Florida Tax Attorney Blog

On February 2, 2012, the 6th Circuit Court of Appeals reversed Defendant Timothy Parkes' convictions of bank fraud on all counts and granted his motion for judgment of acquittal. The 6th Circuit held that the district court had incorrectly denied the defendant's motion for acquittal following the jury trial.

Mr. Parkes and his partner, Mr. Mourier, were each charged with ten counts of bank fraud based on loans made to more than ten limited liability companies by Benton Bank. The aggregate amount of these loans totaled millions of dollars. At trial, the government's theory was that Mr. Parkes and the bank's president jointly created the fictitious entries in an effort to disguise some of the bank's earlier, troubled loans to Mr. Parkes. The bank president, also charged with bank fraud, pled guilty. The jury found Co-Defendant Mr. Mourier not guilty on all charges.

Other than the bank fraud counts, Mr. Parkes was also charged with making a false statement to the special agents during the investigation. Mr. Parkes was found guilty on three counts of bank fraud and one count of making a false statement.

The theory of Mr. Parkes' defense was that the president acted alone. However, he was precluded from bringing this defense. He also made a motion for a mistrial after the prosecutor in this case improperly told the jury if they acquitted the defendant, he would get to keep more than $4 million of the bank's money. Mr. Parkes motion for a mistrial was denied. He then timely moved for a judgment of acquittal based on insufficient evidence. The district court further denied this motion and the defendant appealed, challenging the sufficiency of the government's evidence, the exclusion of evidence that the bank's president has previously engaged in identical frauds, and the prosecutor's misconduct.

Continue reading "Parkes Found Guilty of Bank Fraud for Loans to LLCs" »

Worker classification issues have been the focus of an increasing amount of attention from the IRS within recent months. While these issues have been around for decades, the attention they receive has significantly increased. In September of 2011, the IRS established a new Voluntary Classification Settlement Program, also known as "VCSP," providing "partial relief from federal employment taxes for eligible taxpayers that agree to prospectively treat workers as employees." IRS Announcement 2011-64 (Sept. 21, 2011).

The IRS also entered into a memorandum of understanding with the Department of Labor to share information with regard to the classification, and more importantly, the "misclassification" of employees and independent contractors. Finally, President Obama included a worker classification provision in his plan "Living within our Means and Investing in the Future: The President's Plan for Economic Growth and Deficit Reduction."

Worker classification issues tend to boil down to one thing - is the worker an employee or an independent contractor? Determining the status of a worker depends on a common law facts and circumstances test regarding whether the service recipient has the right to direct and control how the services are provided. Too often, the results of this test are unclear. To resolve these issues, the IRS is now offering taxpayers a program that allows for the voluntary reclassification of workers as employees. To participate in the program, a taxpayer must meet certain eligibility requirements; submit an application; and enter into a closing agreement with the IRS.

To be eligible, the taxpayer must: (1) have consistently treated its workers in the past as nonemployees; (2) have filed all required Forms 1099 for the workers for the past three years; and (3) not currently be under audit by the IRS, the DOL, or a state agency concerning worker classification matters. A taxpayer who was previously audited for these issues will be eligible only if the taxpayer has complied with the results of such audit.

Continue reading "IRS Launches New Voluntary Classification Settlement Program for Worker Classification" »

Whether Florida attorneys' fees are deductible depends on the nature of the underlying claim. If the character of the claim brought is for business purposes, the fees are deductible; if the underlying claim is personal, the attorney fees are not deductible.

To recover attorneys' fees from the opposition, the prevailing party must show that the underlying claim was business related. Otherwise, the attorneys' fees are not deductible. Additionally, the ruling in Commissioner v. Banks, clarifies that even if such fees are deductible, they qualify as itemized deduction, and as such, are subject to the 2 percent floor, mandated by I.R.C. Section 68. 543 U.S. 426 (2005).

However, as part of the American Jobs Creation Act of 2004, Section 62(a)(20) was implemented which allows for attorneys' fees incurred in connection with any action for unlawful discrimination to be deducted. Additionally, this section provides that attorneys' fees incurred for this specific purpose are not considered itemized deductions that would be subject to the 2 percent floor.

Continue reading "Are Your Florida Legal Fees Deductible?" »

In general, non-competition provisions are deemed against public policy. However, they will be enforced if the duration and are of restriction are reasonable. In order to determine what is reasonable, a court will look at the individual facts of each case. Thus, there is no one definitive rule to determine whether or not a non-competition clause is reasonable and consequently valid.

