, propose a 4% business net profits tax, exempting small businesses with less than $500,000 in revenues.

The recommendations are only that, and must be acted upon by the legislature and governor in order to become law.

For more information see:

Commission on the 21st Centuray Economy Press Release dated September 29, 2009

Wednesday, October 28, 2009

California Attorney General Targets Annual Minutes "Scam"

California's attorney general has filed suit against a nyumber of individuals and companies to combat what he calls a scam targeting small businesses:
News Release
October 08, 2009
For Immediate Release
Contact: (916) 324-5500

Brown Sues 8 Individuals and 6 Businesses Operating Scams Targeting California Small Businesses

San Diego - Continuing his fight against "rip-off artists" operating in California, Attorney General Edmund G. Brown Jr. filed suit today against eight individuals and six businesses that operated scams targeting small business owners. The lawsuits, filed today in San Diego Superior Court, seek to recover more than $3 million.

Schedule note: Brown is in San Diego this morning and is available to speak about these cases at approximately 10:30 -- at the Hilton Bayfront Hotel - downtown (Indigo A Room, 1 Park Blvd in San Diego 92101.

"These cases will send a powerful signal that small business owners must be on the alert," Brown said. "These rip-off artists sent official-looking documents through the mail for the sole purpose of duping small business owners into paying them money - for no value in return."

The three cases are separate scams, each following a similar theme. The defendants mailed to small businesses solicitations that appeared to be government documents featuring an official-looking seal, an official-sounding name, citations to the Corporations Code and a "reply by" date. The forms claimed that the business was in danger of losing its corporate or limited liability status if payment was not made within a short period of time.

In the first case, Anthony Williams operated Compliance Annual Minutes Board that mailed to California businesses official-looking forms demanding that the recipient complete the form and return it with payment of an "Annual Fee" of $150 or risk loss of corporate status. Williams claimed that in exchange for payment, he would provide corporate minutes. Instead, he prepared generic fictitious minutes for the business owners who paid his fee.

The next case involved George Alan Miller, Rebecca Miller, Arghisti Keshishyan and Kristina Keshishyan who together operated two corporations and one limited liability company: Annual Review Board, Inc., Business Filings Division and Corpfilers.com, LLC. Miller and his co-conspirators mailed solicitations to California limited liability companies and corporations, demanding that the recipients complete the form and return it with payment or risk penalties, fines and suspension. The payment amounts varied from $195 to $239, but all mailers were designed to be official-looking government documents that misled the recipients into sending money.

In the third case, Maria Jones operated Corporate Filings Division and Corporate Compliance Filings, Inc., which mailed official-looking forms entitled "Annual Minutes Disclosure Statement" to California businesses, implying that the recipient business was required to complete the form and return it with payment of an "Annual Fee" of $175 or risk loss of corporate status. In exchange for payment, Jones agreed to provide corporate minutes. The information she solicited, however, was inadequate for legitimate corporate minutes, and she instead provided fictitious minutes.

All defendants are accused of violating:

- Business and Professions Code section 17533.6 (Deceptive Solicitation Statute)
- Civil Code section 1716 (Phony Billing Statute)
- Business and Professions Code section 17500 (False Advertising Statute)
- Unfair business practices within the meaning of Business and Professions Code section 17200.

In all three cases, the Attorney General's Office seeks civil penalties, injunction and other equitable remedies and costs.

Since 2004, the Attorney General's Office has received more than 5,000 complaints against a growing number of individuals who mailed solicitations made to look like governmental forms to small businesses in California. Today's announcement adds to the five cases the office has already successfully handled since these scams were brought to the office's attention....
See also: California Corporate Compliance Annual Minutes

Saturday, October 24, 2009

Employment Law in a Social Networking, New Media World

I am quoted in a FOXBusiness small business article on how employers can protect their intellectual property rights in a Facebook/Twitter social networking world:
In an age of way-too-much information and widespread social-networking addiction, businesses are finding it increasingly difficult to protect trade secrets and practices. It’s important to know your rights as an employer and/or as an employee.

If you are neither of the above at the moment, and are instead on the job hunt, you should keep in mind that potential employers have the right to (and will) research your online living activities. In one quick Google search, what might a recruiter learn about you? It’s important to always keep your professional goals in mind when posting personal details on sites that are publicly accessible.

If you pass the test and find yourself employed, you’ll then have to follow company policy regarding Internet activities. Because privacy is often a top concern for employer and employee, companies are adjusting to the new online environment and adopting rules and regulations accordingly to ensure protection.

Anita Campbell, founder and CEO of Smallbiztrends.com, said there’s a major difference between large corporations and small businesses when it comes to social media sites. Large corporations are more likely to block all social media sites, such as Facebook and Twitter, from being accessed on the company network.

However, she said most small businesses do not block these sites at work and, in some cases, require employees to participate in them for company benefits. Jonas M. Grant, a business attorney and expert, said some employers rightfully worry about the disclosure of confidential company information by employees who are either posting on Web sites under their own names or anonymously. But he said employers do have the right to legally prohibit certain social-networking activities involving the business to avoid a slip of an idea or secret.

