Ask Your Attorney
About Being Responsible For Business Payroll Taxes
Dear Counselor: Although I have only a very small (2%) ownership interest in the business I work for, the majority owners made me an Assistant Treasurer, and I make out the payroll checks. Now I find out the business is having financial trouble, and the withholding taxes haven't been paid. Will the IRS come after me?
Dear Client: In a just and perfect world, no -- not unless you intentionally diverted the withholding taxes to yourself. However, in the real world, whether you are a 2% owner, or a 92% owner, if you are an officer, and have the responsibility to make out and sign the payroll checks, then it is likely that the IRS will look long and hard at you to see if you can personally be held responsible for making up the unpaid withholding taxes, and also for penalties for failing to see to it that they were paid. If a corporation fails to pay withholding tax, or the employer's portion of social security, the IRS can come after directors, officers and/or other people who are responsible for paying in such amounts and filing the necessary returns (regardless of who owns the business). Having been given the authority to sign checks is one of the first things the IRS is going to look at. So, it might be great for your ego to have been named an Assistant Treasurer, and for you to be able to say you have check signing authority, but with the title comes the responsibility to see to it that business taxes are paid.
You need to come in to discuss this with me right away to see what can be done before the IRS agent "comes a knocking."
Sincerely,
John Maier Jr.
Anthony A. Coletti
About Registering your Trademark
Dear Counselor: I just came up with a terrific logo for my business that I want to use in all my advertising. I'm going to spend a lot of money putting it on all my stationary, labels, checks, shipping and packaging materials, order forms and advertising. So I wonder how I can protect myself from others taking my idea and using it for themselves.
Dear Client: I totally understand your concern. Businesses spend tens of thousands of dollars on advertising, and when you come up with a way to separate yourself from all others through a distinctive logo, label, name or symbol, it is critical to do everything you can to protect it. A "trademark" is a word, name, or symbol which is used to identify a particular product or service offered by a particular manufacturer or from a particular source. It distinguishes the product or manufacturer from other products offered by others. You can protect yourself by registering your logo as a trademark either at the State level or the Federal level, or both. The Wisconsin Secretary of State has a web site devoted to the registration of trade names and trademarks, and for a modest fee ($15) you can register your mark with the State, and the registration remains on record for 10 years. That registration is only effective, though, in Wisconsin. The benefits of a federal trademark registration with the US Patent and Trademark Office far outreach those of a state registration since a federal registration acts nationwide, gives the owner a presumption that the trademark is valid, and carries with it some fairly significant "clout" in terms of the damages that can be imposed upon someone who attempts to use your trademark without your permission. You recognize the need to protect yourself. Now go ahead and do it through the laws available to you, and if you need further help, just give us a call.
Sincerely,
John Maier Jr.
Anthony A. Coletti
About Insulating My Business From My Husband's Creditors
Dear Counselor: My husband and I just moved to Wisconsin, where we are going to "start over." I want to open a new business, and we've agreed that it will be mine alone. I am concerned that my husband still owes a number of creditors from a business he operated before we were married. He is paying them off, but I don't want his creditors (old or new) coming after my business. What do I do?
Dear Client: Some years ago, the Wisconsin legislature enacted a marital property law which applies to married couples who are Wisconsin residents. The general rule for married couples in Wisconsin is that all income, earnings and other property acquired during marriage (except by gift or inheritance) is presumed to be the marital (ie. community) property of the spouses. This general rule will be applied to your new business unless you and your husband agree, in writing, through a Marital Property Agreement, that the business is your separate, individual, property, including any profits generated by the business. You may want to form a corporation or limited liability company to operate your business, and you would be the sole owner. You would then have to be very careful to treat every aspect of the business as your separate property. And, there are special rules that you need to comply with in order to properly advise your household creditors what is marital vs. individual property. Books have been written about this area of Wisconsin law, and there are many court cases that have arisen over the years addressing creditors' rights over marital vs. non-marital property. You need to work closely with us to properly set up your business so that your interests are protected. Come on in, and let's discuss.
Sincerely,
John Maier Jr.
Anthony A. Coletti
About Protesting Your Tax Assessment
Dear Counselor: I just received a notice in the mail from my local assessor that shows that the assessed value of my property is being increased when I think it should be lowered! What do I do?
