IRS Releases This Year’s “Dirty Dozen” List of Tax Scams

As the end of tax season draws near, the IRS would like to keep taxpayers informed of this year’s most common scams.  Although they can occur at any time during the year, tax scams peak around this time as last minute filers prepare their returns.  Many of the scams listed involve some form of identity theft, so be careful with your personal information! Here’s a quick overview of what you should look for:

1)      Identity Theft: Someone else files a return with your information to claim a fraudulent refund.

2)      Phishing: The use of unsolicited email or fake websites to lure taxpayers into giving up personal information that can be used to commit identity or financial theft.

3)      Return Preparer Fraud: Dishonest tax preparers can steal your information.

4)      Offshore Accounts: The use of undisclosed accounts to hide assets and avoid US taxes.

5)      “Free Money from the IRS!”: Aimed at low income earners, these scammers will charge high fees to encourage filers to falsify information or claim credits that either don’t exist or they clearly don’t qualify for.  By the time the taxpayer finds out their claim has been rejected, the preparer is long gone with their fees.

6)      Impersonating a Charitable Organization: In the wake of a natural disaster, scammers may attempt to solicit funds from unsuspecting donors.  They may also contact victims directly in an effort to help them file a fraudulent casualty loss claim.

7)      False/Inflated Income and Expenses: A common form of fraud intended to decrease tax liability, increase refunds or claim undeserved credits.

8)      False Form 1099 Refund Claims: Scammers get taxpayers to give up information based on the incorrect theory that the US government keeps secret accounts for taxpayers and that they can get access to the accounts by filing a 1099-OID form.

9)      Frivolous Arguments: The use of outlandish arguments to justify not paying taxes.  Check out some of them here :

10)   Falsely Claiming Zero Wages: Filing a phony information return to lower the amount of taxes owed.

11)   Disguised Corporate Ownership: Using methods to obscure the true ownership of a business to underreport income, claim fictitious deductions, avoid filing returns, or facilitate money laundering and financial crimes.

12)   Misuse of Trusts: Using trusts to hide income or assets to avoid tax liability.

Be aware and happy filing!

This entry was posted in Tax Law and tagged dirty dozen, income tax, IRS, tax fraud, tax scams on by Sean Malin.

Health Care Law Now the Biggest Concern Among Small Business Owners

According to the U.S. Chamber of Commerce Q1 Small Business Study, released yesterday, requirements of the new health care law now surpass economic uncertainty as the number one concern among small business owners. Over seventy percent of business owners surveyed said that the recent health care law made it more difficult for their business to hire new employees, that it would make coverage more expensive for their employees, and that they anticipate that the 2014 health care tax will negatively impact their business when it goes into effect.

The Small Business Health Options Program (SHOP) was designed to let small business employees choose from a variety of health plan options. However, delays in federal and state program establishment mean that in most states next year, small businesses will not have the numerous options which were promised, but will instead be forced to accept only a single plan, at least for 2014. These delays, combined with widespread confusion over the requirements of the new law are likely the cause of the general disapproval by small business executives.

If you’re a small business owner and have concerns about how the The Patient Protection and Affordable Care Act may affect your business in 2014, the Small Business Administration has prepared a series of articles to help explain how key provisions will effect various size businesses. Additionally, as a blatant plug for our firm, you may also want to schedule a consultation with your local small business attorney to discuss your options.

This entry was posted in Small Business Law and tagged health care law, patient protection and affordable care act, small business, small business administration on by Robert Colby.

A New Jersey Municipality’s Crackdown on “Lepre-con” Festivities

Men are urinating on parked cars on the street; civilians are brawling with law enforcement officers outside of bars. No, these are not just teenagers, and I am not referring to the aftermath of an out of control rock-and-roll concert. I am talking about the Saint Patrick’s Day celebration held in Hoboken during the first weekend of March.

This Saint Paddy’s Day affair, which has cleverly been coined “Lepre-con,” has gained quite a bit of notoriety over the last couple of years due to the boisterous crowd and excessive amount of summonses issued during the festivities. The Saint Patrick’s Day Parade, which had roughly a twenty-five year run in Hoboken before its cancellation in 2012, was done in an effort to reel in the revelers determined to paint the town red-or should I say green?

