Lancaster Law Blog : Lancaster PA Lawyer & Attorney : Russell Krafft & Gruber Law Firm : Pennsylvania : Lancaster's Legal Link

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A while back, I wrote an article called FACTA Guidelines for Disposing Client Information. This article discussed how the Fair and Accurate Credit Transactions Act of 2003 (FACTA) requires businesses to dispose of records and documents containing consumer information. Since then, some of my business clients have asked for clarification on issues relating to customer credit card information.

It doesn't seem that long ago that, when paying with a credit card, your card was placed in an awkward contraption that imprinted your card information onto several receipts. Many of you will also remember ripping out the carbon paper or having the clerk call an 800 number to authorize the transaction. These days, with internet shopping and machines that instantly authorize cards, it is much more difficult to stay on top of who has the ability to track your credit card information. FACTA is a response to that uncertainty.

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On July 13, 2010, I will again be serving as a faculty member for the Seminar “Landlord Tenant Law; Beyond the Basics”, which will be held in Harrisburg. This is the second year that I have served on the faculty and I am looking forward to interacting with my colleagues and other professionals who handle landlord and tenant problems on a regular basis.

This seminar presents an opportunity to update lawyers, property managers and other real estate professionals about the status of landlord/tenant issues and any recent changes to the law. Last year, it provided every participant with an opportunity to ask questions and discuss particular issues that they encounter in their everyday dealings with tenants and landlords. If you are interested in attending this seminar you can register at the Sterling Education website.

It is my hope and expectation that this year's seminar will be as successful and productive as last year and I am looking forward to it.

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Meeting with a lawyer for the first time about a divorce can be overwhelming for a number of reasons. Obviously, clients most likely are experiencing emotional trauma over the loss of their relationship and uncertainty about their future. Navigating the legal intricacies of the divorce process adds yet another element of uncertainty to the situation. For a client who is unfamiliar with the legal process, learning about options and discussing ways in which to proceed during the most stressful  time of their life can be confusing. However, it is a critical meeting — one at which the lawyer can assess the client's situation and priorities, and one at which the client can become comfortable with the lawyer.

Clients often have no idea what to expect from the initial consultation. At the very least, I believe that the client should leave my office that day knowing that he or she has choices, that there is no "one size fits all" method for divorcing, and that I have some understanding of the issues their case will present. In developing an understanding of the issues, it is necessary to have information about the nature of the parties’ marital estate, including their assets and liabilities. It is particularly helpful if clients bring along the following documents when they meet with me for the first time to discuss their divorce:

• Copies of their most recent Federal Income Tax Return, including W-2s, 1099s and schedules.
• Copies of recent paystubs.
• A copy of all recent mortgage and/or home equity loan statements, for all properties owned; if a home is in foreclosure, a copy of the most recent Act 91 Notice.
• Recent statements for all investment and retirement accounts, including 401(k)s, IRAs and pensions.
• Recent bank account statements.
• Annual income statements from the Social Security Administration.
• Information regarding the value of any business interests.
• Documentation of loan balances, credit card debts or outstanding medical bills 

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Since April 26 of this year, the Pennsylvania Department of Revenue ("PADOR") has been granting amnesty to anyone who pays their delinquent state taxes. Such amnesty was authorized by the Pennsylvania Legislature through Act 48 of 2009 in an attempt to raise sagging state revenues. Through the tax amnesty program, the PADOR is waiving all of the penalties and half of the interest accrued on those delinquent taxes. However, unless it is extended, the amnesty period will end on June 18.

The amnesty generally applies not only to individuals, but businesses, estates and any other tax-paying entities owing delinquent state taxes as of June 30, 2009. Applications for amnesty can only be made on-line, as no paper applications are available. However, payments can be made through a variety of methods, including electronic funds transfer, credit/debit card, check or money order. Cash is accepted, but only if delivered in person to the Department of Revenue’s Harrisburg District office which is located in the lobby of Strawberry Square. Once an application is submitted, a payer may make multiple payments during the tax amnesty period in lieu of one lump sum payment. For more information, please see the Pennsylvania Department of Revenue’s Tax Amnesty homepage.