Dear Client: As you know, your real estate tax bill is based upon the assessed value of your property. The higher the assessed value, the higher the taxes you pay. So, making sure the local assessor has the right information is critically important to a fair assessment. If possible, you should arrange to meet with the assessor to discuss your assessment. Local assessors are typically more than happy to arrange an appointment. An informal discussion can often resolve a problem -- rather than going to a formal hearing before the "Board of Review". If the assessor has made a mistake about the size of your property, or the age or condition of your home, you can call that to their attention. If, on the other hand, their data is correct, but you believe the value is just too high, the best evidence of value is a recent "arm's-length" sale of reasonably comparable property. You can try to get information on your own, or work with a real estate broker, or appraiser. You can also review information on what homes similar to yours are assessed at by reviewing the assessor's tax roll. Showing the assessor that your home is assessed much higher than three similar homes the assessor has set lower values for is a strong argument that yours is too high. If you can't reach an agreement, the next step is filing a written Objection, and going before your community's Board of Review where you can present your case. Good Luck, and feel free to call with more questions.
Sincerely,
John Maier Jr.
Anthony A. Coletti
Can I avoid payroll reporting if I just hire someone as an “independent contractor”?
Dear Counselor: I have a very small company and need to hire two people to help with shipping my products. Payroll reporting is so time consuming and expensive that I was hoping to hire them as “independent contractors” so that I wouldn’t have to worry about withholding taxes. Can I do that?
Dear Client: You have to be very careful here not to violate the law because the IRS, and other Federal and State government departments, are aggressively pursuing employers who misclassify employees as independent contractors. As you know, if the people who are providing services to you are truly employees, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages. There are also workers’ compensation coverage issues. The consequences of attempting to treat someone as an independent contractor, when they are really your employee, can be catastrophic for a small business like yours. Not only can you be held liable to the State and Federal Government, but to the employees as well. Generally speaking if you have the right to control what the worker does, where, with what tools and supplies, and how the worker does it, the person will be classified as your employee. Properly classifying individuals as independent contractors is not easy, and if you will come in to discuss, we can go over the tests and rules which the government uses to make the determination – before you get into more trouble than you would have had doing it the right way in the first place.
Sincerely,
John Maier Jr.
Anthony A. Coletti
How do I protect myself when making an offer to purchase?
Dear Counselor: My wife and I want to make an offer to purchase a home that is being sold by its owner. We talked with the owner and have verbally agreed on a price. The Seller wants us to give him $5,000 to bind the deal, and said he’s willing to wait until we sell our home to close. We want the home, and are willing to give him the $5,000 -- but can’t afford to lose that money. How do we protect ourselves?
Dear Client: The first rule here is that Wisconsin law requires that contracts relating to real estate MUST BE IN WRITING to be enforceable. Your verbal agreement needs to be reduced to a written form, and then signed by all parties. If you do not have it in writing, and the Seller finds someone who is willing to pay more, the Seller might return your $5,000 with a note that says: “Thanks, but no thanks!” And you would likely find out that your “deal” is not legally binding. So, when you write up your “Offer to Purchase” you and the Seller will specify the price, the amount of “earnest money” to be put down to hold the deal, and all of the other terms and conditions for your transaction. Part of these terms will include “contingencies” that you, as Buyer, will specify must be met for you to close. One typical contingency is that you, as Buyer, have to be able to get an acceptable mortgage. Another typical contingency is that you, as Buyer, have to be able to sell your current home. If these contingencies are not met, and you are not willing to waive them and close anyway, you are protected and cannot be forced to close -- in which event, you would be entitled to a return of your $5,000 earnest money payment. Come on into the office, and we can help you write up your deal so that you can sleep easy.
Sincerely,
John Maier Jr.
Anthony A. Coletti
How Can I Settle Up With A Creditor ?
Dear Counselor: I recently hired a handyman to do some painting for me. I bought the paint, and he did the painting. The problem is that he sent me a bill for his work that I feel is way out of line. I called and told him that I wanted to pay him, but not overpay him. He said he’d see me in court. Do you have any suggestions?
Dear Client: If you have a figure in mind that you think is fair for the painting that was done, don’t waste time getting into an argument over the phone, or worrying about what he’s going to do. Send him a check for the amount you think fair, and maybe even a bit more. On the face of the check (not on the check stub), write: “Payment in full for painting services rendered.” Always be very descriptive of exactly what you are paying for. If your painter decides to accept payment, and deposits the check, the law treats this as an “accord and satisfaction” and he cannot thereafter legally collect more. This is an easy solution when relatively small amounts due are being argued over. In cases involving a lot of money, the compromise of a disputed claim is often carried out through payment, in return for a written Release. But in everyday situations, you can make payment, and if you write “payment in full” on the face of your check, and describe for what, the creditor cannot take your check and still claim more is due.
Sincerely,
John Maier Jr.
Anthony A. Coletti
Whether My Mother Will Be Evicted Because Of Her Dog?