According to Campbell, small businesses using social media networks can have advantages and disadvantages. Recommending your employees take full advantage of the power of social media for “free” marketing is a definite plus. But allowing employees to have access to social media all day can deter them from actually working, decreasing productivity.

“But the stickier issue is one of inappropriate communications by employees,” Campbell said.

Grant recommends companies have an employee manual and training program in place specifying acceptable workplace use of the Internet in general. He said employers should expressly tell their employees what they can and cannot talk about, especially in an age with constant Internet communication.
“Employers are also wise to have employees sign employee loyalty and confidentiality agreements at the time of hire,” Grant said.

Experts agree that prevention is key for small businesses, and preparing for “what-ifs” is the best protection. Grant said communicating concerns with employees, outlining company rules and restrictions, while implementing appropriate policies and agreements in conjunction with employment law counsel, is the best method of prevention.
What Rights Do Employers, Employees Have in Internet Age? by Hope Holland, FOXBusiness.com, October 22, 2009

Intellectual Property Protection in a Social Networking World

I am quoted in a FOXBusiness small business article on protecting intellectual property rights in a Facebook/Twitter social networking world:
Friend it, follow it or link to it. Brainstorming, would-be entrepreneurs around the world are continuously connecting through social networking sites such as Facebook, Twitter and LinkedIn. But, legal experts warn, users should beware of setting themselves up for Information-Highway robbery.

You can lock the doors on your home and your vehicle. You almost need to rent storage space to store your many login and passwords in today’s Internet age. But, what about your revolutionary ideas for starting your own company or launching a new product line? Do you have any rights when it comes to protecting things you carry in your head?

Yes, the experts say. And they advise that you take them seriously, especially your most basic right for protecting your literally un-touchable valuables.
Remember, you have the right to remain silent.

“If you post a business idea on Twitter, someone could beat you to the punch,” said Jonas M. Grant, a small business lawyer and entertainment intellectual property attorney. “If your idea is what makes your for-profit business special, you should consult with an attorney to see what, if any, protections are available and save the Tweeting for when the business has launched. By posting an idea to a social networking site, you have contributed it to the public domain.”

It seems like a simple concept, but choosing how to protect your ideas can be a difficult and confusing process. Do you need a copyright? A trademark? A patent? What are trade secrets? FOXBusiness.com asked the legal experts to translate the legal jargon regarding intellectual property rights.

Anita Campbell, founder and CEO of Smallbiztrends.com, an online resource for small businesses and entrepreneurs, said if your creation is a book, blog post, artwork, cartoon, software, podcast recording, video, or anything along these lines, than a copyright is right for you. A copyright protects original creative works and the “expression of an idea,” she said. You can simply register for copyright protection with the U.S. Copyright Office.

So, you weren’t born yesterday – and you know better than to Tweet about your idea or write about it on your Facebook page. But what about the people you are including on your launch team? Or, how about if you’d like to discuss your brainchild with any consultants or potential future business partners and/or clients? Can you trust them to keep it off their online world?

The experts say no. If you don’t protect yourself ahead of time, you could wake up to an e-mail announcing the successful launch of your long-time-planned dream company -- and have no legal means to get back what is rightfully yours.

With start-ups predominantly using the cross-globe-reaching Internet and social networking sites to get things moving, Grant said no small business is “too small” to invest in protecting company information. He said this is the reason to have anyone you share your grand plan with sign a non-disclosure agreement (NDA), also known as a confidentiality agreement, confidential disclosure agreement (CDA), proprietary information agreement (PIA), or secrecy agreement. He said to always protect your trade secrets or confidential business information to avoid losing an idea or strategy to another company.

In fact, Grant said small businesses should act like the largest companies in the world, and keep all future business plans secret until all available intellectual property protections are in place and it is time to launch to the public....
Protect Your Business Ideas From Information-Highway Robbery by Hope Holland, FOXBusiness.com, October 22, 2009

Thursday, October 15, 2009

Home Loan Modification Advance Fees Now Illegal in California

As of October 11, 2009, advance fees for home loan modification services are illegal in California, even if charged by licensed attorneys. For more information, see California Department of Real Estate Announcement [PDF]

Saturday, October 10, 2009

Tax Increases Expected by 2011

Higher Taxes Are Coming. Are You Prepared? Wall Street Journal, September 13, 2009:
As the recession and bailout have pushed this year's federal budget deficit to an unheard-of $1.6 trillion, an unpleasant reality has dawned: Taxes are going up. The only questions are when, how much, and for whom?

The answers depend on the shifting sands of wealth politics and the scope of health-care revision. "But everybody thinks that by 2011 tax rates will be higher, at least for those with higher incomes," says Thomas Ochsenschlager, a tax official at the American Institute of Certified Public Accountants.

This certainty turns traditional tax-planning logic upside-down. Taxpayers have long been advised to defer taxes as long as possible, especially by making contributions to tax-sheltered IRAs and 401(k)s or holding assets for years in order to postpone realizing gains.

