Jay Hollander's Weblog - Commercial Law

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Fri Jul 07, 2006

New York's Highest Court Upholds Ban on Gay Marriage

In a decision that, in the short term, is bound to have wide ranging repercussions, the New York State Court of Appeals, the State's highest Court, rejected the constitutional claims of a "right" to marry.

As the Court opined in a 4-2 ruling:

"We conclude . . . that there are at least two grounds that rationally support the limitation on marriage that the Legislature has enacted . . . First, the Legislature could rationally decide that, for the welfare of children, it is more important to promote stability, and to avoid instability, in opposite-sex than in same-sex relationships. [Secondly, the] Legislature could rationally believe that it is better, other things being equal, for children to grow up with both a mother and a father."

While the full ramifications of the decision have yet to be parsed out, it is clear that, except where granted by statute or policy, the argument that gay unions are of such a fundamental nature that they should be treated for all purposes as the equivalent of marriage has suffered a heavy blow in New York.

This decision, found at http://www.nycourts.gov/ctapps/decisions/jul06/86-89opn06.pdf, may be the shot across the bow that ignites the real battle, that before the legislature.

Already, activists have pledged to lobby legislators to enact a statute authorizing gay marriage and the front runner for the upcoming Governor's race, current Attorney General Eliot Spitzer, has gone on record that he favors the rights of gays and lesbians to marry.

So, despite a disappointing setback, the war is far from over.

All told, according to Internet sources, no less than 45 states have statutes banning gay marriage although some allow civil unions.

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Thu Jun 29, 2006

Many LLC's Still Unaware of New Publication Requirements and Penalties

It's been almost a month since the significant changes to publication requirements for NYS
LLC's, PLLC's and LLP's went into effect.

As some of you may know, beginning this past June 1st 2006, the publication requirements governing these entities was made more onerous because, previously, the only penalty for lack of publication was a curable lack of capacity to sue in Court, something that many LLC's didn't think they'd have to do. As this deprived the State of significant publication fees, this could not stand, despite the uniform opposition of many Bar Associations.

As of June 1, 2006, the content of the publication and the penalty for failing to publish have been changed significantly.

Beginning as of June 1, these entities must also publish the names of the ten members of the entity who are actively engaged in the business and who hold the most valuable interest. If there are less than ten members, then all of the members' names must be published.

The method of the publication is also changed, from six weeks in a weekly newspaper, to four weeks, but now one publication must be weekly and the other daily.

More important is the change in the nature of the penalty for non-compliance. Where, before, the penalty temporarily served as a bar to a lawsuit, now, the penalty for failing to publish is the suspension of the entity's right to do business during the period of suspension, which automatically takes effect 120 days following the expiration of the date of formation for affected entities formed on or after June 1, 2006.

In addition to being unable to carry on its business, this provision raises an important issue about the legal consequences on members of the entity if its right to do business is suspended. It's not clear if they will be practicing without benefit of limited liability protection or not.

Worse, even if the suspension is cured by subsequent publication, the statute doesn't clearly state whether likmited liability protections would be reinstated retroactively.

There is one piece of good news. If you formed your entity before January 1, 1999, you're safe and no further publication is required.

Entities formed since then, but before June 1, 2006 have to publish under the new rules.

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Mon Oct 10, 2005

Bloggers Hope to Come Under Shield Law Meant for Journalists

In response to the firestorm arising out of the efforts to protect conversations between journalists and members of the Executive Branch regarding the brewing scandal known as "Plamegate", federal legislation has been proposed to create a shield for journalists.

Much to the disappointment of the blogging community, Senate Republican Richard Lugar, co-sponsor of the proposed Free Flow of Information Act of 2005, indicated that bloggers would "probably not" be considered journalists under the proposed federal shield law, at an event held by the Inter American Press Association earlier today.

Lugar stressed, however, that no final decision had been made about how to define a journalist under the proposed statute.

"Are bloggers journalists or some of the commercial businesses that you here would probably not consider real journalists? Probably not, but how do you determine who will be included in this bill?"

By its language, the "covered person" protected by the bill's terms includes "any entity that disseminates information by print, broadcast, cable, satellite, mechanical, photographic, electronic, or other means and that publishes a newspaper, book, magazine, or other periodical in print or electronic form; operates a radio or television station (or network of such stations), cable system, or satellite carrier, or channel or programming service for any such station, network, system, or carrier; or operates a news agency or wire service." The legislation also covers employees, contractors or other persons who "gathers, edits, photographs, records, prepares, or disseminates news or information for any such entity."

While it's not clear whether bloggers will come within this definition, it's also unclear as to whether or not some unfair advantage in the journalistic playing field is being given to traditional media outlets over the ascending blogosphere.

Read more at http://tinyurl.com/arv3n

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New Proposal to Toughen Data Safeguards

Following California's consumer data protection legislation, members of the House of Representatives have introduced proposed federal legislation to protect sensitive consumer information, help combat identity theft and create a uniform national standard for giving notice of data breaches to consumers.

The legislation, titled the Financial Data Protection Act of 2005, aims to create a uniform standard of care to protect consumer information, set rules for consumer notification in the event of a breach and, notably, requires companies to provide free credit monitoring services to consumers for six months when their information has been compromised.
Read more »

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Tue Sep 27, 2005

High Speed Wiretaps OK'd by FCC

Last month, the FCC issued a news release reflecting its order that providers of certain broadband and VOIP services can be subject to legal wiretaps.

As reflected in the Commission's News Release,

"The Order is limited to facilities-based broadband Internet access service providers and VoIP providers that offer services permitting users to receive calls from, and place calls to, the public switched telephone network. These VoIP providers are called interconnected VoIP providers."

