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

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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.

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One of the most hotly-contested issues facing Judges in custody cases is whether to allow a custodial parent to relocate to another state with the children. This has become quite common, particularly as people have made and developed relationships through the internet. Relocation cases are difficult for all parties involved: the non-custodial parent is shocked and horrified at the prospect of losing regular contact with his or her children and the prospect of not being able to move to a perceived better opportunity is equally difficult for the custodial parent. Often, these cases are not able to be resolved through the custody conciliation process and they end up at a hearing before a Judge.

My practice is to remind clients involved in all custody litigation, including relocation cases, that the Judge deciding the case is a stranger making decisions about what is in the best interest of your family. He or she has no prior knowledge of your family, you and your ex-partner's history, your children's behaviors, likes and dislikes. Depending on your case, it can be helpful or can add to your burden.

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The writer of Ecclesiastes did not have tax law in mind when he said that there is a time to live and a time to die. However, because Congress did not act to extend the current federal estate tax law, the tax expires on December 31. The federal estate tax is scheduled to resurface in 2011 at a rate of 55% on estates valued at $1 million or higher.

During the time that the tax is not in effect, it will be replaced by a 15% capital gains tax on inherited property that is sold (subject to the taxpayer's right to use current values to save at least $1.3 million of assets from capital gains).

In short, there is great uncertainty regarding estate taxes which probably will not be resolved until some time next year. At that time, Congress could reauthorize the estate tax, possibly retroactive to January 1. Such a law, even though retroactive, could be constitutional.

On the other hand, perhaps this is the ideal time persons with a substantial estate should do the right thing for their families by reviewing their estate planning documents.

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The United States Department of Labor's Employee Benefits Security Administration released two new resource links on the COBRA Continuation coverage.

• Fact Sheet: COBRA Premium Reduction
• COBRA Premium Reduction Extension Provision

According to the United States Department of Labor (DOL) the FAQ and other information will be updated sometime this week. If you are interested in receiving immediate updates from the DOL, consider subscribing to their COBRA webpage. By subscribing you can receive notification when the site is updated with new information. 

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Legislation enacted by Congress and signed by President Obama on December 21, 2009, extends the ARRA COBRA premium reduction eligibility for two months, from December 31, 2009 to February 28, 2010, and increases the maximum period for receiving the subsidy to a total of 15 months instead of 9 months. 

With the new changes, the law provides that the 65% premium subsidy for COBRA continuation health benefits is available to individuals who are eligible for COBRA as a result of an involuntary termination between September 1, 2008 and February 28, 2010. The law previously required that both the involuntary termination and the eligibility for COBRA coverage occur before the last effective date of the subsidy, but now only the involuntary termination need take place on or before February 28, 2010, not the COBRA eligibility.

Last month, when we posted on the duration of the COBRA ARRA subsidy, we noted that legislation was introduced to extend the deadline for eligibility as well as the duration of the subsidy. The change enacted this month was not a result of passage of the October legislation but rather changes added to the Department of Defense 2010 Appropriations Act.

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'Tis the season to be jolly, at least that is what we are told. With the stresses that accompany last minute shopping, crowded malls, rising credit card debts and dysfunctional family members, finding that holiday jolliness can be difficult at times. To help you find that holiday joy, I have combed the web for some light-hearted legal bits related to the holiday season. And yes, you may find this hard to believe, but sometimes lawyers can actually be funny. Admittedly, it doesn't happen often, but it does indeed happen.

• "The Night Before Christmas" in legal-speak. Sadly, this piece is not that big of an exaggeration as to how lawyers write in legal documents. There's also an alternate version.
• In the same vein, here is a politically correct and legalese version of a Christmas card  and a holiday email, both from an attorney.
• Want to rock around the Christmas tree lawyer style? Then this website is for you! I'll bet these CDs just fly off the shelves. Seasons Briefings!
• Ever wondered what it would be like to see the detectives on "Law and Order" interrogate Santa? You're in luck -- here you go! I hope Santa was read his Miranda warnings or his confession may be inadmissible in court.
• Here's an amusing Christmas letter from a lawyer's son. I have a feeling this kid is going to end up with lumps of coal in his stocking.