Now taxpayers should reconsider this rule. The current top capital-gains rate of 15% on most assets is the lowest in living memory and the Obama administration has proposed raising it to 20%. Another proposal might tack on a 4.5% surtax for the wealthiest taxpayers. So it may make sense to realize long-term gains now, says Robert Gordon, who advises clients on sophisticated tax matters at Twenty-First Securities in New York....
See also: Barack Obama's Tax Policies

Thursday, July 23, 2009

Online Passwords and Estate Planning

Estate planning for online passwords:
If you're smart about your online life, you've created strong and varied passwords for all your accounts. You change those passwords often. And you never write them down or share them with anyone.

That's all well and good while you're alive. But your admirable devotion to protecting sensitive personal data can wreak havoc for your heirs after you die.

With an increasing portion of our personal lives stored online in password-restricted accounts -- including bank accounts, automatic bill-pay arrangements, personal messages and even items with small monetary but major sentimental value, such as photos -- piecing together an estate after a death can cause major headaches.

For example, if you have an online savings account separate from your regular bank account and the statement notifications are only emailed, not mailed, that account may get overlooked when your finances are disbursed to beneficiaries.

"We spend hours or days trying to track down the information," said Hyman Darling, an attorney with Bacon Wilson in Springfield, Mass., and chairman of that firm's estate-planning department. "Very often things don't come in the mail and we wouldn't know about [the account] for some time."

Of course, creating a will detailing your assets can help, but a will doesn't solve everything. "Even when people remember to leave a list of financial accounts with their other important papers for the next of kin, they often forget account passwords," said Michael Palermo, a Lexington, Ky., attorney who specializes in estate planning.

Without log-in information, survivors usually need to go to court for legal authority to gain account access. The process varies from state to state; it doesn't always require a lawyer but it always takes time, Palermo said. Then, the surviving heir must get the company that runs the online account to heed her authority -- a task that's not always easy, Palermo said.

"Try contacting customer service and telling them, 'I've been appointed as my late brother's administrator. Please give me his user ID and password,' " he said. "Eventually, of course, this type of problem is solved when you can reach a real human being who doesn't act like this is the first customer ever to die. But these people have to be sought out within any institution I've ever dealt with."

The process can be even more complicated if someone is incapacitated rather than dies. "If there's no power of attorney, then we have to have a guardian or conservator appointed to have access to these records," Darling said. "Some companies won't give us information even if we have that, without a specific court order."

The costs of gathering the information can add up, Darling said. "It's unfortunate when they could just have put [the passwords] on a piece of paper or given it to someone they trusted."

The problem isn't limited to financial accounts -- heirs may want to save items with personal meaning, including messages in an online email account or photos stored on a site such as Kodak Gallery or Shutterfly.

Or, if you participate in a social-networking site such as Facebook or Twitter, you may want to exert some control over what happens to your profile after you die, but unless you leave your user name and password with a trusted person, it'll be tough for them to gain access.

What happens to your Facebook page if no one has that log-in information? A Facebook spokeswoman said via email that "if a family member alerts us that a loved one has died, we will place the profile in Memorial State, or take the profile down, based on their wishes." In memorial status, certain profile sections "are hidden from view to protect the privacy of the departed." She added: "We will not give access to the person's account."

While some people might be happy their relatives can't get access to their email or other accounts, others are taking matters into their own hands. "I had a young man in his 20s in here a couple of months ago to sign off on his will and he had some specific instructions about Facebook," said Patricia H. Char, a Seattle attorney with K&L Gates. "These are issues for this generation." ....
Full article: Don't Take Your Passwords to the Grave: Neglecting to share details of online accounts will cost your heirs time, money by Andrea Coombes, CBS Marketwatch via Yahoo! Finance, July 23, 2009

Friday, July 10, 2009

California FTB LLC Fee Refunds and Case Updates

Claims are due this summer for certain claims for refunds of LLC fees (above the $800 per year minimum franchise tax) paid to the California Franchise Tax Board (FTB) for tax years prior to January 1, 2007, for LLCs that had operations in multiple states. This is related to several lawsuits contending the LLC fee is unconstutional, two of which have been resolved, in favor of the limited liability company-taxpayers (Ventas Finance I, LLC v. Franchise Tax Board and Northwest Energetic Services, LLC v. Franchise Tax Board). In Ventas, the court found that Revenue & Taxation Code Section 17942 was unconstitutional as applied to an LLC which derived revenues from inside and outside of California, without apportioning the fee to account for in-state versus out-of-state source revenues. In Northwest, the court of appeals found unconstitutional California's LLC fee as applied to an LLC that registered with the state but never did any business in California (preumably, it had intended to, but circumstances changes, or it hadn't yet got around to doing business here).

