BizLawBuz …. The Power of Know

Beginning in 2008, the Michigan state legislature passed a large tax reduction for personal property classified as Industrial Property. As a result, personal property classified as Industrial Property receives an approximate 50% tax reduction when compared to personal property classified as Commercial Property. Thus, some assessing jurisdictions are reviewing the personal property tax reports of taxpaying businesses and are re-classifying tax-favored Industrial Property as Commercial Property on the assessors’ internal records.

Lee Flaherty

Renewable energy, green building, and sustainable design largely require initial capital expenditures that may exceed available resources of businesses just trying to survive this challenging economy. What options are available to businesses that do not require significant capital outlays and provide the opportunity to significantly control energy costs thereby gaining profits and positioning your company competitively?

This summer, the German American Chamber of Commerce of the Midwest held a conference in Southfield, Michigan, on industrial energy efficiency featuring German and US industry and policy experts. One of the experts is a mechanical engineer from the University of Michigan who heads up the Industrial Assessment Center (IAC), one of thirty such centers in the nation. The U-M Industrial Assessment Center conducts, at no-charge, confidential assessments of manufacturing plants, the results of which are used to provide the business owner with solid suggestions on ways to reduce utility costs and eliminate waste throughout the manufacturing process. Funding is provided by the U.S. Department of Energy. “There are no costs whatsoever for the company and there are no hidden strings attached,” said Arvind Atreya, director of the U-M center and professor of mechanical engineering.

According to the Department of Energy, the average cost savings per plant that implements the recommendation of an IAC audit is $40,000 per year. The cost of recommended renovations or new equipment is recovered, on average, in 18 months.

Go to http://interpro-academics.engin.umich.edu/mfgeng_prog/IAC/ to learn more.

On August 29, 2009, Julie Pfitzenmaier will co-instruct a Dale Carnegie® Public Speaking Workshop for the Young Lawyers Section of the State Bar of Michigan. The workshop will focus on assisting participants in organizing their presentations, speaking with more confidence and clarity, holding their audience’s attention, as well as facing challenging and unexpected questions.

Ms. Pfitzenmaier is a certified Dale Carnegie instructor as well as a practicing attorney with the law firm of Wright Penning & Beamer, P.C., in the firm’s Farmington Hills office. Ms. Pfitzenmaier devotes her practice to business, commercial, and probate litigation, as well as probate and trust administration.

For more information, contact Dirk A. Beamer, Wright Penning & Beamer, P.C., at 248-893-1401 or at dbeamer@wrightpenning.com.

Most nonprofit organizations are required to file an annual information return with the IRS known as Form 990. The IRS uses Form 990 as the primary tax compliance and reporting tool for tax exempt organizations. Unlike all other tax returns, once filed, Form 990 is open to public inspection. The IRS has completely revised Form 990 for filings beginning in 2009. The first filings using the new form began this past May 15, 2009, for tax year 2008.

The new form consists of an 11-page, 11-part core form that is required to be completed by all organizations that file Form 990. Depending upon the type of organization, one or more of 16 additional schedules may also need to be filed.

One of the primary changes involves new and extensive reporting requirements pertaining to the organization’s governance and management (Part VI, Sections A, B and C.) For example, Part VI, Section B, Policies, requires the organization to disclose whether or not it has adopted, and follows, policies pertaining to such things as compliance issues, conflicts of interest, whistleblower, document retention and destruction and compensation. Nonprofits, and their boards, need to be aware of these requirements well in advance of the due date for filing because of the potential need to update, adopt and implement any number of these policies and procedures.

Further, whereas previously the preparation and filing of Form 990 was likely left to the organization’s accountant or treasurer, a final version of the form must now be provided to each member of the organization’s governing board, must be reviewed by that board before filing, and the process for that review must be disclosed in Schedule O (see Part VI, Section A, question 10.)

An extensive amount of information concerning these new filing requirements can be found on the IRS website (www.irs.gov) by clicking on the tab “Charities & Nonprofits.”

Duane L. Reynolds

Tool and die makers – and the manufacturers who use their products – need to be familiar with special lien rights that can be created and enforced under the Michigan Special Tools Lien Act. The Act was passed by the Michigan legislature to give toolmakers greater protection than the traditional mechanic’s lien alone provides.

The Act sets forth procedures allowing toolmakers to create a lien on any tool they fabricate or improve. Among other things, toolmakers need to be marking the tool itself to reflect the lien and also making sure to provide notice of the lien, including UCC Financing Statements, to both their customers and the end-users of the tool. Additionally, the Act sets forth certain procedures by which toolmakers can claim possession of the tool, which offers considerable leverage when negotiating unpaid balances for work performed.