The parade’s cancellation has resulted in less arrests and issued summonses, but has not significantly impacted the still-high number of individuals ticketed for charges such as: Driving While Intoxicated, N.J.S.A. 39:4-50; Disorderly Conduct, N.J.S.A. 2C33-2A; resisting arrest/obstruction of justice, N.J.S.A. 2C:29-2; and lewdness/ urinating in public N.J.S.A. 2C:14-2b.

In order to deter future offenders, city officials implemented a zero-tolerance policy and judges have doubled fines and other penalties. Sentences generally include mandatory community service and a fine. Fines, which ordinarily would have cost an individual $500.00, were increased to as much as $2000.00 for a single offense.

Whether the city’s zero tolerance policy will succeed in diminishing the number of summonses and arrests for next year is questionable, but what seems clear is parade, or no parade, Hoboken’s celebration of all things Irish will remain.

This entry was posted in Criminal Defense Law and tagged crime, criminal law, defense, disorderly conduct, driving while intoxicated, Hoboken, lewdness, obstruction of justice, resisting arrest, saint patrick's day on by Waynice Green.

Amazon and Overstock Lose Battle to Avoid Paying NY State Sales Tax

As states struggle to secure new sources of revenue, many are turning to sales tax from online retailers.  At first, it appeared as though the constitutionality of such taxes was in question because it was difficult to show out of state companies satisfied the physical presence requirements.  However, a recent decision by New York’s highest court has found a way to circumvent this problem in certain circumstances.

In 2008, Amazon and Overstock sued the state’s Department of Taxation and Finance seeking to overturn a law which makes retailers pay state sales taxes if they solicit business within the state. The companies argued the law violated their due process rights by creating an irrational presumption of solicitation in the state because they did not have a physical presence there.  They appealed the lower courts’ decisions upholding the law and eventually had their case heard before the NY State Court of Appeals.  The Court upheld the decision noting that the companies did, in fact, have an in-state sales force through agreements with affiliates who received commissions for posting links on their websites to Amazon and Overstock.

As more states begin implementing new laws that augment the physical presence test, it is likely we will see the issue go up to the Supreme Court.  Although Overstock has terminated the services of its New York based advertisers, Amazon intends to pursue the issue on appeal.

This entry was posted in Small Business Law, Tax Law and tagged business, New York, online, retail, Sales tax on by Sean Malin.

How the Sequester Will Affect New Jersey Small Businesses

The federal budget cuts, known as the sequester, that went into effect March 1st, still have many New Jersey small business owners awaiting the pinch. While it may take a while to feel the effects, here’s where you can expect to start seeing it.

One of the most obvious impacts will come from the approximately $92 million cut from the Small Business Administration (SBA), approximately $69 million of which will come from SBA loan programs. While this represents only a 5% cut, it comes at a time when most traditional bank loan programs are still shying away from small business investment.

Next, the sequester cuts will have a heavy impact on businesses which rely upon federal contracts, and not just defense contracts. According to Democrats on the House Committee on Small Business, approximately 44,000 federal non-defense contracts will be lost, amounting to approximately $2.2 billion dollars in lost revenue. It is also expected that more federal contracts will be awarded to larger businesses, which tend to be more stable, because of the cutbacks.

Another blow to New Jersey small businesses, will come from the approximately $2.9 billion in cuts to aid victims of Superstorm Sandy, as well as cuts to FEMA itself, which will slow the processing of claims.

Finally, cutbacks in federal spending have a ripple effect and a general psychological effect on consumer confidence. Small businesses are usually the first to feel these effects and often the least able to weather the storm. When big businesses experience difficulties in one market, they are often able to move resources to other, stronger markets, in this case overseas. Small businesses don’t have that luxury, and thus are also usually the first to fold when tough times hit.

If you’re a small business owner in New Jersey and haven’t yet started to feel the effects of the sequester, take heart. While the sequester will certainly have an impact, it will likely be countered by the general economic recovery.