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We would like to pass along a reminder from our friends at the Pennsylvania Association of Nonprofit Organizations: annual tax returns for tax-exempt organizations (IRS Form 990) are due on May 17.  The annual returns are usually due on March 15, but that date falls on a Saturday this year, so the IRS extended the deadline to the next business day.  While not all nonprofit organizations are required to file, an organization can lose its tax-exempt status if it is required to file and fails to timely do so.  If you are unsure whether your nonprofit organization is required to file, please visit http://nccsdataweb.urban.org/PubApps/990search.php and enter the appropriate information.  To find out which 990 form your organization is required to file please visit http://www.irs.gov/charities/article/0,,id=217087,00.html.

As I discussed in a previous blog post, remember that Form 990 can be a useful fundraising tool. 

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In the past we have written about the penalties and suspensions imposed on standard driver's license holders caused by a DUI conviction, entrance into the ARD program and refusals to submit to blood tests to determine blood alcohol content. This post will address the impact of those events on a Commercial Driver's License ("CDL").

In Pennsylvania, a CDL is required for a driver to operate a commercial motor vehicle. Such vehicles typically include most buses, big-rig trucks and HAZMAT vehicles. There are several classes of CDLs that vary depending on the specific type of commercial vehicle that is going to be driven.

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Most divorce cases require the use of outside experts to assist with the valuation of marital assets, including real estate, retirement accounts or a family business. The collaborative process is not any different in that those values still need to be obtained in order to negotiate an appropriate settlement that takes into account the needs and goals of both parties. However, a collaborative divorce will likely include just one financial expert to provide a neutral valuation of an asset, rather than a "battle of the experts". In the litigation model, it is not unusual for both parties to obtain their own property appraisals from their own paid expert, requiring both parties to dedicate much-needed resources to obtain a valuation. 

In the collaborative model, one expert can be retained, who will provide a neutral valuation. The use of a collaboratively-trained financial specialist in a collaborative case can also be helpful. Such a financial specialist can provide a financial analysis of the marital estate, evaluate the tax consequences of certain dispositions, develop current and future cash flow analysis, and illustrate long-term financial projections for both parties. Ideally, the financial specialist will model alternatives for dividing assets to ensure financial security for both parties. The financial specialist may also be able to assist with providing clients creative solutions to enhance the total value of their assets available to both. 

This "team approach" to the divorce process helps each party to make fully-informed and carefully considered settlement decisions.  It also allows the parties to have greater control over what their futures will look like after their divorce is final.

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The 65% COBRA Federal Premium Assistance has been extended once again. The last extension covered involuntary terminations through March 31, 2010. On April 15 the President signed H.R. 4851 extending several government programs including unemployment benefits. The COBRA subsidy will now cover qualified individuals who are involuntarily terminated on or before May 31, 2010.

The U.S. Department of Labor has updated its Fact Sheet on the COBRA Premium Reduction. There is also additional information regarding eligibility of terminations from March 2, 2010 through May 31, 2010 which followed a reduction in hours: 

•   March 2, 2010 through May 31, 2010 if:

o        the involuntary termination follows a qualifying event that was a reduction of hours; and

o        the reduction of hours occurred at any time from September 1, 2008 through May 31, 2010 (a reduction of hours is a qualifying event when the employee and his/her family lose coverage because the employee, though still employed, is no longer working enough hours to satisfy the group health plan’s eligibility requirements).  

COBRA premium assistance continues to be limited to 15 months as provided in the first extension and ends upon eligibility for other coverage. For additional information you may want to check out another page on the DOL’s website that includes video messages and other FAQs.

