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The Importance of Digital Estate Planning

Posted Thursday, July 19, 2012 by Pivotal Law Group

alt text Digital information plays an important role in today’s world. We are inextricably tied to the internet and the online world- We socialize using online social media, we search for jobs using the internet, and we even control our finances using internet accounts. But even though the internet and online world plays such an important role during our life time, we often don’t make the necessary provisions for them upon our incapacity and/or death. Often times, upon death and/or incapacity, the internet may be one of the best resources for family to use in settling affairs.

In order to ensure that family members have access to the necessary online digital information, such as account, login, and password information, we recommend doing the following: create a repository of digital assets and their login/password information and keep it in a place that can be easily accessed by family members. Additionally, we recommend amending any existing durable power of attorney to give the attorney-in-fact the power to access all digital accounts. This will prevent family from having to jump through hoops in trying to take care of affairs during incapacity and/or death.

For more information or to update your existing estate plan, please contact Emily Rao at (206) 340-2008.

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Seattle Mandates Paid Sick Leave For Workers

Posted Wednesday, July 18, 2012 by Pivotal Law Group

alt text Seattle is set to become the third major city in the country, after San Francisco and Washington, D.C. to mandate paid leave for employees to care for themselves or family members when ill, or fall victim to domestic violence. The paid leave legislation will take effect September 2012 and affect businesses with at least five full-time employees. Just recently, the city council voted 8-1 to mandate the paid leave legislation, and Mayor Mike McGinn is expected to sign the legislation into law.

According to the new legislation, the paid sick and safe days are aimed at promoting the safety, health and welfare of the people of the City of Seattle, and also to make sure that victims of domestic violence and sexual assault have time to participate in legal proceedings, obtain necessary services, and/or receive medical treatment. Proponents of the legislation see it as a way to allow businesses to succeed while also ensuring good working conditions for employees. Opponents of the legislation believe that it makes it more expensive to do business and more difficult to create jobs.

Below are some quick highlights of the new legislation:

Amount of Paid Time Required:

The maximum number of paid days that must be provided is stated clearly in the legislation. Businesses with 5 to 49 employees are required to provide at least one hour of paid time for every 40 hours, up to a required maximum of 40 hours per calendar year (5 days). Businesses with 50 to 249 employees are required to provide at least one hour of paid time for every 40 hours, up to a required maximum of 56 hours per calendar year (7 days). Businesses with 250 or more employees are required to provide at least one hour of paid time for every 30 hours, up to a required maximum of 72 hours per calendar year (9 days).

What is considered “sick time” and “safe time”?

The legislation defines paid “sick time” as absence resulting from an employee’s own mental or physical illness, injury or health concern, and/or absence resulting from the care of a family member for such. Paid “safe time” is defined as when employee takes time off because their place of business is closed by order of public official to limit exposure to infectious agent, biological toxin, or hazardous material, when they are accommodating to their child’s school closure, or if they are obtaining or assisting a family member in obtaining help in situations related to domestic violence, sexual assault, or stalking. The employer may request for documentation from the employee under certain circumstances.

Existing PTO Policies:

Businesses with existing Paid Time Off (PTO) policies may not be required to alter their policies as long as it satisfies the minimum requirements set forth by the legislation.

Carryover:

Employees are allowed to carry over paid sick time and paid safe time to the following calendar year. However, employers with 5-49 employees do not have to allow their employees to carry over a combined total of paid sick time and paid safe time in excess of 40 hours; employers with 50-249 employees do not have to allow their employees to carry over a combined total of paid sick time and paid safe time in excess of 56 hours; and employers with 250 or more employees do not have to allow their employees to carry over a combined total of paid sick time and paid safe time in excess of 72 hours.

Wait Time:

Employees would have to wait 180 days before using their paid leave if employed by a business with fewer than 250 employees. For larger businesses, employees would have only a 90 day waiting period before paid leave is available. Businesses also have a certain amount of time to implement the new requirements.Retaliation and Posting Requirements:

Employers may not take adverse action or discriminate against an employee because they have exercised in good faith, the rights protected under this legislation. Additionally, employers shall give notice to their employees of their rights under this legislation. The Agency shall create and make available to employers a poster and a model notice to be posted in English and Spanish, and any other languages that the Agency determine as necessary. An employer who willfully violates the notice and posting requirements of this section shall be subject to a civil fine in an amount not to exceed $125 for the first violation and $250 for subsequent violations. The legislation also sets forth requirements for the employer to keep records documenting hours worked by employees.

You can find a full text of the Seattle paid sick leave ordinance here

For information and legal advice concerning these developments, please contact Emily C. Rao at Pivotal Law Group, PLLC at (206) 340-2008.

