KYZ Law, P.C.
formerly Mogilevsky Law Firm, P.A.
How Not to Hide Assets Offshore
If you ever thought that using an offshore corporation was a good way to hide assets offshore take a lesson from this IRS Chief Counsel Advice (CCA20114034).
The first test on disclosure of the ownership of a foreign corporation is the 50% test. This is not a test you want to fail. A U.S. taxpayer must report the ownership of a foreign corporation if the taxpayer owns more than 50% of the total value or total combined voting power of the corporation. This test is applied under the CCA to mean ownership in substance, not just form.
In the examples cited in the CCA the taxpayer attempted to avoid disclosure by having a third party hold title to enough shares so that when calculated the taxpayer owned less than 50%. The CCA concluded that the taxpayer had effective control of the share such that the third party held shares should have been counted as part of the taxpayer’s shares and when included the taxpayer held more than 50% of the combined voting power. The result is that the taxpayer was found to have not filed a timely Controlled Foreign Corporation information return (Form 5471) and therefore was subject to the following penalty regime. First, as set forth in §6501, the statute of limitations on assessment and collection (audit) does begin until the unfiled Forms 5471 are filed. Second, the penalty of 40% for understatement of income tax liability was assessable under §6038. The CCA did not indicate if the taxpayer was also subject to penalties for failure to timely file a Foreign Bank Account Report. The failure to file an FBAR has both civil and criminal penalties which can be assessed.
The CCA clearly demonstrates that the IRS is looking at offshore asset disclosure quite carefully and the failure to report a Controlled Foreign Corporation is not a prudent part of asset protection.
Published by Law Offices of Sanford I. Millar on LinkedIn.
IRS And New Off-Shore Voluntary Disclosure Program
IRS May Be Close to Implementing
New Off-Shore Voluntary Disclosure Program
It has been widely reported in the press and informally announced at the American Bar Association Section of Taxation Meeting in Boca Raton, Florida on January 21, 2011, that the Internal Revenue Service (“IRS”) will soon reveal the details of a new offshore voluntary disclosure program (“new VDP”). It is anticipated that the new VDP will be similar in many respects to the voluntary disclosure program that ended on October 15, 2009 (“old VDP”).
Under the new VDP, participants with undisclosed foreign accounts or unreported foreign income may be able to avoid criminal prosecution and limit their potential exposure to civil penalties by making a voluntary disclosure of such undisclosed accounts or unreported income to the IRS. It is anticipated that such persons generally will be required to (i) file delinquent foreign bank account reports (“FBARs”) and amended returns for a specified period (such as tax years 2004 through 2009) and (ii) pay the tax and interest due on such amended returns along with a 20% accuracy penalty, along with a miscellaneous “offshore” penalty equal to a specified percentage of the highest aggregate balance in the undeclared foreign accounts (plus, where applicable, certain other foreign assets), during the specified period. Under the old VDP, the miscellaneous penalty was 20%, but it is anticipated that the miscellaneous penalty under the new VDP will be higher. For many taxpayers with undeclared foreign accounts or unreported foreign income, the specified penalty structure under the new VDP may be extremely favorable in comparison with the civil penalties that could otherwise be imposed. Each case is different, however, and the advantages and disadvantages of a voluntary disclosure must be carefully analyzed for each taxpayer based upon the individual facts and circumstances.
It has also been reported in the press that the U.S. government is currently (i) investigating certain major banks with offices in China, Hong Kong, India, Korea and the U.S., which promoted undeclared foreign accounts to U.S. persons, and (ii) attempting to obtain the names of U.S. account holders. If the IRS is successful in obtaining this information, it will then be too late for such taxpayers to make a voluntary disclosure. The message to non-compliant taxpayers is clear, act promptly before the government obtains your identity.
Published by Bryan Cave on LinkedIn.
When Does a Grease Payment Become a Bribe Under the FCPA?