From all of us at the Lancaster Law Blog, Merry Christmas, Happy Hanukkah and Season's Greetings!

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The Internal Revenue Service has announced a new standard mileage rate for 2010, which is generally used to estimate the costs of operating an automobile for tax purposes. The new rate, effective January 1, 2010, is 50 cents per mile, down 5 cents from last year. In addition, the standard mileage rate for medical or moving and medical expenses has been lowered to 16.5 cents per mile, and the rate for charitable purposes remains at 14 cents per mile.

While there are generally no Pennsylvania laws requiring employers to use the IRS' rate, there may be some tax advantage for doing so. The IRS will deem employers who make qualifying reimbursements up to 50 cents per mile as meeting their accounting requirements, thus no income reporting or withholding is required for those reimbursements. However, employers need to make sure that their employees have provided adequate proof that the mileage was strictly for business use. Qualifying employees who are not reimbursed for their business mileage will be able to deduct 50 cents per mile on their individual tax returns.

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Who makes your medical decision for you if you are unable? The answer to this question is even more difficult if the decision involves the removal of ventilators, feeding and water tubes. In these situations, friends and family of the patient have become engaged in bitter disputes over (1) who gets to make those decisions and (2) what your wishes regarding treatment would have been? 

A valid Living Will answers both of those question. Living Wills are governed by Act 169 of 2006 (the "Act"), where they generally become effective when the subject of the living will is deemed to be in an "End-Stage Medical Condition". The Act goes on to describe such a condition as an ". . . incurable and irreversible medical condition . . . that will . . . in the opinion of the attending physician to a reasonable degree of medical certainty result in death, despite the introduction or continuation of medical treatment." Examples include brain-death, irreversible comas or other vegetative states where there are no curative treatments to make you better, but only palliative treatments (such as ventilators and feeding tubes) that prolong the process of dying but have no curative properties. With a valid Living Will, you have already declared what your wishes are regarding treatment and named who should carry out your wishes.

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In a previous post, the 2009 Homebuyer Credit Extension and Related Divorce Issues, and in a more recent post, I discussed a possible extension of the First-Time Homebuyer Tax Credit, which was applicable only to home purchases completed on or before November 30, 2009. Well, congress has indeed extended the credit into next year and also made it available to certain taxpayers who already own a home.

For first time homebuyers, the credit is now applicable if the sales contract is fully executed by April 30, 2010 and the closing occurs by June 30, 2010. Moreover those dates are extended to April 30, 2011 and June 30, 2011 respectively for qualifying members of the military serving extended duty outside of the country. You are generally a qualified first-time homebuyer if you have not owned and used another personal residence at any time during the three years prior to the date of the new purchase.

The credit remains to be valued at the lesser of 10% of the purchase price or $8,000 and can be part of your refund if you owe less than $8000 in taxes. There are also phase-outs of the credit for taxpayers with certain adjusted gross incomes (over $125,000 for singles and $225,000 for married couples), but those are significant increases of the original income caps. Further, the credit is not available when a home purchase price exceeds $800,000. For more information on the mechanics of the original credit, please refer to this previous post and the other posts mentioned above.

A reduced amount of the credit (up to $6,500) is also now available to certain existing homeowners who have lived in their current home for five out of the last eight years. The same deadlines, income caps and purchase price limitations discussed above apply. Moreover, although your new home must be your principal residence, there is nothing in the new legislation requiring you to sell your existing home.

Thus, if you are even thinking of purchasing a new home, it may be a good idea to check out your local market because April will be here before you know it.

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We have posted on the 65% COBRA subsidy several times since the American Recovery and Reinvestment Act (ARRA) was enacted.  ARRA provided for a premium subsidy for COBRA continuation health benefits to "assistance eligible individuals."  Those individuals are defined as an employee or member of his/her family who is eligible for COBRA continuation coverage:

1)      at any time between September 1, 2008 and December 31, 2009

2)      elects COBRA coverage, and

3)      is eligible for COBRA as a result of an involuntary termination between September 1, 2008 and December 31, 2009. 