Protections under the Act are not automatic. Rather, toolmakers must make sure they comply with certain statutory requirements to avail themselves of the rights available to them. Similarly, those dealing with toolmakers need to make sure they understand the exposure they face by risk of the provisions of the Act. You can find the Act at www.legislative.mi.gov (MCL 570.541-.571).

Feel free to contact Wright Penning & Beamer with questions about how it works or about how your business may be impacted.

Dirk A. Beamer

A few days ago I was talking to a friend whose business is struggling badly. I knew that he had been talking to a new, potential customer and that the work he hoped to get would pretty much determine whether or not his company would survive. Turns out he was about to sign a contract. Money for him is tight, so, in light of our longstanding relationship, I offered to take a few minutes to look at the contract for him. In doing so I was struck by a number of things that concerned me, not the least of which was a clause that would prohibit him from rendering similar services to any other customer in that particular industry segment. Problem is, that industry segment makes up the bulk of my friend’s business.

I pointed out the ramifications of this clause in an email, assuming that this was something that his new, potential customer was insisting upon and that it was probably not negotiable. That email prompted a quick return phone call. Turns out that the contract was prepared not by the potential customer, but by my friend. The clause was merely part of a contract template he had found on the internet; he had no idea that it was there. Once I pointed it out to him he agreed that he wasn’t all that clear about what it meant or its implications. He does now. Since the new work would not be sufficient in and of itself to sustain his business, he stood to lose everything. At a minimum, he would have certainly found himself embroiled in costly litigation.

My point? There are a whole lot of people out there making a whole lot of money trying to convince you that all you need is a “one-size-fits-all”, generic template for every conceivable legal situation, and that you can easily find them on the internet. After all “who needs a lawyer” anyway? I’ve seen situations like this many times in my career and I have seen a lot of people hurt. In every situation the fees I would have charged had I gotten involved at the outset pale in comparison to the fees that were later incurred in an effort to try to straighten things out after the damage was done. The timing was fortuitous on this one and I was able to help keep a friend from potentially losing his business. It’s been a good day.

Duane L. Reynolds

These changes, as written about below, effective January 16, 2009, should at least marginally improve the hassle for employers of compliance with the FMLA. In particular, the updated regulations clarify that the burden is on the employee, and not the employer, to give timely notice of a request for FMLA leave.

The updated rules significantly expand the leave rights for military personnel and their families. Employers dealing with currently enlisted personnel, their family members, or with family members caring for soldiers returning from duty need to pay particular attention to these updated requirements.

–Dirk A. Beamer
———————————–
From the Manufacturer & Business Association

DOL Issues Final Family, Medical Leave Changes

November 17, 2008

Society for Human Resource Management
November 2008
By Bill Leonard, Senior Writer

After more than two years of collecting data and drafting revisions, the U.S. Department of Labor (DOL) has released the long-awaited final changes to regulations governing the Family and Medical Leave Act (FMLA). The final rule revisions, which were set to appear on the Federal Register on Nov. 17, 2008, will take effect on Jan. 18, 2009, and help clarify employer and employee responsibilities under the law.

Prior to publication, the DOL placed a link to the 762-page rule revision on the department’s web site. Attorneys and business-related groups throughout the country began poring over the document to analyze the changes.

The immediate reaction was that DOL officials had made only modest changes to the proposed set of rules, which were released in February 2008.

“We are taking a close look at the final regulations and comparing them with the proposed changes,” said Lawrence Lorber, a partner in the labor and employment practice area of the Washington, D.C. office of Proskauer Rose LLP. “At first glance, it appears there aren’t any changes that are radically different from the proposed regulations.”

Officials from business-related groups such as the U.S. Chamber of Commerce and the National Association of Manufacturers stated that although the final rules don’t differ much from the DOL’s original proposal, the rule revisions still shed important light on how the FMLA is to be applied in the workplace.

“The new rule does some good things, and we welcome these changes,” said Mark Freedman, director of labor policy for the U.S. Chamber of Commerce. “We do wish that it had done more, but the DOL has taken some important steps to restore the balance of employer and employee obligations under the statute.”

Some family advocacy groups weren’t so happy with the final regulations, however.

“The new FMLA regulations for workers take us in the wrong direction, and are harmful and unnecessary,” said Debra L. Ness, president of the National Partnership for Women and Families. “They will restrict access to protections workers have relied on for 15 years, protections they need now more than ever, with the economy in deep trouble and families struggling terribly.”