Link to the full article: 8ddecfed-a507-450c-8ca5-5eeb558e0baf
H-1B Visa Cap To Be Reached Imminently
However, the USCIS announcement indicates that the agency “continues to accept these petitions and they will be counted against the regular cap until the regular cap is reached.” In addition, USCIS has the regulatory authority to utilize unused Chile/Singapore free trade visas from the previous fiscal year and may also allow regular H-1B filings based on low estimates of Chile/Singapore free trade filings in previous years. It is unknown exactly how much longer USCIS will continue to accept H-1B filings; however, we estimate the cap will be reached imminently—probably within the next few days. Once the cap is reached this year, cap-subject employers will have to wait until April 1, 2011 to file new H-1B petitions, which will not be effective until October 1, 2011. Please note that H-1B filings will continue to be possible for cap-exempt employees and employers. A cap-exempt employee is any foreign national who previously held H-1B status with a cap-subject H-1B employer and has remaining H-1B time available. These are most often H-1B transfers from current H-1B employment. Cap-exempt employers include institutions of higher education and certain non-profit research organizations. H-1B petitions that are cap-exempt under any of these rules may continue to be filed and approved even though the quota for new H-1Bs has been exhausted.
Any continued H-1B availability offers opportunities to identify employees who might benefit from a conversion of their current status to H-1B. These include foreign nationals in the U.S. in TN, H-1B1, or E-3 status, particularly those who may want to pursue permanent residence. With the extensive priority date backlogs limiting immigrant visa availability, many of these employees will have to maintain their non-immigrant status and work authorization for years before they will be eligible for permanent residence. Once the permanent residence process reaches a certain stage, these employees may not be able to travel abroad because TN, H-1B1, and E-3 classifications do not permit “dual intent”—the intent to work temporarily while also applying for permanent residence. If an employee in TN, H-1B1, or E-3 status cannot file an I-485 application because of priority date backlogs, he or she may not be able to travel for several years. Conversion to H-1B status solves this problem, because H-1B status specifically allows for “dual intent,” allowing the employee to maintain H-1B status while also pursuing permanent residence. In addition to the benefit of dual intent, H-1B status may also be extended beyond the usual six-year limit for those whose permanent residence processing is commenced in a timely fashion. Employees in L-1 status may also benefit from conversion to H-1B. Although the L-1 classification permits dual intent, L-1 extensions beyond the usual limits are not permitted based on commencement of permanent residence processing. By converting to H-1B status, however, the employee becomes eligible for unlimited annual extensions as long as the green card process is commenced in a timely fashion.
Even after H-1B usage reaches the cap for this fiscal year, cap-subject employers who are considering first-time H-1B filings may want to consider filing on April 1, 2011 when the H-1B filing window for the quota for the next fiscal year (which starts October 1, 2011) is opened.
Published by Mintz Levin on LinkedIn
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IVF Children Conceived with Dead Father’s Sperm May Be Entitled to Social Security Survivor Benefits
The posthumously conceived twins in this case are undisputably the man’s biological offspring and therefore fit the definition of “child” within the meaning of the Social Security Act, the Philadelphia-based 3rd U.S. Circuit Court of Appeals ruled (PDF) Tuesday. The only question left to decide when it comes to the issue of Social Security benefits, the appeals court said in a decision reported Thursday by the Legal Intelligencer, is whether the child of a deceased wage earner is dependent or is deemed dependent on his or her father at the time of his death.
The case involved a claim for surviving child’s insurance benefits on behalf of twins born in 2003 to Robert Capato, who died of cancer 18 months earlier, and his widow, Karen, who conceived the children using her late husband’s frozen sperm.
The Social Security Administration denied her claim on the grounds that the twins were not Capato’s children for Social Security purposes, and a federal court judge in New Jersey affirmed the decision.
In its decision, the 3rd Circuit acknowledged that the case presented some difficult legal and moral questions, but none that it found necessary to address given the “discrete factual circumstances” of the situation.
“We, nonetheless, cannot help but observe that this is, indeed, a new world,” Judge Maryanne Trump Barry wrote for the panel.
ABA Journal- Posted Jan 7, 2011 5:51 PM CST
By Mark Hansen
Divorce Rates By Occupation
Study breaks down
divorce rates by occupation
Washington Post Staff Writer
Sunday, September 19, 2010
If you marry the charming dancer who asks for your hand, are you more likely to wind up in divorce court than if you’d picked the sensible engineer?
That seems to be the suggestion of a recent study that explores the correlation of various occupations and rates of separation and divorce — raising questions about the way our careers can impact our personal lives.
The study, published in the spring edition of the Journal of Police and Criminal Psychology, was co-written by Michael Aamodt, a professor emeritus at Radford University who now works as a consultant with the Washington-based DCI Consulting Group.