The third case, Bakersfield Mall, LLC v. Franchise Tax Board, challenges the right of the FTB to levy the LLC fee on LLC's that do business entirely in California. Those with potential claims should review this notice and speak with their accountant about filing an appropriate and timely claim, or filing a protective claim:

FTB Notice 2009-04 dated 5/22/2009

Monday, July 6, 2009

Michael Jackson's Estate and Estate Planning (press item)

Recently quoted in the press on Michael Jackson's estate, will/trust, and creditor and child custody issues:
Though Michael Jackson’s body isn't in the ground yet, speculation is running rampant as to what will happen to his financial assets. Many suspect that legions of those only tangentially connected to the pop star are already sharpening their knives for their shares of the possible profits.

"There are a lot of dark characters that are going to try to make a buck out of this because Michael Jackson, unfortunately, is such a polarizing figure and his name is greater than any individual’s name on earth," said Aphrodite Jones, author of "The Michael Jackson Conspiracy."

"That being the case, everyone and anyone during his life tried to make money any way they could, and I don’t think that will end because of his death," Jones explains. "You think about Elvis Presley and all of the people who have made livings as impersonators and the Graceland tours, etc. — that’s nothing compared to what we’re going to see here."

As far as legal entitlements, Jackson's assets are undercut by the $400 million in debt that the pop star left behind.

Jonas M. Grant, an entertainment lawyer in Burbank, Calif., explains. "In general, creditors get the first crack at the contents of a deceased’s estate," he said.

Entertainment lawyer Jonas M. Grant says the mother of two of Jackson's children, Debbie Rowe, will likely get custody of those children and their inheritance. "[She] will benefit financially indirectly even if she is not named as a direct beneficiary of his estate, which she also may well be."
Vultures set to profit off of Jackson’s death: Skeptics say those who exploited him in life ready to strike again, Heidi Patalano, Metro International, June 29, 2009

Update: When quoted for the above news article, I didn't have the benefit of reviewing Michael Jackson's purported last will, which can be seen below, and is a pour-over will, essentially directing that all of his property not already titled to the "Michael Jackson Family Trust" be added to that trust, for distribution to the beneficiaries named in that trust:


Michael Jackson's Will - full screen (new window)

Sunday, June 7, 2009

Los Angeles Business Tax Amnesty Program Announced

The City of Los Angeles agency responsible for the administration and collection of business taxes, the Office of Finance, has announced a tax amnesty program. Non-compliant businesses will still have to pay the base tax and interest due, but an automatic waiver of the usual penalty will apply (without the amnesty program, penalty waivers can be requested, but they are discretionary with the Office of Finance):
Tax Penalty Amnesty Program
Chapter II, Article 1.12, Sections 21.12.1 - 21.12.7 of the Los Angeles Municipal Code provide for the development and implementation of a Tax Penalty Amesty Program. This program, beginning May 1, 2009 and ending July 31, 2009, allows taxpayers to avoid tax penalties imposed on any taxes as a result of nonreporting, underreporting, underpayment, or nonpayment of certain taxes. Tax Penalty Amnesty is applicable to (1) Business Taxes; (2) Telephone, Electricity, and Gas Users Taxes; (3) Commercial Tenants Occupancy Taxes; (4) Transient Occupancy Taxes; and (5) Parking Occupancy Taxes.

To participate in the program, taxpayers must file an application for tax penalty amnesty during the specified dates and comply with two conditions:

1.File completed tax statements or returns for all periods and taxes for which the taxpayer has not previously filed a tax statement or return and/or file completed amended tax statements or returns for all periods for which the taxpayer underreported the taxes due; and
2.Pay in full all principal, interest, and any applicable fees (excluding penalty fees) due.
The Tax Penalty Amnesty Program is an opportunity to pay delinquent City taxes and avoid up to forty (40%) in penalties. To take advantage of the amnesty program, please visit one of our offices or call the L.A. Tax Amnesty Hotline at (213) 978-1555 weekdays from 8:00 am to 5:00 pm.
More information and applications forms available here: http://www.lacity.org/finance/amnesty/index.html

Thursday, May 28, 2009

Indiana Secretary of State Corporate Minutes Mailings

From Indiana Secretary of State Todd Rokita. California may want to follow suit (although California's laws may be drafted differently than Indiana's, and it is not clear if these defendants are also behind some of the California mailings.

COMPLAINT FILED IN BUSINESS MAIL SCAM

May 21, 2009- An out-of-state operation sending deceptive solicitations to Indiana businesses for the last several months would face fines of over $1.5 million and be barred from doing business in Indiana if the state prevails in a lawsuit filed last week in Marion County court.

The complaint against Aaron V. Williams of Las Vegas, Lisa Diane Brown of California and several companies affiliated with the two was filed by Attorney General Greg Zoeller in Marion County Superior Court alleging several violations of the Deceptive Commercial Solicitation Act. The action comes after a multi-state investigation by the office of Indiana Secretary of State Todd Rokita which tracked the activities of a business operated by Williams and Brown known as "Indiana Corporate Compliance."

Indiana businesses have reported receiving letters from Indiana Corporate Compliance that appear to come from an official government source - specifically the Business Services Division of the Indiana Secretary of State's office. The letter solicits annual fees of $125 to $150 that it claims will be used for the record keeping and processing of the company's annual minutes. It also instructs businesses to respond by citing fictitious state law and including a "return by" date. The return addresses on the letters are rented mailboxes at UPS stores in Indianapolis, including one within steps of the Indiana Statehouse.