The full Order can be found at http://tinyurl.com/7ks5q

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Thu Sep 15, 2005

Voluntary State Sales Taxes for Internet Purchases

It seems that scarecely a year goes by without some new, yet unsuccessful, iniative to overcome the conceptual resistance to allowing states to compel onlyine merchants to collect sales taxes on Internet sales.

The reasons for the resistance have been gone over many times, including, among others, technical problems in reconciling disparate state tax schemes and exepmptions but, now, there is a new kind of initiative, designed to encourge, not require, the collection of such taxes by online merchants.

Added to this is the fact that, as far back as the early 1990's, the U.S. Supreme Court forbade states from compelling merchants to collect state sales tax unless the merchant had a physical presence in the state.

But, a new initiative, called the "Streamlined Sales Tax Project" aims to change this by coming up with a viable technology to simplify the collection and administration process, in the hopes of convincing the government to overrule the Supreme Court precedent.

More details can be found in an article in today's New York Law Journal at http://tinyurl.com/82wbh .

A group of thirteen states

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Tue Sep 13, 2005

New IRS Policy Guideline on Auto Deductions

WASHINGTON – The Internal Revenue Service and Treasury Department announced today an increase to the optional standard mileage rates for the final four months of 2005.

The rate will increase to 48.5 cents a mile for all business miles driven between Sept. 1 and Dec. 31, 2005. This is an increase of 8 cents from the 40.5 cent rate in effect for the first eight months of 2005, as set forth in Rev. Proc. 2004-64.

“This is about fairness for taxpayers,” said IRS Commissioner Mark W. Everson. “People are entitled to deduct the real cost of operating a vehicle. We’ve responded to the recent gas price increases by making this special adjustment so taxpayers get the tax benefit they deserve.”

In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2005. The IRS normally updates the mileage rates once a year in the fall for the next calendar year.

“With many predicting a decline in gas prices over coming months, we will hold off on setting the 2006 rate until closer to January,” Everson said. Next year’s rate could be lower than 48.5 cents.

While gasoline is a major factor in the mileage figure, other items enter into the calculation of mileage rates, such as the price of new vehicles and insurance.

The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of the extra burden of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.

The new four-month rate for computing deductible medical or moving expenses will be 22 cents a mile, up from 15 cents for the first eight months of 2005. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.

The annual Revenue Procedure includes limitations on who is not eligible to use the standard mileage rate.

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Mon Apr 18, 2005

Unintended Consequences for the Class Action Fairness Act?

This news story falls into the You Can't Win for Losing category. The Class Action Fairness Act, recently signed into law, was designed to hem in what was perceived to be overly aggressive and manipulative plaintiffs by switching class action lawsuits to federal, instead of state, courts.

Part of the strategy was to preclude plaintiffs from forum shopping to figure out which state court might grant them the most money. Federal courts are viewed as harder to sue in, requiring larger and more skilled firms, and results tend to be more uniform than in state courts, according to perception.

Some observers, according to an article in Law.com, are now predicting that, true to the law of unintended consequences, defendants may not get the benefits they hoped for after all from the new law. Why? Because funneling most class action lawsuits to federal court also will have the effect that defendants will now face "bigger, richer, more experienced plaintiffs firms".

Not only that, but plaintiffs lawyers can keep class actions in state courts if two-thirds of the class and the defendant are citizens of the state. Plaintiff's attorneys are therefore expected to demand defendants' customer lists to do an analysis prior to the case being able to be transfered to federal court.

http://tinyurl.com/8hy6x [sub req'd]

Class Action Fairness Act: http://thomas.loc.gov/cgi-bin/bdquery/z?d109:s.00005:

President George Bush's speech when signing the Act:
http://www.whitehouse.gov/news/releases/2005/02/20050218-11.html

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Thu Apr 14, 2005

An Uncertain Basis for Estate Tax Repeal

Nothing in tax law is as it seems. Even the simple can be complicated. Take, for instance, the recently publicized vote in the House of Representatives to permanently repeal the Estate tax.

Leaving aside questions of whether such permanent repeal would amount to a perpetual budget busting loss of revenue, might it surprise you to know that other portions of the repeal bill ironically would cause many taxpayers to pay more taxes on certain inherited propertiy than would be paid under prevailing law?

Well it's true, says the National Multi Housing Council and the National Apartment Association. And it's all due to the new bill's elimination of stepped up basis, the tax fiction that allows recipients of inherited depreciated property to "step up" their tax basis to a property's fair market value at the time of inheritance, rather than measuring capital gains from a lower basis of the property when held in the hands of the donor.

For more details on how the permanent repeal of the Estate tax could prove more taxing to many, read

http://biz.yahoo.com/prnews/050414/dcth086.html?.v=1

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Tue Mar 29, 2005

eBay Earnings Might Be Taxable

If you sell your old stuff on eBay, do you have to pay taxes? If you do it all the time? Where, exactly, is the line between a hobby and a business? Some 135 million people who use eBay need to know by April 15th. So My Way News has an article that points out that the IRS has 9 indicators that what a person is doing constitutes a business:

"These indicators include evidence that the taxpayer depends on the income, acts in a businesslike manner, or puts enough time and effort into the activity to suggest a profit motive.

Fooden said the difference between a hobby and a business can often be the seller's intent."

Selling off your attic junk one time only probably doesn't count as a business, the article says, but if you are scouring garage sales for older comics for collectors, you might qualify. And if you are selling a relative's antique china collection, that might mean capital gains taxes are owed. So, be aware that this is an issue if you're selling on eBay, and the general rule, the article says, is this: if you are selling and making a profit, you should declare it.

http://apnews.myway.com/article/20050328/D893N13O0.html

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