At first, Aamodt wasn’t interested in the romantic lives of either dancers or engineers. Much of his academic career has been spent researching the personalities of law enforcement officers. In previous studies Aamodt debunked a myth about higher-than-average suicide rates among police officers and showed that most cops have personality traits similar to those of other Americans.
Turning to their domestic lives, however, he found statistics about divorce rates based on occupation hard to come by. Student Shawn P. McCoy, co-author of the study, pressed Census officials to provide data that could be parsed to reveal divorce and separation rates for Americans working in 449 jobs.
At the time of the 2000 Census, 16.35 percent of Americans who had previously been married listed themselves as divorced or separated.
Only 14.5 percent of law enforcement officers who had been married said the same. (The rates varied widely across the profession, though: Just 12.5 percent of detectives were divorced, but 25.5 percent of fish and game wardens had broken up with a spouse.)
Dancers and choreographers registered the highest divorce rates (43.1 percent), followed by bartenders (38.4 percent) and massage therapists (38.2 percent). Also in the top 10 were casino workers, telephone operators, nurses and home health aides.
Three types of engineers — agricultural, sales and nuclear engineers — were represented among the 10 occupations with the lowest divorce rates. Also reporting low marital breakup rates were optometrists (4 percent), clergy (5.6 percent) and podiatrists (6.8 percent).
The numbers don’t paint a complete picture. If a person had divorced and remarried by the time of the Census, they would be counted as married. So it could be the case that people in some occupations are just quicker to jump into the next marriage than others.
The authors also point out that the data don’t reveal whether it’s the nature of the jobs that lead to divorce, or if people prone to unstable relationships are drawn to certain professions.
Terri Orbuch, a sociologist and director of a long-term study on marriage funded by the National Institutes of Health, thinks that our working lives can directly affect our home lives.
“One of the things I found is that job stress spills over into our relationships. It can be not getting along with our colleagues or our boss . . . or the actual amount of time that we need to spend at work or doing work at home that spills over and affects our marriages negatively,” says Orbuch, author of “5 Simple Steps to Take Your Marriage From Good to Great.”
Aamodt knows his study raises more questions than it answers. Chief among them: Why?
“Why are bartenders this way and engineers that way? Unfortunately we just don’t know,” he says, before adding that several of his graduate students are looking into it.
But for now, perhaps this is reason enough to give that engineer a second glance.
Posted on LinkedIn by Jai Kissoon.
Don't Always Expect Confidentiality When Contacting An Attorney Through A Website
Websites May Trigger Unforeseen Ethics Obligations to Prospective Clients
After David Walsh lost his job as a cashier at a large warehouse store, he typed “employment lawyer” into an Internet search engine and generated a list of local firms.
The firm websites conveniently listed the names of their lawyers and provided contact information, including e-mail addresses. Walsh randomly e-mailed several of the firms saying that he was looking for a plaintiffs employment lawyer to represent him in a wrongful termination suit against the store, which he identified in the e-mail. He also attached a file with correspondence he exchanged with the store’s human resources department. It turns out that one of the lawyers to whom Walsh sent the e-mail represents the store as outside counsel. Now what?
This hypothetical scenario is likely to occur with great frequency now that websites have become a common means for lawyers to communicate with the public in efforts to generate new business. Indeed, lawyer websites have replaced business cards and Yellow Pages advertising for their “branding” potential. Embedding certain words on a law firm website as HTML text makes it attractive to Internet search engines, thus increasing webpage traffic that may result in more business.
Lawyers and potential clients appear to be going online at similar rates. As early as 2001, 77 percent of law firms already had an online presence, according to Greenfield/Belser Ltd., a brand design firm in Washington, D.C., that focuses on professional services marketing. In 2010, nearly 84 percent of lawyers said their firm had a website, according to the ABA’s Legal Technology Survey Report.
Meanwhile, a 2009 study by the Pew Research Center in Washington found that 74 percent of all Americans use the Internet, and of those, 81 percent go online to research products or services.
Given these statistics, lawyers with websites have good reason to be apprehensive about uninvited communications that could inadvertently lead to the formation of lawyer-client relationships, conflicts of interest and breaches of confidentiality. Under Rule 1.18 (Duties to Prospective Client) of the ABA Model Rules of Professional Conduct, for instance, “A lawyer who has had discussions with a prospective client shall not use or reveal information learned in the consultation” except under certain circumstances involving former clients.