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A few weeks ago I wrote about protecting the tax-exempt status of your nonprofit organization. As promised therein, this post covers intermediate sanctions; however, before I broach that topic, I wanted to pass along a quick tax note.

Earlier this month, President Obama signed the Hiring to Restore Employment Act (or the HIRE Act). One key provision allows most nonprofit and some for-profit organizations to keep their share of the 6.2% payroll tax on certain new hires of certain individuals for the rest of 2010. The new hire must NOT: (1) have worked more than 40 hours in the previous 60 days; (2) replace an existing employee (unless the former employee left voluntarily or for cause); and (3) be related to owners or managers of the hiring organization. Additionally, if the employer is a nonprofit, the new employee must perform work that furthers the employer's tax-exempt purpose. The Act also includes other provisions such as a new hire retention credit.  Please check the IRS website for additional details if you think your organization or business could benefit from the HIRE Act. 

Now, back to the subject at hand. The sanctions are called "intermediate" because they generally don't threaten the tax-exempt status of a nonprofit. They were developed because the IRS wanted a system more flexible than the all-or-nothing decision to revoke or not revoke tax-exempt status of questionable organizations. 

Essentially, intermediate sanctions penalize "disqualified persons" from entering into "excess benefit transactions" with tax-exempt organizations. The Internal Revenue Code defines a "disqualified person" as someone who was in a position to exercise substantial influence over the dealings of the organization at any time during the five year period ending on the date of the transaction in question. These are generally the directors, officers, key employees, founders, substantial contributors and employees with compensation based on revenue. Family members of "disqualified persons" also tend to be deemed "disqualified". 

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Recently, WITF aired a three part series on adoption which highlighted how important permanency is for children, particularly those children who are often perceived to be unadoptable because of their age, physical disabilities or mental health issues. I have had the pleasure of working with many families during the last 12 years that have adopted children regardless of any challenges the children may face. These families simply opened their heart to a child in need and never looked back. 

In the last several years I have become more involved in contested adoptions. While I have always handled contested adoptions, I have come to realize that the legal risk to adopting families is not always clear when a child is placed.

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Russell, Krafft & Gruber is proud to be exhibiting at the Pennsylvania Association of Nonprofit Organizations (PANO) Annual Conference held on April 6, 2010. This event features keynote speaker Robert Egger of the DC Central Kitchen and 9 educational workshops. The workshop topics include:

• Using Technology to Move Your Mission Forward
• Partnering with Corporations: Five Strategies to Increase Sponsorship Income
• Nonprofit Advocacy Engagement: Now Is the Time for Community Benefit Organizations to Step Up
• Emerging Trends in Health Insurance for Employers
• A Look at Nonprofit Collaboration and Shared Services
• Make Your Teams All They Can Be and Much More
• Jumping In With Both Toes... How To Immerse Your Organization in Social Media Without Drowning
• "To Merge or Not to Merge?"
• The Pollyanna Principles: A New and Revolutionary Way to Approach (and Enhance!) "Nonprofit" Governance!

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The Hospice of Lancaster County, along with other national, state and community organizations, is leading a new effort to publicize the importance of advance healthcare directives resulting in the formal designation of April 16, 2010 as National Healthcare Decisions Day.

How can you celebrate that day? As a participating organization, Hospice of Lancaster County will be working to educate the Lancaster County community about the importance of advance directives. They will use their Five Wishes, a document that helps people making a living will to express their preferences about end-of-life decision making in a variety of areas. The Five Wishes document will be available in various public libraries throughout the county, as well as at health fairs and expositions.

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When I became an attorney, I never imagined that I would actually look for ways to help clients stay out of the courtroom. After all, one of the reasons the legal profession interested me was that I could argue and advocate for clients in court (an '80s child, I admittedly watched too much L.A. Law).