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State Tax Amnesty Programs

Posted Friday, May 11, 2012 by Michael A. Larson

alt text A recent note from a colleague reminded me of the dangers taxpayers face when entering into state tax amnesty programs. In many cases, these programs are excellent and provide taxpayers with an opportunity to settle past liabilities at a reasonable cost and bring their businesses into compliance with local authorities. However, there can be pitfalls to any amnesty program.

For example, Ohio is now offering a tax amnesty program from May 1, 2012 through June 15, 2012. Unfortunately, this program does not limit the “look back” period for assessing taxes. While some taxpayers will still find the Ohio tax amnesty program to work best, other taxpayers will find other alternative strategies work better. My recommendation is that you consult a local practitioner with specialized knowledge of the amnesty program, regardless of the state. One of the benefits I can provide to my clients is a network of outstanding tax professionals that know the ins and outs in particular states.

For more information, please contact Ronald Bueing at (206) 340-2008.

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Proposed Washington ETA on Common Paymasters

Posted Sunday, May 6, 2012 by Michael A. Larson

alt text For a number of months the Washington Department of Revenue has been working on guidance for governing the taxation of reimbursement of employee salaries under a common paymaster or common pay agent arrangement. The most recent draft version of an excise tax advisory (ETA) on this subject should be a cause of concern for many businesses using centralized payroll structures. Were it to be adopted in its current form, this ETA would virtually eliminate the ability of affiliated companies to use a centralized common paymaster without incurring a substantial increase in their Washington B&O taxes.

Many companies use centralized payroll reporting out of a single entity in order to reduce the cost of payroll tax compliance. Under these systems one company will pay wages to the employees, handle centralized employee benefits, and report wages and tax information to the government often using a single employer account. Reimbursements from the affiliated companies to the reporting entity, often referred to as the common paymaster, are not subject to tax in any other states. However, as a gross receipts state Washington has a long history of taxing intercompany expense reimbursements between affiliated companies. Yet, for many years Washington has recognized that reimbursements of wages, payroll taxes and benefits within a common paymaster arrangement between affiliated companies are not subject to tax.

The draft ETA as currently structured would make it virtually impossible for most organizations to qualify for exemption from B&O tax of reimbursements of wages, payroll taxes, and benefits made by affiliates to a common paymaster. Further, the limited number of companies that could qualify under safe harbors proposed in the ETA would not likely be able to qualify unless they planned ahead of time to meet certain notice requirements that would not ordinarily be performed by any company using a common paymaster structure. This ETA has yet to be finalized and affected taxpayers may be able to affect the final language by providing commentary during the adoption and review process.

If your company employs a common paymaster or common pay agent structure, I encourage you to contact me for consideration of how this ETA may affect your Washington B&O tax liability.

For more information, please contact Ronald Bueing at RBueing@PivotalLawGroup.com.

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Washington Supreme Court “Clarifies” Rules for Collecting Washington B&O Tax

Posted Tuesday, May 1, 2012 by Michael A. Larson

alt text In a decision last week, Peck v. AT&T Mobility, the Washington Supreme Court ruled that a seller is prohibited from recouping its B&O taxes by collecting a surcharge in addition to its monthly service fee. The case involved cell phone services billed by Cingular. Prior to the purchase of cell phone service, Cingular disclosed that it would bill its customers for a monthly charge and a surcharge to recoup B&O taxes incurred by Cingular. The court found that “Cingular’s monthly service fee, the sales price of its service contract, did not include the B&O surcharge.” Thus, the service charge was “added on to its monthly service fee” and Cingular was not allowed to recoup the B&O tax per RCW 82.04.500.

The Washington Supreme Court distinguished a recent Washington Appeals Court decision, Johnson v. Camp Automotive, Inc., that allowed an automobile seller to recoup its Washington B&O tax as a part of the negotiated sales price for an automobile. The court noted that in the summary judgment proceedings the seller submitted “unopposed declarations establishing that the purchase price included a B&O tax that was disclosed and negotiated,” thereby establishing that the B&O tax was “factored into the sales price.”

The court dismissed language in Camp Automotive that seemed to indicate that disclosure prior to negotiation of the sales price was the determinative factor. Instead, the court found that the B&O tax simply cannot be added to a sales price.

By confirming the holding in Camp Automotive, the court appears to allow for sellers to separately itemize a B&O tax reimbursement, provided that this separate itemization is merely precedent to setting the sales price. This would then appear to allow sellers to obtain reimbursement for the Washington B&O tax, but only where that tax is identified and is treated as an element in negotiating the final sales price. However, in situations where a sales price is advertised, it would appear that there can be no subsequent alteration of that sales price to include a reimbursement of Washington B&O tax.

For more information, please contact Ronald Bueing at RBueing@PivotalLawGroup.com.

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