Rule 1.18 also generally prohibits a lawyer from representing a client “with interests materially adverse to those of a prospective client in the same or a substantially related matter” if the lawyer received information from the prospective client that could be significantly harmful to the affected client. (The Model Rules are the direct basis for lawyer ethics codes in every state except California.)
DWINDLING BENEFITS
But what particular circumstances cause Rule 1.18 or related ethics provisions to kick in as a result of online communications between a lawyer and a prospective client?
The ABA Standing Committee on Ethics and Professional Responsibility explored that question in Formal Opinion 10-457 (Lawyer Websites) (PDF), issued Aug. 5, 2010. The opinion recognizes the growing use of websites by lawyers. “A lawyer website can provide to anyone with Internet access a wide array of information about the law, legal institutions and the value of legal services,” states the opinion. Websites also serve as an effective marketing tool for lawyers, the opinion notes.
But the opinion cautions that “the obvious benefit of this information can diminish or disappear if the website visitor misunderstands or is misled by website information and features.” For lawyers, online marketing can give rise to problems when website visitors interpret material posted as general information to apply to specific situations, or when visitors make unanticipated inquiries or unexpectedly provide confidential information. Websites that invite inquiries, such those with “contact us” or “click here for a free consultation” buttons, can be especially problematic.
Lawyers are “well-advised to consider that a website-generated inquiry may have come from a prospective client,” states the opinion, and they should pay special attention to including appropriate warnings that effectively limit, condition or disclaim any obligations to website visitors. “Such warnings or statements may be written so as to avoid a misunderstanding by the website visitor that (1) a client-lawyer relationship has been created, (2) the visitor’s information will be kept confidential, (3) legal advice has been given, or (4) the lawyer will be prevented from representing an adverse party.”
The key, concludes the ethics committee’s opinion, is that “limitations, conditions or disclaimers of lawyer obligations will be effective only if reasonably understandable, properly placed and not misleading. This requires a clear warning in a readable format whose meaning can be understood by a reasonable person.” And, the opinion notes, “The appropriate information should be conspicuously placed to assure that the reader is likely to see it before proceeding.”
THE POWER OF DISCLAIMERS
A number of state bar opinions also have tackled the issue of online communications, and several have concluded that lawyer websites should contain “click-through” (also called “click-wrap”) or pop-up disclaimers that require a prospective client to assent to the terms of the disclaimer before being permitted to submit the information to the lawyer’s site.
This approach was taken in Virginia Legal Ethics Opinion 1842 (Sept. 30, 2008), which states that one way to avoid an inference that an attorney-client relationship has been established or that information submitted to a law firm’s website will be kept confidential is to include a disclaimer on the website warning against disclosure of confidential or sensitive information and also warning that the firm has no duty to maintain the confidentiality of any submitted information.
Florida Bar Opinion 07-3 (Jan. 16, 2009) concluded that a person seeking legal services who sends information unilaterally to a lawyer has no reasonable expectation of confidentiality regarding that information. Thus, the lawyer who receives that information has no conflict of interest if already representing or later asked to represent an adversary, and may use or disclose the information. Again, a careful lawyer will post a statement on the website stating that the lawyer does not intend to treat as confidential information sent to the lawyer via the website, and that such information could be used against the person by the lawyer in the future.
Other states agree. New York City Bar Association Ethics Opinion 2001-1 (March 1, 2001) states that a lawyer is not disqualified from representing an existing client when the lawyer receives an unsolicited e-mail from an adverse party, but that the lawyer may not use or disclose that information if the lawyer’s website has not adequately disclosed that the law firm will not treat such communications as confidential. According to San Diego County Bar Association Ethics Opinion 2006-1 (2006), a lawyer does not owe a duty of confidentiality to a person who sends unsolicited information to the lawyer and may use such information in representing an existing client. California Formal Ethics Opinion 2005-168 (2005) has gone so far as to conclude that a lawyer may invite people to provide information to the lawyer via e-mail or another form of electronic communication via the lawyer’s website with no duty of confidentiality attaching if the lawyer provides a clear disclaimer that he or she will not treat the information provided as confidential.
Effective disclaimers in lawyer websites are particularly important for online visitors who may be inexperienced in using legal services, states the ABA ethics opinion.
“It would be prudent to avoid any misunderstanding,” states the ethics committee, “by warning visitors that the legal information provided is general and should not be relied on as legal advice, and by explaining that legal advice cannot be given without full consideration of all relevant information relating to the visitor’s individual situation.”