At any rate, since I entered private practice nearly 9 years ago, I have met with hundreds of people about their options for divorcing. It's not uncommon for someone to come in to my office for an initial consultation and tell me that they would like to divorce and resolve related issues like custody, child support and spousal support without going to court. Even with the best legal representation, litigation can be an uncertain and frightening experience. It's simply not the right choice for everyone or every family. I wanted to be able to provide an option to those clients who are weary of litigation and believe they can work out a solution without the need for court intervention. For that reason, I recently became trained to practice the collaborative method, or what's familiarly called "Collaborative Law".

The hallmark of a collaborative case is a Participation Agreement, which is a written agreement where both parties commit to resolve the matter outside of court. Each client has his or her own attorney to help them through the process, providing advice about options and creative solutions for moving forward. If necessary, a financial expert and family specialist (often a psychologist) will help the family work through asset valuation or custody issues. The goal of the collaborative model is to reduce the conflict within a family so that at the conclusion of the divorce, the parties can move on with their lives without some of the emotional and financial harm that can sometimes occur during the traditional litigation model.

To date, Collaborative Law is still a relatively new option for Lancaster County residents to pursue. It is my hope that by educating clients and other professionals including, attorneys, financial experts and family therapists, Collaborative Law will offer an additional option clients can utilize to reach constructive agreements about the dissolution of their marriage.

In the next few weeks I will be posting additional articles covering Collaborative Law in more detail.

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The COBRA subsidy, originally outlined in the American Recovery and Reinvestment Act (ARRA) and subsequently extended, covered involuntary terminations through February 28, 2010. Without another extension, employees involuntarily terminated beginning March 1 would not have been eligible to receive this COBRA premium assistance. 

Congress had been attempting to push back the extension one more month, but that bill was blocked by Senator Jim Bunning. However, Bunning yielded last Tuesday and the extension has now been officially pushed back until March 31, 2010. This will allow qualified individuals who are involuntarily terminated before that date to reduce their health plan costs by 65% through the subsidy. A bill called the American Workers, State and Business Relief Act of 2010 includes a provision to extend the subsidy through year-end. We will continue to monitor this ever-changing situation, so please be sure to check back.  In the meantime, for additional information, check the recently updated Fact Sheet posted by the United States Department of Labor.

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Allowing a nonprofit organization to be tax exempt provides an incredible advantage by leaving the organization with more resources to accomplish its mission, especially with charitable organizations. However, the tax-exempt status can be taken away if the organization breaks the rules. Thus, it is important for the directors, officers and employees of tax-exempt organizations to know about those rules and how they interact.

One such rule is known as the "prohibition on private inurement", which states that an organization is not operated exclusively for tax-exempt purposes if its net earnings inure, in whole or in part, to the benefit of private individuals. Okay, that is admittedly dry and probably raises more questions than it answers, but the prohibition is basically meant to prevent money or other assets of the organization from going to an individual that is not in one of the charitable classes the organization is meant to benefit (otherwise known as the "public beneficiaries"). The obvious examples are directors who grossly overpay themselves or divert funds for their private use. Inurement also occurs when a private individual benefits from any transaction with the organization that does not reflect fair market value and current economic conditions.

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We have had a number of inquiries and comments on our blog post regarding Act 4, the amendment to Pennsylvania's insurance company law relating to health insurance coverage for adult children up through and including age 29. Prior to Act 4, if an employer offered dependent coverage, insurance companies were only required to provide coverage to children on their parents' insurance until the age of 19. The Pennsylvania Insurance Department estimates that almost 40% of those who were uninsured in Pennsylvania are between the ages of 19 and 29. 

A key phrase of Act 4 provides that the insurer's obligation to provide coverage to a child of an insured employee beyond a specified age, up through and including the age of 29, is "at the option of the policyholder", meaning the employer.   Also, coverage would be provided at the insured employee's expense. Employees may wonder why an employer would not choose to provide this coverage and what the value is of legislation mandating insurers to offer coverage while giving employers the ability to opt out. In addition, if an employer is self-insured, Act 4 does not make any change in what coverage must be offered because it applies only to insurers.