DOL officials said that the department received more than 5,000 comments on the proposed changes during the public comment period, which ended April 11, 2008. It took the department nearly six months to go through all the public comments and draft appropriate responses.

The final regulations implement the expansion of the FMLA for military families, which was passed by Congress and signed into law by President Bush in January 2008. According to Lorber, the new regulations governing the FMLA leave for military families and caregivers might receive the most attention from attorneys and employers—“just because they’re new.”

Under the FMLA expansion, employers are required to offer up to 26 weeks of unpaid leave to employees who provide care to wounded U.S. military personnel. Employers must provide 12 weeks of FMLA leave to the immediate family members (spouses, children or parents) of Reservists and members of the National Guard who have “qualifying exigencies.”

The DOL’s definition of “qualifying exigencies” is included in the final regulations and will affect any employer who employs military Reservists and members of the National Guard, Lorber said.

“There is a lot of interest in the term because it definitely will have an impact on how employers must approve FMLA-mandated leave,” Lorber said.

The new rule defines “qualifying exigencies” as (1) short-notice deployment, (2) military events and related activities, (3) child care and school activities, (4) financial and legal arrangements, (5) counseling, (6) rest and recuperation, (7) post-deployment activities and (8) additional activities where the employer and employee agree to the leave.

According to a statement released by the DOL, the revised regulations include a number of changes to address the U.S. Supreme Court’s ruling decision in Ragsdale vs. Wolverine Worldwide Inc. The new rule clarifies that if an employee suffers individual harm because the employer did not follow the notification rules, the employer may be liable.

The regulation finalizes the DOL’s longstanding position that employees may settle their FMLA claims voluntarily without court or departmental approval. However, prospective waivers of FMLA rights will continue to be prohibited. While the rule retains the six individual definitions of “serious health condition,” the revisions provide guidance on some regulatory matters. First, it clarifies that if an employee is taking leave involving more than three consecutive calendar days of incapacity plus two visits to a health care provider, the two visits must occur within 30 days of the incapacity. Second, it defines “periodic visits to a health care provider” for chronic serious health conditions as at least two visits to a health care provider per year.

Phone: 814-833-3200
Toll free: 800-815-2660
Fax: 814-833-4844
Website: http://www.mbausa.org/

————————————–
If you have any questions about how your business could be affected by the Department of Labor changes made to the Family and Medical Leave Act please contact me at Wright Penning & Beamer, (248) 477-6300.

-Dirk Beamer
www.wrightpenning.com

From a December 10, 2008 Detroit Free Press article

December 10, 2008

Foreign tax policies put U.S. cars at disadvantage

BY U.S. REP. MIKE MICHAUD

In the debate about the Big Three American automakers, unfair foreign trade practices have scarcely been mentioned and the very unlevel playing field on which we force our domestic producers to compete.

Unfair foreign trade and economic practices are not “just a different way of doing business,” but are conscious policies intended to distort markets and give foreign firms a competitive advantage. Consider just one of these unfair practices: value added tax systems, which are used to discriminate against American cars, trucks and auto parts, as well as thousands of other products, by more than 150 of our trading partners.

The VAT is levied at each step of the production process — whenever value is added to a product and that product is passed up the assembly chain. The VAT is ultimately incorporated in the final price of the product and paid by the end consumer. However, if the product is exported, the producer gets a big break: The tax is rebated. In effect, the VAT functions as an export subsidy. But it is also a barrier to foreign markets for products from the United States, a non-VAT country.

If VAT countries trade with each other, it is a wash. Each country rebates the VAT for its exported products and imposes the VAT on imported products. There is rough parity. But in the United States, there is a free ride for foreign products produced under a VAT system — because we do not levy a VAT at the border that compensates for the export rebate the product received at home. American-made, domestic products sold in our market do contain the cost of our taxes, but exported VAT products don’t contain the cost of taxes at home or here.

This VAT disparity exists on cars, trucks and auto parts imported into the United States.

Compare a German and American car, each offered to the consumer in its home market for $20,000. When the German car is exported to the United States, the VAT taxes are rebated, and it costs $17,885 here — a price advantage of roughly 10% due only to the difference in tax systems, not corporate competitiveness.

The $20,000 American car exported to Germany is saddled with the VAT at the border — which is imposed not just on the base price of the car, but the shipping and insurance costs as well — and winds up costing $25,792 in Germany.

Small wonder that Detroit cannot export effectively from the United States but must set up foreign operations to counter the effects of the VAT (and currency manipulation and many other unfair foreign trade practices).

This VAT disparity is reliably estimated to place an extra $290-billion burden on American manufactured goods and $85 billion on U.S. services — or roughly half our yearly trade deficit.