Some changes may be effected if the Extended COBRA Continuation Protection Act of 2009, H.R. 3930, introduced in the House of Representatives on October 26, 2009 and referred to Committees on Education and Labor, Energy and Commerce, and Ways and Means, is enacted.   

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CNN is reporting that the Senate will likely extend the credit through April of 2010.  In addition, they are also planning on adding a $6,500 credit for current homeowners who have lived in their current residence for at least five continuous years.  If you are interested in learning more about the  first time home-buyer tax credit refer to my previous blog posts 2009 First-Time Homebuyer Tax Credit and 2009 Home Buyer Credit Extension and Related Divorce Issues.

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Many of you may remember that back in 2001, Congress enacted legislation that was supposed to have repealed the Federal Estate Tax (the "FET"). However, anyone familiar with the Tax Reconciliation Act of 2001 (the "Act") knows differently.

In general, estates are only subject to FET if they exceed the Applicable Exclusion Amount (the "Exclusion"). Instead of permanently repealing the FET, the Act gradually increased the Exclusion from $1 million in 2002 to $3.5 million in 2009. In addition, the maximum FET rate was lowered from 50% to 45% over the same period. The Act is then scheduled to repeal the FET, but only for 2010. Starting in 2011, the FET reverts to pre-2001 levels with a $1 million Exclusion and a maximum rate of 55%.

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In a previous blog post, I addressed how in cases of driving under the influence, the blood alcohol content ("BAC") of the offender affects the severity of the sentences. Clearly, obtaining an accurate measurement of BAC is very important to law enforcement officials. As a result, after someone is arrested for DUI and transported to a hospital or police station, breathalyzer or blood tests are administered to specifically determine the suspect's BAC. Over the years many people have asked me if they can simply refuse to submit to those tests. Surprisingly, you can in fact refuse to take such a test. However, if you do, your driver's license will be suspended for at least one year and you will subject yourself to further possible disadvantages.

The suspension arises from the so-called "Implied Consent" law, which is found in section 1543 of the Pennsylvania Motor Vehicle Code, . Generally, section 1543 states that anyone who ". . . drives. . . a vehicle in this Commonwealth shall be deemed to have given consent to one or more chemical tests of breath, blood or urine for the purpose of determining [BAC] . . . if a police officer has reasonable grounds to believe the person . . ." is under the influence of alcohol or a controlled substance. More simply stated, in the eyes of the law, anyone driving a vehicle in Pennsylvania has already implicitly consented to BAC testing. Refusals to submit to BAC tests will result in a license suspension of at least one year. Moreover, such suspension will be in addition to any suspension that arises from the DUI charges themselves if a conviction occurs.

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On September 29, 2009, Matt Grosh and I served as faculty members at a training session for Certified New Home Sales Professionals, which was held at the Lancaster County Association of Realtors. The three-day training was focused on marketing and selling new construction and offered continuing education credits to real estate agents with varied levels of experience.

The focus of my presentation was on the Fair Housing Act of 1968 and 1988 (FHA) and its effect on the marketing, advertisement and sale of new homes. The FHA provides for equal treatment of protected classes and individuals regardless of their race, religion or national origin. Matt Grosh focused his presentation on contract law and the effect of contract principles on agreements for the sale of real estate.

The seminar gave the participants an opportunity to discuss the methods by which they advertise and market their homes and how they avoid issues that could cause concern for disparate treatment in home sales. There were a number of questions regarding how to market properties without running afoul of the federal and state fair housing statutes. The discussion generated during the question and answer period was additionally informative and productive. There were approximately 25 real estate agents in attendance, many of whom are also members of the Building Industry Association of Lancaster County.

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Many of you have received marketing materials from contractors of various types encouraging you to take advantage of recent changes to the rules regarding residential energy tax credits.   This opportunity to make your home more energy efficient and save money on taxes was created by the American Recovery and Reinvestment Act of 2009 (the "Act"). 

