Have you ever copied a photograph from a website thinking that the photograph was free to use? You may have thought this because the photograph did not contain a watermark or copyright notice. Maybe the photograph claimed that it was “royalty free,” and you assumed that meant it was free to use for no charge. Or, perhaps you were aware that using the photograph was not authorized, but you figured it would never be discovered. These are common mistakes that can prove to be costly.Continue reading “Beware of Copyright Trolls”
Following the Supreme Court’s June 2018 decision in South Dakota v. Wayfair, states have acted quickly to enact economic nexus laws to require remote sellers to pay sales tax. “Economic nexus” is the power of a state to compel remote sellers to pay sales tax on their transactions with purchasers in the state. As of October 1, 2019, economic nexus laws have gone into effect in all states with a statewide sales tax, except Missouri and Florida. States are using economic nexus laws to compel remote sellers, or sellers with no physical presence in the state, to collect sales tax if the seller’s economic activity in the state reaches a pre-determined threshold. Previous laws required the seller to have a physical presence within the state, such as a brick-and-mortar store, office, or warehouse.Continue reading “States Rush to Pass Economic Nexus Legislation”
The U.S. Patent and Trademark Office (USPTO) issued a new rule that requires foreign trademark applicants and registrants to be represented by an attorney licensed in the United States. Under the U.S. counsel rule, codified at 37 C.F.R. § 2.11(a), any trademark applicant or registrant domiciled outside of the United States must retain U.S. counsel to file any document before the USPTO. This rule change is an effort to combat the unauthorized practice of law as well as the use of fake or suspicious specimens. The rule change was prompted by the USPTO’s examination of foreign trademark applications. In some cases, foreign applicants filed hundreds of trademark applications in their own names. After reviewing those applications, the USPTO discovered that those applications were, in fact, filed by foreign practitioners.Continue reading “New Rule Requires U.S. Counsel to Represent Foreign Trademark Applicants and Registrants”
The Department of Labor (DOL) finalized its proposed rules for overtime eligibility. As some may recall, the DOL attempted to issue new overtime rules back in 2015, but those overtime rules were enjoined by a federal district court in 2016. Below is a summary of the final 2019 overtime rules:Continue reading “New Proposed Fair Labor Standards Act Overtime Rules”
Navigating the Possibility of Incurring UBTI
UPDATE: The Taxpayer Certainty and Disaster Tax Relief Act of 2019 retroactively repealed the tax on employee parking benefits for nonprofit employers by striking paragraph 512(a)(7) from the Internal Revenue Code. An organization that paid the tax may be eligible for a refund. To claim a refund, the organization needs to file an amended 990-T, as further explained by the IRS here.
Nonprofit organizations that provide employee parking benefits may be surprised to learn that they may be subject to incur unrelated business taxable income (UBTI). In addition, organizations with no UBTI may now be required to file form 990-T.
The Tax Cuts and Jobs Act (Act) amended Section 274 of the Internal Revenue Code (IRC) to disallow for-profit employers from deducting certain expenses related to transportation fringe benefits provided to their employees. The Act added IRC Section 512(a)(7) to what constitutes UBTI for nonprofits and other tax-exempt entities. The Act states that tax-exempt entities are required to increase their UBTI by expenses related to transportation fringe benefits provided to their employees. The transportation fringe benefits subject to this tax include expenses associated with:
Don’t be complacent.
Each year tax-exempt organizations in the United States receive hundreds of millions of dollars in donations. Donors contributing to 501(c)(3) organizations are able to deduct their own contributions from their taxes, subject to IRS limitations. Recently, a higher standard deduction has been put in place through the Tax Cuts and Jobs Act. This will likely diminish the number of taxpayers and donors who itemize their deductions, making it tempting for charities to assume that receipting donations is no longer important. However, charities should continue to exercise care in receipting donations for the benefit of the donor. Continue reading “Receipting Donations”
President Trump Sued for Unpaid Overtime
In July 2018, President Donald Trump learned the danger of disregarding employment law when he was sued by his long-time, personal chauffeur for unpaid overtime. In this case, Trump did not abide by state and federal wage and hour rules.
Reportedly, chauffeur Noel Cintron was “forced to work thousands of hours of overtime without compensation,”1 anywhere from 50-55 hours per week. He would begin at 7:00 a.m., five days a week, and stay until Trump, his family, or business associates no longer needed Cintron’s services. Continue reading “Law Suit Shows the Danger of Disregarded Employment Law”
Recent IRS Guidance Made it Easier
Has your organization moved from the state it was incorporated? If so, you may want to consider re-structuring your legal entity under the new guidance issued by the IRS. In Rev. Proc. 2018-15, the IRS announced that a new exemption application is not required if a domestic tax-exempt organization changes its legal structure or re-incorporates in another state. Under prior IRS guidance, an organization was required to file a new exemption application in order to keep its exemption if it made any of these changes. Continue reading “Want to Move Your State of Incorporation?”
Does Your Church Need Both?
Sometimes when we analyze governance issues for our clients, we discover that they have two sets of governing documents: a constitution and bylaws. “Constitution” is the title most commonly associated with the governing document of an unincorporated association, whereas “bylaws” govern a corporation.
One of the main reasons churches have both documents is tradition: “It’s always been that way.” However, it is not legally necessary to have both, and in practice, it can lead to confusion, unclear answers, and unintended outcomes when the organization makes decisions. To prevent these problems, it is best if the organization has one set of governing documents that addresses all of the relevant governance issues. Continue reading “Constitution and Bylaws”
Is Your Church a Religious Corporation or a Not for Profit?
In Illinois there are two corporation laws that can be used to form churches: the Religious Corporation Act of 1872 and the Not for Profit Corporation Act of 1986. Most lawyers practicing in the state of Illinois have probably heard of the latter statute, but relatively few may have heard of the former one.
Churches typically function with little awareness of their underlying corporate structure until they need to engage in some sort of commercial transaction–such as the purchase of real estate or obtaining a commercial loan–then the corporate structure becomes a matter of some attention.
Both kinds of corporations can function in the modern world of commercial transactions, but one type functions more easily than the other. Care to guess which one? Continue reading “The Legal Status of a Church”