In the next session, I and other members of Congress intend to introduce legislation to address this huge problem. Once we in Congress place the Big Three — and all other domestic producers — on an equal tax footing, American firms will take back lost market share here at home, expanding the domestic economic base to generate more jobs (with good benefits), profits, income — and tax revenue.

U.S. REP. MIKE MICHAUD, D-Me., represents Maine’s 2nd Congressional District and is the founding member of the House Trade Working Group, a leading voice for fair trade policies in Congress. Contact him through his Web site at www.michaud.house.gov.

Technology Solutions Explains the Importance of Taking Advantage of IRC Section 179 to Small to Mid-Sized Businesses

Many Companies Are Not Aware of the Tax Law that Can Impact Their Bottom Line

LIVONIA, MI — November 26, 2008 — Technology Solutions, LLC, an industry leader in business communications, announced today that the company is educating the region’s businesses on how to take advantage of significant tax deductions when acquiring new technology under Internal Revenue Code (IRC) Section 179. Technology Solutions, LLC is placing special emphasis on Section 179 because the deductions may change under the new administration in 2009.

“Section 179 of the Jobs and Growth Tax Relief Reconciliation Act was specifically designed to give businesses the ability to increase their spending on new equipment and generate growth in order to stimulate the economy,” said Steve Futrell, President of Technology Solutions, LLC. “Unfortunately, many companies are not aware of these substantial deductions and how it applies to their business. We believe it is our job as our customers’ strategic business partner to educate them on Section 179 and give them the information so they can determine whether to take advantage of it in 2008.”

Back on February 13th, President Bush raised the deduction limit under Internal Revenue Code (IRC) Section 179. Now, business taxpayers may generally elect to take an outright deduction of up to $250,000 of the cost of equipment placed in service during a tax year. If the aggregate cost of qualifying equipment placed in service during the tax year is greater than $800,000, then the deduction is reduced by $1 for each dollar by which the aggregate cost exceeds $800,000. For qualifying assets, the cost of which has not been deducted under Section 179, the remaining cost of the equipment is then depreciable in accordance with the ordinary tax depreciation rules.

Since February, businesses have been experiencing a tremendous push with these new changes. Those companies that are aware of the deductions are scrambling to ensure they are taking the appropriate steps, because it means hard dollars going directly to their bottom line. Surprisingly, many companies have either never heard of the law or don’t know how to take advantage of it.

“During these uncertain economic times, companies must continue to change the way they conduct business and invest in technology or they will not be around much longer,” added Mr. Futrell. “These deductions give businesses of all sizes the ability to do just that! Many organizations haven’t made a change to their voice and data technology in quite some time and the latest advancements have an amazing impact on profitability and productivity. Now, is the time for every organization to take a hard look at implementing new technology that will help them weather the ups and downs that our economy is likely to experience over the coming months.”

ABOUT TECHNOLOGY SOLUTIONS, LLC
Technology Solutions, L.L.C. is a leading provider of voice and data networking equipment and services for businesses within Michigan and across America.
Technology Solutions offers state-of-the-art technology to help its customers increase profitability, reduce communications costs, and give them a competitive advantage in their marketplace.

The company has quickly expanded to provide complete converged solutions incorporating voice systems, data systems, and structured cabling needs, saving customers significant time and cost, and enabling them to leverage their IT investment for future growth. From a consultative approach, Technology Solutions designs, implements, and monitors end-to-end solutions.

With over 70 years of experience, the professionals at Technology Solutions are committed to the philosophy of providing best in class technology, with personal and customized service and support.

For more information on Technology Solutions, call (734) 542-6929 or visit www.ts-llc.com.
——————————
Please feel free to contact Wright Penning & Beamer with questions about your company’s technology investments at 248.477.6300

Business Management/Law

From small business to large corporations, we provide practical advice
The lawyers of Wright Penning & Beamer provide legal services and advice to over 300 business entities — from entrepreneurs to subsidiaries of large, publicly owned companies. If you are a decision maker for a business entity, large or small, we can help. We provide practical advice on a wide range of issues — from starting a business to growing your business operations to succession planning — whether handing the business on to a family member or key employees, or selling it to a third party. We employ a results-oriented approach to assist our firm’s business clients in the following areas of expertise:

Buy-Sell Agreements

Services Offered: We assist businesses with multiple owners to analyze and implement a plan that protects the business, its owners, and the owners’ families in the event of any business owner’s death, disability, retirement or cessation of involvement in the business.

