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March 31, 2005

Employers Must Notify Employees Of Their Rights Under The Uniformed Services Employment And Reemployment Act

The NFIB is reporting that as of March 10th, the DOL is requiring all employers to notify employees of their rights under the Uniformed Services Employment and Reemployment Rights Act (USERRA). The DOL is requiring employers to distribute a complete notice of rights to all employees. This applies to all employers, regardless of employer size and regardless of whether any uniformed service members are employed. Click here for the link to the DOL compliance page on the USERRA.

Posted by Nick Infusino at 05:52 PM in Small Businesses | Permalink | TrackBack

Bank Consolidations and Deregulation Changes Small Business Lending Landscape

The SBA Office of Advocacy has released a study that indicates that bank deregulation and the expansive use of bank holding companies (BHCs) has changed the lending market for small businesses (the report is entitled "The Effects of Mergers and Acquisitions on Small Business Lending by Large Banks").

The study shows that as BHCs grow in size their percentage of small business loans (as compared to its total business loans) decreases. The study also indicates that the organizational form of the BHC has an effect on its small business lending. When a BHC acquires banks but chooses not to merge the newly acquired bank into other subsidiary banks then the acquired bank's small business lending is little effected. But, if two subsidiary banks are merged to create one large subsidiary bank, then the large subsidiary bank's small business lending declines.

This study may provide an interesting glimpse into future small business lending problems. Clearly, the trend in the banking industry over the past couple of decades has been one of consolidation and deregulation. If this trend continues, this study may foreshadow a market in which fewer lenders are willing to serve small business customers.

Click here for the full report. Click here for the report summary.

Posted by Nick Infusino at 05:25 PM in Small Businesses | Permalink | TrackBack

FTC Settles with Fraudulent Debt-Counseling Agencies

U.S. regulators settled with three debt-counseling agencies accused of scamming consumers out of millions of dollars.

The three agencies involved in the settlement were National Consumer Council, Debt Management Foundation Services Inc. and Better Budget Financial Services Inc. Lydia Parnes, head of the Federal Trade Commission's consumer protection division stated that "All three companies lied about who they were, what they could do for consumers and how much they charged."

According to the FTC, there have been an increasing number of scams involving debt-counseling agencies. Although many agencies are legitimate, it has been an increasingly common problem that some agencies promise to help consumers reduce monthly payments and manage debts, but they only succeed in making matters worse for the consumer.

Better Budget Financial Services Inc. instructed clients to pay their monthly bills to Better Budget rather than creditors while the agency claimed to be negotiating with creditors. However, Better Budget was not negotiating with creditors as the consumers expected. As a result, interest would mount forcing consumers further into debt and often resulting in bankruptcy.

National Consumer Council promised consumers free debt-counseling services. Instead of offering credit-counseling they were using their non-profit status to act as telemarketers. They would place unsolicited calls to consumers to direct them to other debt-counseling services that would charge them fees and rarely reduce their debt problems.

Debt Management Foundation Services Inc. also violated telemarketing laws to solicit business from consumers. They would then charge consumers up to $1,000 for their services.

The companies involved must repay consumers more than $25 million. Debt Management Foundation Services Inc. and National Consumer Council are in the process of being shut down.

Posted by Mandy Gibbs at 01:05 PM in Bankruptcy & Debtor/Creditor | Permalink | TrackBack

March 30, 2005

SCOTUS Hears Arguments in Grokster

As scheduled, the Supreme Court heard oral arguments for the Grokster case yesterday.  So far, it looks as though at least some Justices are uncomfortable with tightening the copyright laws.  Justice Souter remarked, "I know perfectly well that I can buy a CD and put it on my iPod.  But I also know if I can get music without buying it, I'm going to do so."  The problem comes when you consider what Souter reffered to as "the guy in the garage."  "The question is: how do we know in advance that we can give the inventor -- that is, the developer -- the confidence to go ahead?" asked Souter.  "How do we avoid the foregone conclusion that the iPod developer is going to lose his shirt?"

Justice Ginsburg addressed an alternate concern that SCOTUSblog reports troubles a number of the Justices: how does one judge secondary infringement in the digital age?  Under the Betamax standard, secondary infrigement claims will fail against a product with substantial non-infringing uses.  So the question becomes: is the Betamax standard somehow inadequate for digital technology?

More as this develops...

Posted by tRJ at 04:13 PM in Copyright & Trademark | Permalink | TrackBack

South Carolina Legislators Looking To Lower Small Business Tax Rate

WLTX.com is reporting that the South Carolina Senate Finance Committee has approved a bill that would reduce the State's small business tax rate from 7% to 5% over the next four years. The bill now moves to the Senate floor for debate.

