Online Notary Public Alert

California's Secretary of State has issued an alert regarding online notary services, purporting to provide notarization for California residents over the Internet using a webcam. A webcam is not a permissible substitute for appearing before a notary in person (or having the notary travel to you, if you are not mobile). Notary license may be checked online here. The full text of the alert follows:

Online webcam notarization is invalid and illegal in the State of California.

A private company claims to have the first online notarization website and has sent misleading information and made false claims to California notaries public concerning a new online notarization service. The web-based platform purports to allow a person to submit copies of identification over the Internet and to use a webcam in lieu of a personal appearance in front of a notary public. Appearance via webcam does not meet the requirements for notarization in California.

California notaries public are authorized under current law to perform electronic notarizations as long as all the requirements for a traditional paper-based notarial act are met, including the use of a seal for all but two specific documents used in real estate transactions. California law requires a person to appear personally before a notary public to obtain notarial acts like acknowledgments or jurats. This means the party must be physically present before the notary public. A video image or other form of non-physical representation is not a personal appearance in front of a notary public under current state or federal laws. The technology solution offered by this private company does not comply with California law.

2011 EDD Employer Payroll Tax Changes

The EDD has announced additional online services for small business, as well as highlighting other 2011 payroll tax changes.

IRS targets S corporation tax savings

The Wall Street Journal reports on a recent court case, David E. Watson P.C. v. U.S., in which the IRS took on an accountant-taxpayer for not paying himself enough salary as an employee of the subchapter S corporation he co-owned:

For Sub-S owners, this issue isn't going away. Last year it even turned up in legislation, when the House passed a provision that would have subjected all profits of shareholder/employees of personal-service firms—such as accounting, law and consulting firms—to payroll taxes. The measure died in the Senate, but the IRS would likely welcome its return. Cases like Mr. Watson's are expensive for the agency to litigate because each turns on individual circumstances.

Recent IRS statistics suggest why the agency might focus on Sub-S pay. Over the past decade and a half, when executive paychecks exploded, the salaries of Sub-S owners declined as a percentage of total income, from 52% in 1995 to 39% in 2007, according to the latest data available. (The remaining income is taxable to the owners as well, but doesn't incur payroll taxes.) During the same 12-year period, Sub-S income doubled, while salaries increased only 26%. The average pay for a Sub-S owner was recently was $38,400, according to Martin Sullivan, an expert with Tax Analysts, a nonprofit publisher near Washington.

Tom Ochsenschlager, former head of tax for the American Institute of CPAs, says pay and payroll tax issues are a frequent source of friction with clients: "Sometimes you have to take them to the woodshed and say, 'You need to report more income as pay for personal services."'

What is a fair ratio of profits to pay? There isn't one answer, experts say. A company with substantial capital or assets, such as a manufacturer, often is able to justify lower pay than one selling personal services like a law or accounting firm. Says Mr. Willens: "I would tell a client that for personal services, 70% would be the absolute floor and might not get the job done," he says.

Read more about S corporation tax savings.

Social Security Payroll Tax Holiday 2011

For 2011 only, there is a minor payroll tax holiday, where the employee half of Social Security tax will be paid out of the U.S. federal government's general fund, instead of deducted from employees' paychecks. This is part of the overall tax compromise bill, which Congress passed, extending the Bush tax cuts for two years, as well as adding this tax cut.

Employees will pay 4.2% of their wage earnings up to the $106,800 cap, instead of the normal 6.2% rate. Employers still pay their full half (6.2%). The self-employed, who normally pay both halves of the Social Security tax through the self-employment tax, will pay a combined rate of 10.4% (the employer's 6.2%, plus the employee's 4.2% rates).

To a minor extent, this limited payroll tax holiday - which is designed to spur consumer spending - will ameliorate some of the benefits of S corporation payroll tax savings.

LegalZoom.com Accused of Unauthorized Practice of Law and Privacy Violations

Legal Zoom (legalzoom.com) is accused of the unauthorized practice of law, as well as disclosing to third parties customers' private information:

LegalZoom and Washington State Reach Agreement Over Unauthorized Practice of Law, IP Watchdog

[T]he most egregious charge leveled against LegalZoom is that they sold, transfered or otherwise disclosed consumer information to third parties. So not only was LegalZoom offering to provide legal services to individuals without a legal license but they seem to have been collecting private information and giving away sensitive, personally identifying information such as financial information, information relating to real or personal property and information relating to family relationships. This screams for further investigation by other State Attorneys General and the United States Patent and Trademark Office. Not only does LegalZoom’s advertising lull unsuspecting consumers to believe they are being represented, but what LegalZoom learns during such representation is given away to third parties? If an attorney did that they would lose their license.

New California Employer Workplace Poster and Pamphlet

Effective October 8, 2010, two new regulations impacting California employers go into effect:

1. All employers must post the new Notice to Employees, Injuries Caused by Work

2. Each new employee who begins work must be provided with the new Worker's Compensation Pamphlet, available here.

For more on employer workplace posters or to retain an employment attorney to advise and counsel you on California or Nevada business law issues, please click here.

Debt Collection Scam Phone Number 760-284-1423

Please note that if you have received a call from an alleged paralegal or other person claiming to work at, with, or from the Law Office of Jonas M. Grant, and demanding the payment of an alleged debt, and threatening "prosecution" or anything else if payment isn't made, note that these calls are not originating from this office, which does not practice consumer debt collection law and does not employ paralegals or others to make calls on behalf of debt collection agencies or creditors.

Calls have been reported to originate from 760-284-1423, an area code in which this law office does maintain an office, employees, attorneys, paralegals. Nor does this office have or use any 760 area code telephone. Note that the number displayed on the caller ID may be spoofed, and therefore the owner(s) of this telephone number may or may not be involved in this scam.

Furthermore, the United States abolished debtor's prisons more than a century ago; all collections and debtor-creditor matters are civil in nature, there is no jail time or criminal prosecution for failing to pay a debt (unless there's also fraud or other criminal activity involved).

Please do not cooperate with these individuals, and report to them to appropriate authorities. If you have any additional information about their whereabouts or identity, or aren't sure if a call is originating from this office, please contact the office.

Here's what others have reported about the nature of calls from this number. In sum, it's always a scam, but the scam and the alleged name of the caller varies from call to call.