"The actions of these out-of-state scam artists to bilk Indiana businesses are deceptive, despicable, and likely criminal," said Secretary Rokita. "I will do everything I can to stand up for Indiana businesses and shield them from financial attack. I thank Attorney General Zoeller and his team for helping bring legal action."

Secretary Rokita has issued warnings through the media, sent e-mails to Indiana businesses and posted warnings on his Web page to ignore the letter. Still, businesses report falling victim to the scam and have sent money in response to the letter. No business has reported receiving any services from Indiana Corporate Compliance. Secretary Rokita's office continues to investigate and is developing a criminal case against Williams and Brown.

State law requires periodic business entity reporting, but with fees of only $30 every two years for for-profit entities and $10 every year for non-profit organizations. Businesses operating in Indiana can now securely perform this reporting online through the INBiz portal found on the Secretary of State's Web page, www.sos.in.gov/business.

If you believe you fell victim to this solicitation, please contact the Business Services Division Help Line at (317) 232-6576. Businesses wishing to check the validity of any mailing from Indiana's Business Services Division or any division of the Office of the Indiana Secretary of State should also call this number.

See also: California Corporate Compliance Minutes

Wednesday, May 20, 2009

SBA Announces No-Interest Loans for Struggling Businesses

PRESS OFFICE/LOS ANGELES

Release Date: May 18, 2009 Contact: David J. Hall (202) 205-6697
Release Number: 09-30 Internet Address: http://www.sba.gov/news

SBA Launches New 100-Percent Guarantee ARC Loan Program to Help Struggling Businesses

WASHINGTON – Small businesses suffering financial hardship as a result of the slow economy may be eligible to receive temporary relief to keep their doors open and get their cash flow back on track through to a new loan program announced today by SBA Administrator Karen G. Mills.

Beginning on June 15, SBA will start guaranteeing America’s Recovery Capital (ARC) loans. ARC loans are deferred-payment loans of up to $35,000 available to established, viable, for-profit small businesses that need short-term help to make their principal and interest payments on existing qualifying debt. ARC loans are interest-free to the borrower, 100 percent guaranteed by the SBA, and have no SBA fees associated with them.

“These ARC loans can provide the critical capital and support many small businesses need to make it through these tough economic times,” said Administrator Mills. “Together with other provisions of the Recovery Act, ARC loans will free up capital and put more money in the hands of small business owners when they need it the most. This will help viable small businesses continue to grow and thrive and create new jobs in communities across the country.”

“It’s my firm belief that we will soon see better days ahead with these Recovery Act tools including this highly anticipated deferred-payment loan that can now aid small business owners confronting these dynamic conditions,” said Alberto G. Alvarado, Los Angeles SBA District Director.

As part of the Recovery Act, the ARC program was created as a no-interest, deferred payment loan to help small businesses that have a history of good performance, but as a result of the tough economy, are struggling to make debt payments.

ARC loans will be disbursed within a period of up to six months and will provide funds to be used for payments of principal and interest for existing, qualifying small business debt including mortgages, term and revolving lines of credit, capital leases, credit card obligations and notes payable to vendors, suppliers and utilities. Repayment will not begin until 12 months after the final disbursement. Borrowers don’t have to pay interest on ARC loans. After the 12-month deferral period, borrowers will pay back the loan principal over a period of five years.

ARC loans will be made by commercial lenders, not SBA directly. For more information on ARC loans, visit www.sba.gov


http://www.sba.gov/idc/groups/public/documents/sba_homepage/news_release_09-30.pdf

Monday, May 18, 2009

Study Names "Most Free" States; California Ranks Poorly

A recent George Mason University study ranked the 50 U.S. states on a freedom scale, attempting to turn the various economic, social, and personal freedoms available in each state into a number, allowing comparison and ranking.

According to the researchers, the "freest" states are New Hampshire, Colorado, and South Dakota: "All three states feature low taxes and government spending and middling levels of regulation and paternalism."

On the other end of their spectrum, "New York is the least free by a considerable margin, followed by New Jersey, Rhode Island, California and Maryland."

A color-coded freedm-ranked map of the states is available here.

Thursday, April 9, 2009

Blog Post Cited in Orange County Register Article on Annual Minutes Mailings

This blog's most popular entry, posted in January 2007 but updated continually since, concerning misleading corporate and LLC annual minutes mailings was recently cited in a small business advice column in the Orange County Register:

Old scam reappears in O.C.:
Burbank attorney Jonas Grant gives a good explanation of the law on his California Business Law Blog, based on problems his clients reported to him in 2007. The post has gotten dozens of comments from people who received these solicitations, some from other states.