The tax savings arise out of revisions to two separate credits. The first is known as the Credit for Non-Business Energy Property, which was not available for the 2008 tax year. It allows taxpayers to claim a credit equal to 30% (up from 10% prior to the Act) of the cost of qualified energy-efficient improvements made to their residences in 2009 and 2010. Qualifying property can include such items as high efficiency heat pumps, air conditioners, water heaters, windows, doors, insulation materials and certain roofs. For a more precise list of qualified improvements, please see the Energy Star website.    Originally, there was a lifetime cap of only $500.00 for this credit. However the Act made two significant changes to the cap: 1) the maximum amount was raised to $1,500.00; 2) the cap is now only applicable to the 2009-2010 tax years combined and not to a taxpayer's lifetime.

The other credit is the Residential Energy Efficient Property Credit. This credit is equal to 30% of the cost of residential energy efficient property placed in service before January 2017. Examples of such property improvements include solar electric and water heating systems, small wind energy systems and geothermal heat pumps. Again, a more specific list of qualified energy systems can be found on the Energy Star website. This credit has already been extended through 2016, and applies to vacation homes in addition to principal residences. Previously, credits for solar, wind and heat systems were capped at $2,000.00, $4,000.00 and $2,000.00 respectively. However, the Act removed those caps entirely, providing the potential for substantial tax saving for environmentally conscious taxpayers.

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Back in July I wrote about the first-time homebuyer tax credit that applies to home sales occurring before December 1, 2009. However, there is some great news for prospective homeowners unable to squeeze in a purchase in that timeframe: Reuters is reporting that the credit may be extended for another six months. With bipartisan support in Congress and recent hints that President Obama will back such an extension, the amendment is likely to pass.

Also, we have received queries from readers regarding the effects of divorce on the credit. A common occurrence in divorces is that an ex-spouse's name continues to remain on a deed while he or she no longer lives in the residence. As long as the ex-spouse has not lived in the house at all over the past three years, and as long as the divorce was finalized three or more years ago, the ex-spouse will qualify as a first-time homebuyer because the house is not his or her primary residence. Of course, this assumes that the ex-spouse does not reside in other real property that he or she owns.

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Tax-exempt and nonprofit organizations can now find a marketing opportunity in an unusual place, their tax return. It's no secret that people generally hate filling out tax returns almost as much as they hate paying their actual taxes (click here to see an amusing letter sent to the IRS by a disgruntled taxpayer). So it may come as a surprise to many tax-exempt and nonprofit organizations that they can use their well prepared tax returns for an important purpose - fundraising.

Many donors use the website GuideStar.org to access the most recent Form 990, which are the annual tax returns filed by tax-exempt organizations. This can help guide donors in assessing organizations for charitable contributions. Recently the IRS has changed Form 990 enabling it to serve as a powerful public relations tool.

For example, in Part I, Line 1, the preparer is directed to,"[b]riefly describe the organization's mission or most significant activities". This gives the preparer a great opportunity to use positive, inspirational and persuasive language to sell the organization to potential donors. Also, this portion of the tax return will likely be the first entry a potential donor may read, thus it's important to utilize this properly to promote your organization's mission. The usual droll prose used to fill out most tax returns should be avoided and, because it is a tax return, don't stretch the truth.

In Part III, Line 4 the preparer must describe how the organization's three largest programs serves its tax exempt purpose. This is another great opportunity to describe and promote exactly how the organization fulfills its mission. The description of programs should be in depth and as specific as possible. Consider answering these questions when filling out Part III, Line 4:

• Who was helped? 
• How many people were helped? 
• How many volunteers were used? 
• How much money was raised and disbursed? 
• Are there any statistical results? 

Give the potential donor confidence that his money will be well used.

Also note that in Part X, Line 1, it asks for the amount of money an organization is keeping as cash in a non-interest-bearing account. If this entry reflects a large sum of money, it gives potential donors the impression that the organization is merely sitting on the money it receives instead of using it to fulfill its mission. As a practical matter, it's best to structure the organization's finances so that little or no money should appear in this portion of the tax return.