This entry was posted in Small Business Law and tagged new jersey, sequester, small business on by Robert Colby.

NJ Supreme Court Upholds the Sanctity of the Home

Last week, in State v. Vargas, the New Jersey Supreme Court found that the “community caretaker exception” to the warrant requirement is not applicable to the home.

The Fourth Amendment to the United States Constitution asserts that an individual has the right to be free from unreasonable government intrusion in his (or her) “persons, houses, papers, and effects”. Meaning that governmental actors, such as the police, cannot invade a person’s home to conduct a search or seizure absent a warrant. As time has passed, the list of exceptions to this warrant requirement has grown significantly to include the community caretaker exception. This, in its application, has enabled the police to conduct a search or seizure of a vehicle, despite the lack of a valid warrant, if there is an apparent emergent need, and if doing so would otherwise be within his/her law enforcement obligations as a police officer. The issue then became whether this exception should also be expanded from vehicles to homes.

In Vargas, the police responded to a call from a concerned landlord, who stated he had not seen Vargas, his tenant, for a couple of weeks. Could his tenant be extremely sick? Could he be dead? The police proceeded to conduct a search of the home while Vargas was not at his home, without a warrant or authorized consent. Their search uncovered drug paraphernalia, which the government then turned around and used against Vargas in a subsequent criminal trial. Vargas was able to successfully suppress the evidence at the trial court, but upon appeal, the evidence was subsequently brought back in. Here, the Court believed that the officers were acting within their official capacity as law enforcers, and the evidence was properly obtained.

Police officers have a duty to protect and serve;but at what price? In New York, there has been much controversy over the “stop and frisk” policy. Last month, during a high school lecture I was conducting, I surveyed the class: “How many of you have been, or know someone who has been, frisked?” Almost everyone in the room raised their hand. Should we be willing to give up more of our individual liberties if it could result in less drugs and violence in our communities? The New Jersey Supreme Court has made it clear. Not when it comes to our homes. The sanctity of one’s home, must remain off limits from government interference, unless a warrant was issued or some type of exigent circumstance exists. Sorry officer, looks like you need to get your warrant.

State v. Vargas, 2013 N.J. Lexis 203 (N.J. Mar. 18, 2013).
Cady v. Dombrowski, 413 U.S. 433, 93 S.Ct. 2523, 37 L. Ed. 2d 706, 1973 U.S. Lexis 48 (U.S. 1973).

This entry was posted in Criminal Defense Law, Landlord Tenant Law and tagged community caretaker exception, criminal law, fourth amendment, New Jersey Supreme Court, police, State v. Vargas, tenant, warrant on by Waynice Green.

Is Casey Anthony’s life story an asset to be liquidated in bankruptcy?

A recent development in the saga of Casey Anthony has brought to light a question of whether the rights to a person’s life story can be considered an asset that can be liquidated in a Chapter 7 bankruptcy.

Earlier this year, Casey Anthony filed for bankruptcy as a result of debts exceeding $792,000. Faced with the challenge of locating assets owned by someone with no income and living off the charity of family and friends, the bankruptcy trustee turned to more unconventional methods of determining assets. The trustee in the case, Stephen L. Meininger, filed a motion with U.S. Bankruptcy Judge K. Rodney May for permission to sell “the exclusive worldwide right in perpetuity to the commercialization of Anthony’s life story”. At the time of the creditor’s meeting, Mr. Meininger asked whether Casey Anthony had received any offers or made any efforts to sell her life story to which she replied she had not.

Mr. Meininger relies on the presumption that a person’s ability to sell the rights to their life story is an asset. Because Casey Anthony did not sell those rights at the time of filing, she still held an asset that could be liquidated. If permission for the sale is granted, the proceeds would go toward paying down Casey Anthony’s debts and prevent her from profiting off the sale of the story in the future. A hearing has been set for April 9th to determine the outcome.

This entry was posted in Bankruptcy and Foreclosure and tagged bankruptcy, Casey Anthony, Chapter 7, life story on by Sean Malin.