(One even accuses Grant of sending the letters, thus the red-letter disclaimer at the top of his post. Talk about shooting the messenger.)
By Jan Norman, March 29, 2009

California Sales Tax Rate Increase

Effective April 1, 2009, but unfortunately not an April Fool's Day joke is a 1% rate increase to California's sales tax, for a new total of 8.25%. In addition, certain cities and localities may add an additional surcharge of up to 2.0%, for a grand total not to exceed 10.25%, among the highest sales tax rates in the nation. Los Angeles County's rate is now 9.25%.

More detailed information is provided in this notice issued by California's sales tax authority, the Board of Equalization (CA "BOE").

See also:

California Legislature Plans to Increase Taxes Amid Recession

Wednesday, April 8, 2009

Free Legal Forms Online

Adams Drafting, a blawg of interest primarily to business attorneys, has an interesting post and following discussion regarding the use, misuse, and dangers of free legal forms found on the Internet or elsewhere: With Free Online Forms, You Get What You Pay For. Excerpts:
The problem isn’t a shortage of free legal forms online. Instead, it’s that there’s available online for free a vast and ever-growing supply of contract models, most of them crappy, and separating what’s OK, in terms of language and substance, from what’s not OK is a gruesome task....


I see the problem as being not that the documents are inherently incorrect in themselves - I’m sure the good sites produce very sound documents - but that they are drafted in the abstract. If a person pulls a document from any standard database - whether one of these sites or their own firm’s standards - it will be blind luck if it actually works for the agreement they are trying to draft for without amendment. Then there seem to be three options:

(i) The document as just used as-is - the document is unlikely to fit the deal.
(ii) A non-lawyer makes some changes. The problem here is the risk of unintended legal consequences of a change.
(iii) A lawyer reviews it. Clearly the issue here is cost.

I suppose people just need to balance those factors, but for any deal worth anything significant, it is likely to be worth having a lawyer have a look, at which point it is more cost-effective for them to use their own standards.
See also Factual Error Found On the Internet, The Onion, 2002.

Friday, March 20, 2009

New Twitter account - Follow us

The Law Office of Jonas M. Grant, P.C. is now on Twitter - which means you can "follow" us by signing up as one of our followers here, and receive occasional updates, including notification of new blog posts here - typically about four per month - and you can of course stop "following" at any time.

Our Twitter page can be found here:

Twitter: Law Office of Jonas M. Grant, P.C.

For those who prefer, there is also a free subscription available for the Atom feed for this blog.

See also:

Thursday, March 5, 2009

Nigerian Email Scam Targets Lawyers & Their Client Trust Accounts

Law.com reports that a new variation of the standard so-called Nigerian, 419, or advance fee email scam has been targeting lawyers. Phony clients allegedly seeking to collect funds from stateside customers contact a U.S. attorney seeking collections assistance. As soon as the attorney has accepted the representation, the customer immediately agrees to pay (how often does that happen!?), often in two partial payments to be timed one right after another. The check then received will usually be a forged cashier's check, payable to the attorney, and from which the attorney is told to deduct his fee (which the client may not be too concerned about the amount of, another red flag).

The author suggests that attorneys avoid becoming victims by:
  • Researching clients using Google and other sources before accepting the matter
  • Contacting any attorney or other party that has supposedly referred the matter to the lawyer
  • Accepting overseas, especially Chinese, clients only if their story makes logical sense and upon the payment of a retainer
  • Responding to any initial inquiries not known to be fraudulent, but which are suspected to be, making sure to point out clearly that an advance deposit against fees/costs is always required
  • Taking any suspected fraudulent check to the issuing bank for analysis - they will often be able to identify small details that make the forgery obvious
  • If a large payment is received upon behalf of a "client", even if by a cashier's check, holding the funds at least two weeks for clearance before disbursing the funds
A typical solicitation looks like this, and may even track this language precisely:
Dear ,

Request for Legal assistance


This is an official request for legal representation on behalf of XXX Co.Ltd.
We are a textile company with principal business in garment manufacturing and trading.
We are presently incapacitated due to international legal boundaries to exert pressure on our delinquent customers and we request for your services accordingly. We got your contact information from the Online Lawyers Directory as a result of our search for a reliable firm or individual to provide legal services as requested.
After a careful review of your profile as well as your qualification and experience, we are of the opinion that you are capable and qualified to provide the legal services as requested.
On behalf of XXX Co.Ltd, Please accept my sincerest appreciation in advance for your willingness to render your services as we look forward to your prompt response to our request.

Thank you.
Another example:
Attention Counsel,
XXX CO., LTD. is a manufacturing company with its head office in Japan, and branches all over Asia continent. The management of XXX CO., LTD. requires your legal representation for our North American delinquent customers. We are looking for a reputable attorney to represent us in North America in order for us to recover monies due to our organization by overseas customers, and as well follow up with these accounts. In order to achieve these objectives a good and reputable law firm will be required to handle this service.
We understand that a proper Attorney client agreement must be entered into by both parties.
Your consideration of our request is highly anticipated, and we look forward to your prompt response.
Yours Truly,

XXX

June 2009 update: The State Bar of California has issued a fraud alert to California attorneys on this topic:
STATE BAR ISSUES FRAUD ALERT TO CALIFORNIA ATTORNEYS

MEDIA CONTACT: Diane Curtis 415-538-2028 diane.curtis@calbar.ca.gov

San Francisco, May 29, 2009 —

The State Bar of California today issued a warning to attorneys to beware of international Internet scams purporting to hire U.S. lawyers to collect large debts.