With regard to what is deemed reasonable, there is case law supporting the proposition that a county wide restriction is facially reasonable. Some courts have held that up to 75 miles is reasonable. However, the court will look at the specific facts, including the type of work involved to determine if a non-competition clause is sound. If a court finds that a certain restriction is unreasonable, it would reduce that restriction to a narrower geographical limitation.

In addition, it is important to note that non-competition clauses may have serious tax consequences for you and/or your business. Allow a well qualified contract law and tax attorney to assist you in interpreting the legal and tax ramifications of non-competition provisions, as well as many other complex clauses that might be included in contracts you would like to sign or have signed by a client.

Continue reading "How Do You Know if Your Non-Compete Clause Is Taxable?" »

The Florida Statutes provide that individuals will be disqualified from receiving unemployment compensation under certain circumstances.

Specifically, providing:
If an individual is discharged from employment for drug use as evidenced by a positive, confirmed drug test as provided in paragraph (1)(d), or is rejected for offered employment because of a positive, confirmed drug test as provided in paragraph (2)(c), test results and chain of custody documentation provided to the employer by a licensed and approved drug-testing laboratory will be self-authenticating and admissible in unemployment compensation hearings, and such evidence will create a rebuttable presumption that the individual used, or was using, controlled substances, subject to the following conditions:

(a). To qualify for the presumption described in this subsection, an employer must have implemented a drug-free workplace program under §§ 440.101 and 440.102, and must submit proof that the employer has qualified for the insurance discounts provided under § 627.0915, as certified by the insurance carrier or self-insurance unit. In lieu thereof, an employer who does not fit the definition of 'employer' in § 440.102 may qualify for the presumption provided that the employer is in compliance with equivalent or more stringent drug-testing standards established by federal law or regulation. (emphasis provided)

(b). Only laboratories licensed and approved as provided in § 440.102(9), or as provided by equivalent or more stringent licensing requirements established by federal law or regulation may perform such tests.

Courts have found that an employer failed to establish a chain of custody with respect to the employee's specimens and because the employer, which failed to establish certification required by Florida Statute §§ 443.101(11) and 627.0915 was not entitled to the presumption contained in § 443.101(11). The employer did not produce a certificate or other evidence of the company qualifying for insurance discounts and could not verify the testing lab's qualifications.

Courts have noted that the employer has the burden of proving that the act complained of constitute "misconduct" sufficient to disqualify the employee from receiving benefits and that the unemployment compensation statute is to be liberally construed in favor of the employee where the employee is disqualified from receiving those benefits. In such cases, Courts held that the former employee was not guilty of misconduct and was entitled to unemployment compensation benefits.

Continue reading "Disqualification for Florida Unemployment Benefits When Discharged" »

A corporation is a separate legal entity, with its own identity. Once funds are deposited into a corporate account, those funds become the property of the corporation. Decisions with regard to a corporation's property are made by the shareholders and carried out by the board of directors and officers of the corporation. Florida law requires that a corporation has a board of directors and that the board exercise all corporate powers. Any action of the board must be approved in a meeting and if no such meeting occurs, then by written unanimous consent of the board of directors. The board of directors has the authority to execute bylaws, which detail the methods through which these decisions and activities occur.

The directors of a corporation are fiduciaries who are entrusted with the activities of the corporation and are held to a high standard of conduct. Under Florida corporate law, a director must perform his or her corporate duties: (1) in good faith; (2) with such care as an ordinary prudent person in a like position would exercise under similar circumstances; and (3) in a manner the director reasonably believes to be in the best interests of the corporation. Courts have noted that Florida law has long recognized that corporate officers and directors owe duties of loyalty and a duty of care to the corporation. A director's fiduciary duties are extended to the creditors of a corporation when the corporation becomes insolvent or is in the vicinity of insolvency.

Fraudulent transfers in Florida are governed by statute:
A transfer made by a debtor is fraudulent as to a creditor whose claim arose before the transfer was made if the transfer was made to an insider for an antecedent debt, the debtor was insolvent at the time, and the insider had reasonable cause to believe that the debtor was insolvent.

Generally speaking, if there is not enough corporate funds to pay all creditors, an "insider" of the corporation cannot get paid before outside creditors.

Continue reading "Fraudulent Transfers In Florida" »