Posts from: November 2016

Following Corporate Formalities are Really that Important?

Recently a dissolved corporation found out the hard way that corporate formalities do indeed matter to the IRS.

Urgent Care Nurses Registry, Inc. (Urgent Care) was incorporated in California on July 21, 2005, and was assigned a taxpayer identification number by the California Franchise Tax Board (board). On Aug. 1, 2008, the board suspended Urgent Care’s corporate charter pursuant to section 23301 of the Suspension and Revivor article of the California Revenue and Taxation Code, and on July 26, 2016, the California secretary of state certified that Urgent Care’s “powers, rights and privileges remain suspended.”

Urgent Care filed some income and employment tax returns for 2009 through 2013 but enclosed no payments. It failed to file other returns, and IRS prepared substitutes for returns and assessed all of the taxes in question plus a penalty for failing to file Forms W-2, Wage and Tax Statement. In January of 2015, IRS sent Urgent Care a Final Notice of Intent to Levy and Notice of Your Right to a Hearing.

On Sept. 28, 2015, Urgent Care timely sought review in the Tax Court. On July 28, 2016, IRS filed a motion to dismiss for lack of jurisdiction, contending that the petition was not filed by a party with capacity to sue. The Court directed Urgent Care to respond to the motion to dismiss on or before Sept. 2, 2016, which it failed to do.

The Tax Court granted IRS’s motion to dismiss for lack of jurisdiction on the ground that Urgent Care lacked legal capacity to prosecute the case.

The Court said that since Urgent Care’s corporate powers were suspended in 2008, and there was no indication that it has since received a certificate or revivor or become current on its California tax obligations, it lacked the capacity to sue.

Is your corporation in good standing and are its books and records up to date? Shouldn’t they be?

If you have any questions or would like to discuss this article or any other legal concern you have, please contact:

Morris Saunders at:

msaunders@lgattorneys.com or at 312-368-0100.

The Americans with Disabilities Act: Employers Must Engage in the Interactive Process

A recent 7th Circuit Court of Appeals decision emphasizes the steps an employer must take to accommodate an employee with a disability.  The American’s with Disabilities Act (“ADA”) is a federal statute that applies to any employer of 15 or more employees.

In Eymarde Lawler v. Peoria School District No. 150, a teacher (“Lawler”) with PTSD was hired by School District 150 (the “School District”) and worked without incident for 4 years.  Lawler’s PTSD symptoms began to manifest in 2010.  She was initially given a leave of absence, and then transferred to a school for students with emotional and behavioral problems.  Lawler had no prior experience teaching children with severe behavioral problems but never-the-less earned a satisfactory rating after the first year.  The following year, after several stressors in and out of school (including witnessing the aftermath of a shooting and being concussed by a student), Lawler’s psychiatrist opined that the events had retriggered her PTSD and that Lawler should be transferred away from such a stressful environment.

The School District refused the transfer request, instead performing an accelerated review that labeled her job performance unsatisfactory and terminating her.  Lawler sued for, among other things, failure to accommodate her PTSD under the Rehabilitation Act.  The Rehabilitation Act requires the same analysis as the ADA.

Under the ADA, the employer (and the employee) must engage in the “interactive process” to find a reasonable accommodation for the employee’s disability.  After the request from Lawler (supported by a psychiatrist’s professional opinion) for a transfer to a less stressful environment, the school district was required to make a reasonable effort to explore possible accommodations, such as looking for open positions in other schools or reducing the number of students with behavioral or emotional disorders in Lawler’s classroom.

In this case, the facts in the record suggest that the School District made no attempt to look for another position for Lawler.  “The school district simply sat on its hands instead of following-up with Lawler or asking for more information.”  The court vacated the summary judgment award initially granted to the School District and remanded the matter for trial.

It is vital that employers covered by the ADA take employee requests for disability accommodation seriously and explore available options.  By failing to engage in the interactive process, the School District now faces the prospect of liability for failure to accommodate Lawler’s disability.

If you have any questions regarding an employer’s responsibilities or an employee’s rights under the Americans with Disabilities Act, please contact:

Robert Cooper at:

rcooper@lgattorneys.com or (312) 368 0100.

Cook County Raises Minimum Wage

On October 26, 2016, the Cook County Board passed an ordinance to gradually increase the minimum wage to $13.00 per hour by 2020. The Cook County Board’s action follows the lead of the City of Chicago which in 2014 passed an ordinance to gradually increase the minimum wage in Chicago to $13.00 per hour by 2019.

The first increase is effective July 1, 2017, raising the minimum wage from $8.25 to $10.00 per hour. The minimum wage will increase again on July 1, 2018, to $11.00 per hour; on July 1, 2019, to $12.00 per hour; and on July 1, 2020, to $13 per hour. The ordinance applies to any business or individual that employs at least one employee who performs at least two hours of work in any two-week period while physically present within the geographical boundaries of Cook County, with limited exceptions.

The ordinance also requires Cook County employers to provide notice to their employees regarding their rights under the ordinance, including: (i) conspicuously posting a notice at each facility within Cook County; and (ii) providing a written notice to employees with their first paycheck issued after July 1, 2017.

Employers are subject to significant penalties for non-compliance with the ordinance, including, but not limited to, fines in the amount of $500 to $1,000 per each day of non-compliance. The ordinance also establishes a private cause of action for employees who may recover damages against an employer in an amount equal to three times the amount of any underpayment, in addition to the employee’s attorneys’ fees and costs. An employer’s failure to comply with the ordinance may also violate other laws including the Illinois Wage Payment and Collection Act, Illinois Minimum Wage Law, and Federal Fair Labor Standards Act, which also provide for an employee’s recovery of damages, interest and attorneys’ fees.

If you have any questions regarding the minimum wage applicable to your business or your obligations under the new Cook County Ordinance, please contact:

Kristen E. O’Neill at:

koneill@lgattorneys.com or 312-368-0100.

Have You Planned For The Disposition Of Your Digital Assets?

Many of us have accounts with Facebook, Twitter, Instagram, Google Mail, and similar accounts, digital files such as photos, music, movies, and also online accounts with banks, merchants and others. These types of files and accounts are often referred to as digital assets. Have you ever thought about what would happen to those digital assets upon the disability or death of the owner? Does anyone have the right of access? Does anyone have the right to keep the asset or to destroy (discontinue) it? If nothing is done, the keeper (“custodian”) of those digital assets may eventually terminate the asset and delete them.

Digital assets are generally governed by a complex set of Terms of Service, which are drafted to protect the provider of the service – not the user.

Illinois recently passed The Revised Uniform Fiduciary Access to Digital Assets Act, which may provide certain fiduciaries with access to your digital assets. This Act, while appearing to provide access to a deceased user’s digital assets, may not provide complete access. So, what should you do?

  1. Make an inventory of your digital assets and make sure it is accessible to those whom you trust. Include the name of the internet site, your user name and your password, and if applicable your account number and other relevant information.
  1. Provide in your estate planning documents that your trustee, executor or other fiduciary has the power to be granted access to your digital assets. OR, perhaps you do not want anyone else to be granted access. In that event you should expressly prohibit access to anyone else.

If you would like to discuss your estate planning, including the disposition of your digital assets, please contact:

Morris R. Saunders at:

312-368-0100 or at msaunders@lgattorneys.com.

 

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