Posted by Nick Infusino at 12:16 PM in Small Businesses | Permalink | TrackBack

20% Growth in Angel Funding For Startups in 2004

The NFIB is reporting that angel funding for startups increased by 20% in 2004 (citing a report by the Center for Venture Research at the University of New Hampshire). The most popular sectors for angel investors were software (22%), health care services (16%) and biotech (10%).

Posted by Nick Infusino at 12:08 PM in Small Businesses | Permalink | TrackBack

NY Court of Appeals rules that a telecommuter must pay NY state income tax

In a 4-3 decision, the NY Court of Appeals ruled yesterday that a telecommuter who lives and works in Tennessee but is employed by a New York-based company must pay New York taxes on 100 percent of his income even though he spends at most 25 percent of his working time in the Empire State.

In Matter of Huckaby, 8, the court rejected constitutional challenges to the so-called "convenience of the employer" test that enables New York to tap the income of people who live outside the state but work for an in-state firm.

Under the convenience of the employer test, if the employee works out of state due to the needs of the employer, he or she may apportion income between the days spent in and out of New York. But if the employee works out of state for his or her own convenience, New York claims the right to tax all of the earnings, no matter how much time was spent working here. The rationale for New York's convenience test was explained 31 years ago in Matter of Speno v. Gallman, 35 NY2d 256 (1974): "Since a New York resident would not be entitled to special tax benefits for work done at home, neither should a nonresident who performs services or maintains an office in New York State."

In Tuesday's opinion, the majority expressed some reservations over the fundamental fairness of taxing out-of-state residents who have only remote links to New York. But in the final analysis, Judge Susan Phillips Read, joined by Chief Judge Judith S. Kaye and Judges Albert M. Rosenblatt and Victoria A. Graffeo, concluded that the convenience of the employer test does not inherently offend either the Commerce Clause or the Due Process provision in the U.S. Constitution.

On Tuesday, the court majority said there may be some point at which the tax is so disproportionate -- for instance, if the taxpayer works only one day a year in New York -- that its application would violate due process. But it declined to draw any line and said that in the Huckaby case, spending 25 percent of one's time in New York is plenty to justify the tax and "satisfy any rough proportionality requirement called for by due process."

Posted by Gerry Torres at 08:34 AM in Taxation | Permalink | TrackBack

March 29, 2005

Tractor Giant Wants Square-Dancers to Relinquish Trademark

Case New Holland ("CNH") has filed a petition with the USPTO to cancel a trademark owned by Iowa farmers who use CNH tractors for a touring square-dance show.

Since 1998, 11 farmers from Nemaha, Iowa have been touring their square-dancing tractors under the trademarked name Farmall Promenade.  Now CNH, which currently owns a trademark for tractors under the Farmall name, wants the farmers' trademark cancelled.

CNH maintains that it has no desire to shut down the square-dancing machines; it simply wants to protect the Farmall name on apparel.  But the farmers believe their trademark allows them to sell T-shirts and similar merchandise bearing the Farmall Promenade name.

Says one farmer, "We're fighting it because we don't think we've done anything wrong."

Posted by tRJ at 02:15 PM in Copyright & Trademark | Permalink | TrackBack

IRS collects $3.2 Billion in Son-Of-Boss Tax Shelter Scams

IRS Commissioner Mark Everson announced March 24, that it has collected over $3.2 Billion in from taxpayers participating in the Son of Boss tax shelter. IRS officials expect this number to grow to over $3.5 Billion once all the settlements are in. Son of Boss was an abusive transaction aggressively marketed in the late 1990s and 2000 primarily to wealthy individuals.

The settlement initiative required taxpayers to concede 100 percent of the claimed tax losses and pay a penalty of either 10 percent or 20 percent unless they previously disclosed the transactions to the IRS. So far, $3.2 billion in taxes, interest and penalties have been collected from the 1,165 taxpayers who are participating in the settlement initiative. The typical taxpayer payment was almost $1 million, with 18 taxpayers paying more than $20 million each and one paying over $100 million.

Participants not taking part in the settlement initiative have or will shortly receive a deficiency notice from the IRS disallowing all claimed tax losses and transaction costs. They will also be assessed the maximum applicable penalty –– 40 percent.

Posted by Gerry Torres at 06:29 AM in Taxation | Permalink | TrackBack

March 28, 2005

Hope At Home Act Awaits House Approval

Inc.com is reporting that the Hope at Home Act, which was unanimously approved by the Senate earlier this month, is now awaiting passage in the House. The Hope at Home Act would provide a 50% tax credit to companies that pay the difference between company salary and military salary to employees called to active duty.

The Act would also provide a tax credit to companies forced to hire replacements for employees called to active duty. The estimated cost of the Act is $1.9 billion over the next 10 years. Proponents hope the Act can be implemented by January 2006 if it passes the House.

Posted by Nick Infusino at 12:20 PM in Small Businesses | Permalink | TrackBack