Despite efforts to publicize the scams over the last year, Bank of America Vice President Blossom Dunng said attorneys continue to be targeted. In four separate cases since the start of the year, Bank of America attorney customers lost hundreds of thousands of dollars from counterfeit checks.

"As bank officials say, 'Know who you're doing business with,'" said State Bar President Holly Fujie. "If you deposit a check for $500,000, you had better have a clear idea where that money is coming from."

The scammers often use the names of real companies to gain credibility and use e-mail addresses that seem to have a connection to the companies. The State Bar itself has received such bogus solicitations:

"This is an official requisition for your legal consultation services on behalf of _________," one e-mail sent to the bar said. "We are presently incapacitated due to international legal boundaries to exert pressure on our delinquent customers in USA and we request your services accordingly."

"We got your contact information from the state of USA lawyers Directory as a result of our search for a reliable firm or individual to provide legal services as requested. After a careful review of your profile as well as your qualification and experience, we are of the opinion that your [sic] are capable and qualified to provide the legal services as requested."

If an attorney responds, the process begins and at some point the attorney receives a legitimate-looking check - sometimes even what appears to be a cashier's check - for the supposed debt. The attorney is asked to subtract his retainer and then send a check for the rest to the client.

In 2006, one attorney had a $2 million loss. This year, Dunng said, checks from the attorneys to the phantom clients range from $75,000 to half a million dollars.

Dunng, treasury services manager who handles all 8,800 Bank of America Client Trust Accounts, said the customer, not the bank, is responsible because it is common practice for the bank to make deposited funds immediately available to good bank customers.

"Attorneys should be the last people to fall for these scams," said Fujie. "Be careful!"

Scott Wilson, FBI special agent in Cleveland, says scams change so quickly that it's very difficult to keep up with them. Still, law firms that have been victimized or contacted as part of what looks like a fraud scheme should report the incidents. If a law firm has lost money in a fraud scheme, contact the local FBI office, says Wilson. If firms or lawyers have not lost money but believe they have been targeted by scammers, they should make a report to the Internet Crime Complaint Center at www.ic3.gov.

To view a story in the California Bar Journal about attorney victims of Internet scams, go to www.calbar.ca.gov, and check the California Bar Journal archives for July 2008.

Founded in 1927 by the state legislature, the State Bar of California is an administrative arm of the California Supreme Court, serving the public and seeking to improve the justice system for more than 80 years. All lawyers practicing law in California must be members of the State Bar. By May 2009, membership reached more than 222,000.

Thursday, February 26, 2009

Obama Moves to Raise Estate Tax

President Barack Obama has announced his intention to increase the estate tax:
President-elect Barack Obama and congressional leaders plan to move soon to block the estate tax from disappearing in 2010, suggesting the levy might outlive the "Death Tax Repeal" movement that has tried mightily to kill it.

The Democratic stance on the estate tax contrasts with Mr. Obama's reluctance to press forward with his campaign pledge to raise income-tax rates on top earners, which he worries could have an adverse economic impact during a recession.

But Democrats are determined to act quickly to prevent the estate tax's scheduled repeal. Elimination of the levy on big inheritances was approved by Congress under President George W. Bush in 2001, with rollbacks phased in slowly and its full elimination slated to take effect next year.

The Senate Finance Committee will move within weeks on legislation to reverse that law, and Mr. Obama is expected to detail his estate-tax preservation proposal in his budget next month, congressional tax writers said.

Under the Obama plan detailed during the campaign, the estate tax would be locked in permanently at the rate and exemption levels that took effect this year. That would exempt estates of $3.5 million -- $7 million for couples -- from any taxation. The value of estates above that would be taxed at 45%. If the tax were returned to Clinton-era levels, it would exclude $1 million from taxation with the rest taxed at 55%....
Obama Plans to Keep Estate Tax, Wall Street Journal Online, January 12, 2009

See also:

Barack Obama, Democrat for President, On Estate Taxes

Wednesday, February 4, 2009

Hilton Hotels Leaves Beverly Hills, California To Lower Its Cost of Doing Business

Hilton Hotels Corp., which last month announced it was leaving Beverly Hills, said Wednesday it had chosen Fairfax County, [Virginia], as its new corporate home.

Hilton, which wants to lower its cost of doing business .... [intends to] create more than 300 full-time jobs in Fairfax County within the next 36 months.
Hilton Selects D.C. Suburb for New Home, Los Angeles Business Journal, February 4, 2009

See also: California Scheming and Some Californians Flee State for Greener Pastures

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Friday, January 30, 2009

Study Finds Settling Lawsuits Often More Cost Effective Than Litigating Them Through Trial

A 2008 study by the Journal of Empirical Legal Studies, as reported last year in a New York Times article, Study Finds Settling Is Better Than Going to Trial, found that -
.... most of the plaintiffs who decided to pass up a settlement offer and went to trial ended up getting less money than if they had taken that offer.