Changes in Pre-Employment Inquires into Applicants’ Criminal History

Last month, Senators Sandra Cunningham, M. Teresa Ruiz, and Raymond Lesniak introduced a bill that would limit a company’s rights to ask certain questions of job applicants that pertain to the applicant’s criminal record. Entitled the “New Jersey’s Opportunity to Compete Act,” the bill would, among other things, ban a potential employer from including a checkbox on an application that asks whether the applicant has a criminal history. In fact, the bill would prevent employers from asking an information about criminal history until after a conditional offer is made. The bill would allow business owners to do a background check, but much later in the hiring process than is currently common, especially among smaller employers.

While it is understandable that many New Jerseyans with criminal histories would applaud this effort to help employ people with convictions on their record, it must also be acknowledged that a business owner, who is often liable for the actions of his or her employees under the doctrine of vicarious liability, should be allowed to use criminal history as a selection criterion. Allowing businesses to do a post-hoc criminal background check does remedy the situation to some degree, but only when other qualified applicants will have already been turned away. This bill may be especially detrimental to small business owners, who may only have a few employees. One employee with a serious criminal conviction can have a major impact on a such a business, and small businesses may not have the resources to do a post-offer background check, when a simple checkbox would have resolved the issue prior to an offer. I encourage you to read the bill below and welcome your thoughts on this issue.

This entry was posted in Criminal Defense Law, Small Business Law and tagged conviction, criminal background, employment, new jersey, small business on by Robert Colby.

Tortious interference between attorneys?

Yesterday, the New Jersey Supreme Court decided, in the case of Frank J. Nostrame v. Natividad Santiago, that attorneys can sue each other for tortious-interference with business, when one attorney steals another attorney’s client. The case involved a malpractice suit on contingency, which Nostrame filed, but which another attorney, Mazie Slater, later took over after the client terminated the relationship with Nostrame. The court held that a successful suit will need to allege specific wrongful means, such as deceit, defamation, misrepresentation, fraud, or even violations of the Rules of Professional Conduct such as those that limit solicitation.

Will this unleash a barrage of lawsuits between rival firms? Will it usher in a new era of kinder, gentler business practices between attorneys? In my practice, I have not yet heard an attorney allege that another attorney “stole” his or her client or potential business. Perhaps this is because Central New Jersey has historically had a more collegial atmosphere among lawyers. Perhaps it’s because the legal field is small enough, it isn’t worth complaining about another attorney, lest one burn an important bridge. In any case, it is my sincere hope that this case does not open the door to attorney competition becoming a major portion of the courts’ concern.

This entry was posted in Small Business Law and tagged law firm, New Jersey Supreme Court, tortious interference on by Robert Colby.

The Independent Contractor Surprise

I was recently told by a potential client that his/her employer was asking all workers of his/her type (messengers) to sign a new contract with the company that explicitly calls them independent contractors. While they had always understood they were not employees and paid their own taxes, the company had never insisted on an IC contract. Each of these workers were also asked to register a new LLC company in their name. Unless they took these steps, they were told they could no longer work at the company. This deeply concerned my potential client because he/she didn’t understand why, after working for the company for several years, and being sent a 1099 every year, the company suddenly cared and wanted to take these steps.

Recent crackdowns by various state and federal agencies over independent contractor/employee status have inspired a lot of companies to review their so-called independent contractors to ensure they truly fit the test (in New Jersey, see 43:21-19(i)(6)(A)(B)(C)). The problem is, a high percentage do not. The solution most lawyers, including myself, advise is to immediately bring workers in line with the standards, or else cease employing them. However, this solution may require further explanation, given that at least some workers, might reasonably see this action as hostile. In the future I will, and I advise other business/employment attorneys to, consider offering a written explanation to provide to workers about why the sudden changes are necessary. We must always consider not only the legal, but also the psychological, ramifications of alterations to the business-employer or business-independent contractor relationship. A well-informed worker is likely to be both happier and more productive, making everyone better off.

This entry was posted in Small Business Law and tagged employee, independent contractor, small business law on by Robert Colby.