As a business owner, you want to know that your bases are covered. A buy-sell agreement allows you to put into writing how the business will continue and under what terms any benefits would be paid in the event of an owner’s death, disability, retirement or cessation of involvement. Without a carefully prepared buy-sell agreement, a business often experiences tumultuous times after the loss of an owner. Privately-owned businesses with multiple owners need to memorialize these terms to ensure that the business will continue to run smoothly.

Computer and Software Law

Services Offered: Assisting clients involved in developing and marketing computer software technology, and also those clients who make use of the technology in their business.

The constant evolution of technology has changed the way that businesses operate. We make it a priority to stay aware of the legal issues resulting from businesses implementing these new processes and procedures.

Contract Negotiation

Services Offered: Negotiating and drafting understandable, enforceable business agreements between clients and their customers, vendors, contractors or other third parties.

We know that details make or break a contract. Our extensive experience in reading the fine print and solving potential contract problems protects our clients and saves them money.

Corporate Start-ups

Services Offered: Identifying and establishing the proper business entity (C corporation, sub-chapter S corporation, limited liability company, etc.) to conduct business, shelter investors from liability and minimize tax implications. Also, handling the numerous filings and reportings necessary for registration with the state and federal governments.

All too often, new business owners cut corners in forming their entities in an attempt to save money. We find that clients who take these shortcuts frequently wind up with negative tax consequences, liability problems and unexpected operational difficulties. Our attorneys are experienced in corporate formation and we will assist you in setting up your company so that your focus can be where it belongs – on your business.

Financing/Matching Investors with Opportunities

Services Offered: Assisting in obtaining the necessary financing to support business start-ups, expansion and ongoing operations; negotiating security agreements as needed between clients and customers to minimize exposure for credit extended; and helping clients identify and obtain sources of capital.

We have helped clients obtain simple lines of credit, and we have negotiated and obtained capital in excess of $50,000,000. Wherever you fall in that spectrum, we have the contacts and referral sources gained from years of experience in the business industry to help you find the financing you need for your business operations.

Human Resources and Employment Law

Services Offered: Advising clients on hiring, firing and disciplining employees; advising clients on compliance with state and federal wage, hour, and employee benefit laws; and advising clients on compliance with state and federal workplace safety and anti-harassment rules and statutes.

We understand that it takes a dedicated task force to operate your business. It also takes a commitment to a safe and healthy workplace. As a firm, we are prepared to handle a wide range of employment and labor law issues. Let us work with you to minimize liability and efficiently resolve conflicts that may arise from the day-to-day reality of working with people.

Insurance

Services Offered: Assisting clients in risk assessment and procurement of appropriate coverages; managing coverage disputes with carriers; and representing the business interests of insurance agents on the national and local level.

It has been our experience that business owners can often benefit from a better understanding of their chosen insurance. We offer services that open the lines of communication between a client and their insurance representative to ensure that all the parties are on the same page. We understand that risks are a natural part of business, and that’s why we want to make sure that you’re adequately covered for whatever business brings.

Mergers and Acquisitions

Services Offered: Negotiating and orchestrating the buying and selling of all, or any part of, a business entity.

Sometimes it’s time to make a change. Whether you are simply selling your business, acquiring a new business or working through a highly-complicated recapitalization, we have the experience you want to navigate this often difficult process.

Tax-Exempt Organizations

Services offered: We represent a wide range of nonprofit organizations all the way from inception through dissolution.

Our clients include private foundations, churches, schools and other educational enterprises, charities, counseling agencies, adoption agencies, community organizations, mission groups, and many others. Since our founding, we have enjoyed particular success in helping our nonprofit clients smoothly and successfully navigate the complex waters of the tax-exempt approval process. We also routinely advise our clients on matters unique to nonprofits, such as corporate governance, private inurement, limits on campaign and lobbying activity, and state registration and licensing requirements.

Tax Planning

Services Offered: Devising and implementing tax strategies to minimize tax liability for business entities and their investors; handling necessary tax filings, reportings and returns in conjunction with each client’s accountant.

As a business owner, you have a lot to think about. One thing you might overlook is tax planning, specifically the research and development of tax credits. Wright Penning & Beamer has the third-party resources to help you analyze and identify possible tax-savings opportunities.

Workouts and Asset Protection

Services Offered: Working with distressed companies to develop and implement solutions short of bankruptcy for retiring outstanding debt, or for liquidating in an orderly and efficient manner.

We believe that bankruptcy is not the only option for a distressed company. In several instances, we have been able to assist clients struggling with difficult financial circumstances in negotiating extended terms with their vendors and suppliers. We have found that many vendors and suppliers prefer working through these types of payment plans and see it as a favorable and more efficient solution than bankruptcy.