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

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In 1993 Pennsylvania signed into law the Plain Language Consumer Contract Act (PLA). The PLA requires any "consumer contract" to meet a test of readability, meaning it is easy to read and understand, which takes into account both the contract's language, form and design. The Act covers any contract with an individual except contracts over $50,000, securities, insurance, real estate, commercial leases, and documents by financial institutions regulated by certain other state and federal laws. Notably included in the definition are residential leases. In addition to the requirement that language be easy to read and understand, the Act imposes certain other language requirements to be included in consumer contract. For example, a contract must state if the party doing business with the consumer retains a security interest, and that the consumer may lose certain property if he or she does not fulfill the obligations under the contract.

If a seller or lessor violates the PLA's test of readability, the violation triggers several damages imposed by the Act. Damages include compensation equal to actual loss suffered by the consumer, statutory damages of $100 or if the contract is less than $100 the amount of the contract, court costs, attorney's fees and "any equitable and other relief ordered by the court." 

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The Internal Revenue Service has announced a new standard mileage rate for 2011, which is generally used to estimate the costs of operating an automobile for tax purposes. The new rate, effective January 1, 2011, is 51 cents per mile, up one cent from last year. In addition, the standard mileage rate for medical or moving and medical expenses has been raised from 16.5 to 19 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 51 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 51 cents per mile on their individual tax returns.

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Christmas came a little early for many taxpayers in the enactment last week of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010(the "Act"), which extended the Bush tax cuts for two years. The Act also erased much of the uncertainty regarding the fate of the federal estate and gift taxes that we have written about.

Estates created in 2010 have not been subject to a federal estate tax. A gift tax with a rate of 35% applies to gifts made in 2010, but donors have a credit of one million dollars against the gift tax. Before the Act, in 2011 the estate tax was to be reenacted with a $1 million credit (which is shared with the credit against the gift tax and is commonly referred to as the "unified credit") and a maximum rate of 55%. The gift tax would have had the same maximum rate.   

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Recently I wrote about the expansion of the adoption tax credit for 2010. The credit was raised to $13,170.00 for 2010 and is generally available to cover qualified expenses incurred as a result of the legal adoption of a child under the age of eighteen. 

When adopting a special needs child, however, the full amount of the credit can be claimed even if there were no actual expenses. For residents of Pennsylvania, in order to claim the credit the Commonwealth must have made a determination of special needs for the child. Generally speaking, the state should make such a determination if the child:

• Is over the age of five and under the age of eighteen;
• Is a member of a minority group;
• Has a natural brother or sister in the same adoptive home;
• Has a physical, mental or emotional condition or handicap; or
• Has a genetic condition which indicates a higher risk of developing a disease or handicap.

Such circumstances tend to reduce the likelihood that a child will be adopted without some form of assistance. Hence, the adoption credit serves to subsidize the adoption of a special needs child.

A taxpayer claiming the adoption credit must file IRS Form 8839. In addition, the taxpayer must include a copy of the determination of special needs. For more information on adoption and related issues, please refer to the Pennsylvania Statewide Adoption and Permanency Network.

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Recently, I had the privilege of becoming a preferred consultant for the Nonprofit Resource Network (NRN). The mission of the NRN is to enhance the effectiveness of local nonprofit organizations in carrying out their own missions. In addition to holding a number of educational seminars and networking events in or near Lancaster County, the NRN provides hands-on counseling to help nonprofits achieve long-term financial stability. As a preferred consultant, I was given the opportunity to write an article for the new resource section of their website. I am posting the article on the Lancaster Law Blog to benefit our readers as well. I would also encourage everyone to check out the Nonprofit Resource Network website for additional information pertaining to nonprofits.

It probably goes without saying that effective leadership is an essential component to the performance of non-profit organizations. In order to successfully pursue their tax exempt purposes, it is essential for non-profits to seek out and hire quality executives to run the show.