By
Eileen Libby, associate ethics counsel for the ABA Center for Professional Responsibility.
Can I Claim Attorney/Client Privilege On Work E-mail?
Plaintiff Who Discussed Suit with Lawyer on Work E-Mail Can’t Claim Privilege, Court Says
A woman who sued her employer claiming discrimination can’t shield her lawyer e-mails in the litigation because they were sent from her work e-mail account, a California appeals court has ruled.
Gina Holmes had claimed the e-mail was protected by the attorney-client privilege, according to stories by Wired’s Threat Level blog and Technolog on MSNBC.com.
The Sacramento-based appeals court said the e-mail was not a protected confidential communication because Holmes’ employer, the Petrovich Development Co., had warned that employee e-mails were not confidential and were subject to monitoring.
“The e-mails sent via company computer under the circumstances of this case were akin to consulting her lawyer in her employer’s conference room, in a loud voice, with the door open, so that any reasonable person would expect that their discussion of her complaints about her employer would be overheard by him,” the court said.
Last March, the New Jersey Supreme Court protected e-mails sent from a personal account on a work computer to a lawyer. The court noted that the e-mails weren’t clearly covered by the employer’s policy, and they contained the standard warning that they were confidential attorney communications.
ABA Journal, Posted Jan 20, 2011 8:02 AM CST
By Debra Cassens Weiss
Can Lawyers Advertise On Groupon?
Proposed NC Ethics Opinion Says Lawyers Can’t Ethically Offer Groupon Deals
Updated: Groupon is known for its great deals on everything from restaurant meals to oil changes, but can it ethically be used by law firms seeking new business?
An ethics subcommittee of the North Carolina State Bar will be considering the issue, according to assistant ethics counsel Suzanne Lever. She tells the ABA Journal the matter was sent to the subcommittee at a meeting Thursday.
Groupon allows consumers to pay one price up front for a service that is more valuable. A restaurant, for example, may offer a $50 meal for $25 that is paid immediately. One law firm that used Groupon, the Law Offices of Craig S. Redler & Associates in St. Louis, offered to provide a will and durable power of attorney for $99.
Groupon gets paid a percentage of the amount earned by the advertiser, and that’s the issue that will be considered by the North Carolina ethics subcommittee. A proposed opinion written by committee staffers opines that the arrangement amounts to impermissible fee-sharing with a nonlawyer, according to an Oyez column by North Carolina Lawyers Weekly.
The bar provided a copy of the proposed opinion, which has not been posted online, to the ABA Journal. “The Ethics Committee recently approved participation in a barter exchange program in which members of the exchange pay a cash transaction fee of 10 percent on the gross value of each purchase of goods or services,” the proposed opinion says. Unlike the barter program, the Groupon compensation, negotiated on a case-by-case basis, “is a percentage of the amount actually paid to the lawyer and appears to constitute revenue sharing with a nonlawyer,” the proposed opinion says.
Carolyn Elefant, writing at Nolo’s Legal Marketing Blog, noted the opinion. “Though personally, I don’t find much mischief in fee splitting as a way to spread advertising costs, I can easily see many other bars taking the same approach,” Elefant wrote. She did question, however, whether marketing on Groupon would be profitable for law firms.
“It seems that lawyers are bound to lose money,” she opines. “More importantly, unlike restaurants or hotels, will Groupons yield referrals or repeat business for lawyers? I’m skeptical.”
Lawyer Craig Redler tells the ABA Journal he cleared his Groupon offer with Missouri ethics regulators before it ran. “I was absolutely aware of the fee-split issue,” and that’s why the ad stated it is valid for estate planning or other legal services if a will isn’t appropriate, Redler says.
“It was essentially a coupon like you’d run in the Yellow Pages,” he says. “It was a discount.”
Redler says the firm lost money when clients got the $99 will and power of attorney. But the ad brought calls from a lot of new clients, most of whom sought additional legal services. From that standpoint, he says, the Groupon worked well.
Redler says he’s surprised by the response to his ad. “I didn’t realize it would cause such a stir,” he says. “I’ve been getting e-mails from attorneys all over the country asking how it’s worked out.”
ABA Journal, Posted Jan 19, 2011 10:18 AM CST
By Debra Cassens Weiss