"The lesson for plaintiffs is, in the vast majority of cases, they are perceiving the defendant’s offer to be half a loaf when in fact it is an entire loaf or more," said Randall L. Kiser, a co-author of the study and principal analyst at DecisionSet, a consulting firm that advises clients on litigation decisions.

Defendants made the wrong decision by proceeding to trial far less often, in 24 percent of cases, according to the study; plaintiffs were wrong in 61 percent of cases. In just 15 percent of cases, both sides were right to go to trial — meaning that the defendant paid less than the plaintiff had wanted but the plaintiff got more than the defendant had offered.

The vast majority of cases do settle — from 80 to 92 percent by some estimates, Mr. Kiser said — and there is no way to know whether either side in those cases could have done better at trial. But the findings, based on a study of 2,054 cases that went to trial from 2002 to 2005, raise provocative questions about how lawyers and clients make decisions, the quality of legal advice and lawyers' motives....

Wednesday, January 14, 2009

How to Avoid an IRS Tax Audit: Incorporate Your Small Business

One tip for Dodging a Tax Audit, per the Wall Street Journal's reporting: Incorporate. The WSJ reports that the IRS continues to target Schedule C filers for tax audits and additionally notes that the IRS will sometimes act on an anoymous tip regarding a taxpayer's non-compliance with U.S. tax law.
[T]he overall audit rate this year is likely to remain about the same as last year, says Linda Stiff, IRS deputy commissioner for services and enforcement. But officials are likely to continue their emphasis on high-income taxpayers. Your chances of getting audited are especially high if you work for yourself, file what's known as a Schedule C form for sole proprietors and deal in large amounts of cash. IRS research has shown especially large amounts of noncompliance among this group.

"Like Willie Sutton said about banks, the IRS is looking at high-income, self-employed Schedule C filers because that's where the money is," says Martin Laffer, a certified public accountant at Laffer & Gottlieb in Beverly Hills, Calif. For example, he says one of his clients being audited owns several retail stores and also is a consultant.
See also:

Time to Incorporate?
California incorporation

Monday, January 12, 2009

Some Californians Flee State for Greener Pastures

Go East, young man? Californians look for the exit, Associated Press, January 12, 2009:
The number of people leaving California for another state outstripped the number moving in from another state during the year ending on July 1, 2008. California lost a net total of 144,000 people during that period — more than any other state, according to census estimates. That is about equal to the population of Syracuse, N.Y.

The state with the next-highest net loss through migration between states was New York, which lost just over 126,000 residents.

California's loss is extremely small in a state of 38 million. And, in fact, the state's population continues to increase overall because of births and immigration, legal and illegal. But it is the fourth consecutive year that more residents decamped from California for other states than arrived here from within the U.S.

A losing streak that long hasn't happened in California since the recession of the early 1990s, when departures outstripped arrivals from other states by 362,000 in 1994 alone.

In part because of the boom in population in other Western states, California could lose a congressional seat for the first time in its history.

Why are so many looking for an exit?

Among other things: California's unemployment rate hit 8.4 percent in November, the third-highest in the nation, and it is expected to get worse. A record 236,000 foreclosures are projected for 2008, more than the prior nine years combined, according to research firm MDA DataQuick. Personal income was about flat last year.

With state government facing a $41.6 billion budget hole over 18 months, residents are bracing for higher taxes, cuts in education and postponed tax rebates....
March 2009 update:

Related: Corporate oil booms in low-tax Switzerland, Reuters, March 12, 2009 ("[A] wave of energy companies has in the last few months announced plans to move to Switzerland -- mainly for its appeal as a low-tax corporate domicile that looks relatively likely to stay out of reach of Barack Obama's tax-seeking administration.") and California Scheming: What One-Party Rule Is Doing To Once-Golden State

Thursday, January 1, 2009

California Secretary of State and FTB To Introduce LLC Suspension Program in 2009

Happy new year. And with the new year comes changes to various state and federal laws. Among others:

The new cell phone law prohibits text messaging or reading or writing emails while driving.

Covered employers will be affected by changes to the federal Family and Medical Leave Act (FMLA) and should have their employee manuals reviewed and revised accordingly. A new workplace poster is available here: 2009 FMLA poster

The definition of a disability under the Americans with Disability Act (ADA) has been broadened.

The time limits for filing a discrimination claim under the Civil Rights Act of 1964 and the Age Discrimination in Employment Act were extended.

In 2009, the California Franchise Tax Board (FTB) and Secretary of State (SOS) will be allowed to suspend limited liability companies (LLCs) that do not comply with various FTB and SOS filing and tax payment requirements. The FTB and SOS already do this for corporations, but up until now, the law had prohibited them from doing so with LLCs. This changes makes proper business entity maintenance, already crucial for ensuring maximum tax and limited liability advantages, all the more important. LLCs that are not being used should be dissolved while still in active status.

See also: 2009, Time To Incorporate?