While insurers may appreciate the opportunity to provide coverage to the group of young adults who are underserved, employers are not likely to be as supportive. It has been projected that the mandate would increase employees' contributions to their group health insurance, since insurance laws require additional costs to be spread among all employees, and not just those with adult children. This may result in overall health insurance premiums rising for employers and all employees. In addition, this effect could result in more employers becoming self insured to avoid legal mandates such as extended adult child coverage or Pennsylvania mini COBRA application requiring COBRA coverage for employers employing fewer than 20 employees.

You can visit the Pennsylvania Insurance Department's website for additional information regarding Act 4.

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The Pennsylvania Supreme Court has recently issued the updates to the Pennsylvania Support Rules and Guidelines, which go into effect on May 12, 2010. The Pennsylvania Support Rules and Guidelines are required to be updated every four years and many times involve only an update to the child support schedule with little or no substantive changes to the rules. This year, however, there are a number of significant changes and in some instances, may have a major effect on the calculation of child or spousal support. Below are some of the more significant changes to the 2010 Amendments to the Pennsylvania Support Guidelines:

1.      The first and potentially most significant change is in the application of the support guidelines to circumstances where the monthly household income is in excess of $20,000. Previously, the child support schedule ended at a combined adjusted net income for the parties at $20,000. The new schedule includes a combined adjusted net income of up to $30,000. Therefore, the basic child support schedule can be used where the parties' income is up to or equal to $30,000 per month. This should provide some much needed uniformity in calculating support for parties who have a substantial monthly income up to $30,000.

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The tragic events recently suffered in Haiti have spurred millions of dollars in donations from American taxpayers to relief agencies devoted to helping earthquake victims. Through special legislation enacted on January 22, 2010, those taxpayers will generally be able to claim those deductions on their 2009 returns. It is hoped that the immediate benefit will spur even more current donations.

However, there are some limitations. 

• First, because donations to qualified charities are considered itemized deductions, the new provision will be unavailable to taxpayers who utilize the standard deduction. 
• Second, qualifying contributions are limited to cash and do not include property donations.  Qualifying  cash contributions can be made by text message, check, credit card or debit card. 
• Third, to qualify, donations must be made specifically for the relief of victims in areas affected by the January 12, 2010 earthquake in Haiti, and they must be made after January 11, 2010 and before March 1, 2010. 
• Fourth, the donations must be made to bona fide, qualified charities. The IRS maintains a database of such charities, but many churches and government agencies qualify even though they are not listed. 
• Please also note that donations to foreign organizations are generally not deductible. 

Finally, it is also important to keep a record of your donation. For donations by text message, the phone bill will suffice as long as the name of the charitable organization is listed.

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Much has been written about the physical dangers of driving under the influence. Additionally, in previous blog posts we have discussed the legal penalties DUI charges can bring, such as jail time, expensive fines and lengthy drivers license suspensions. As if you needed another reason to be wary, I've got one for you: stiff penalties for driving while your license is suspended. 

Section 1543(b) of the Pennsylvania Motor Vehicle Code states that if the drivers license of a person driving a motor vehicle has been suspended as a result of DUI or DUI related charges (more on this later), such driver shall be fined $500 and serve at least 60 days in jail upon conviction. However, if that driver has a blood alcohol content ("BAC") of .02% (much lower than the standard DUI BAC threshold of .08%) then the penalties are increased to a $1000 fine and a minimum of 90 days in jail. Repeat offenses of the .02% BAC rule will lead to significant increases in fines and jail time. 

Moreover, there are a few wrinkles in the law that make section 1543(b) applicable in more situations than you might think. First, section 1543(b) applies to license suspensions arising from acceptance into ARD, convictions of driving under the influence of a controlled substance, and refusals of breathalyzer and other BAC tests.