Dear Counselor: My elderly mother recently lost her hearing and would benefit greatly if she could have a trained dog to let her know when someone is at the door, and things of that nature. BUT, she lives in a complex that has a "no pet rule". She doesn't want to be evicted, but needs help. Is there anything we can do?
Dear Client: This is actually a pretty common question. Frequently, having a trained "service" animal can mean a world of difference in the quality of life to their owner. If there is a "no pet rule" where your mother lives, just because it sounds final, doesn't mean that it is. The Federal Fair Housing Act requires "reasonable accommodation" and this applies to trained service animals which assist their masters with their disability. You can help your mother by contacting the board or management company at your mother's complex, and providing them with information concerning your mother's disability, together with a letter from her doctor explaining her need to have the trained dog with her. They will then be able to allow her to have the dog as a qualified accommodation under the Act. Best of luck to you, and let me know if you need any further help.
Sincerely,
John Maier Jr.
Anthony A. Coletti
Whether You Must Verify Employment Eligibility?
Dear Counselor: My husband and I operate a business which has done well, and we are now ready to hire our first two employees. We wondered whether we have to verify the citizenship or legal right to work of these new employees. How do we do that?
Dear Client: Yes, you must ask your new employees to present certain original documents to establish their eligibility for employment. The Immigration and Nationality Act requires employers to review these documents, such as a passport, driver's license or State ID card, voter's registration card, social security card, US Military card, or an original or certified copy of birth certificate. Just like most things involving the government, there is a form to be used. It is the "Form I-9, Employment Eligibility Verification" form, which can be obtained pretty easily by downloading it from the internet. You not only must fill out the form, but also must retain it just in case the government wants to inspect it. There is no filing fee for competing it, but if you ignore these requirements, you can be fined or otherwise penalized. When in doubt, call us, and we'll guide you through the process.
Sincerely,
John Maier Jr.
Anthony A. Coletti
About Firing Your Attorney!
Dear Counselor: My widowed sister just can’t get work with the attorney her husband had used for many years. She believes he has charged her too much, and doesn’t believe his bill is fair. But she doesn’t know what to do, and she is afraid he won’t return her legal documents and papers if she goes to someone else. What should I tell her to do.
Dear Client: The relationship between an attorney and client is one built on trust and confidence. Without that, it is difficult, if not impossible, to work with that person. Attorneys know that, and in life, personalities sometimes simply clash. Your sister should advise the attorney in writing that his services are no longer needed, and that he should return her file to her. Attorneys are prohibited from withholding a client’s file when it has been requested, and a failure to return it is a common ground for the lawyer to be disciplined. Hence it is unlikely the lawyer would try to hold the file hostage to payment of his bill. Your sister’s file belongs to her, and is entitled to it -- even if she still owes the lawyer money. As far as the unpaid fee, if your sister and the lawyer can not agree upon what is fair, the State Bar of Wisconsin has a fee arbitration program which has been set up for exactly this type of dispute. Your sister needs only go on-line to the website maintained by the State Bar of Wisconsin, and the forms to request fee arbitration are right there. A final piece of advice, however, is that your sister may first want to simply suggest to the lawyer what she thinks is fair, and offer to pay that. Most lawyers really want to please their clients, and not end up in a dispute. So, they are often willing to discount the fee to avoid further problems.
Sincerely,
John Maier Jr.
Anthony A. Coletti
About Adverse Possession
Dear Counselor: A few years ago, my husband and I had come back from vacation to find that our neighbor had built a fence between our backyards. It looks nice, but he built it more than ten feet on our side of the lot line. We've asked him about it, but he said he couldn't do anything now -- that moving it would be too costly for him. We are wondering what to do. We've avoided the issue ever since, but are concerned about our property rights.
Dear Client: When clients come to us with this kind of a problem, we tell them that they are dealing with what lawyers call a case of "adverse possession". If you aren't careful, after a certain period of time goes by, you could legally lose your right to that part of your property that has been fenced in by your neighbor. Usually, that takes 20 years, but under some circumstances, it can be as little as 10 years. You could find out that title to that strip of property has passed to your neighbor, and you have lost your rights to make him move the fence! When dealing with a residential lot, losing land area like that could mean that your home is now sitting on a lot that is less in land area than the zoning ordinance requires, or that your home now technically is too close to your new lot line than what the zoning laws require. You need to stop worrying about being polite, and protect yourself. In may instances, a written agreement can be recorded that states that your neighbor realizes his fence encroaches on your property, but that you are permitting it for the time being -- subject to your future right to make him move it back. You can be a nice neighbor without losing your property rights. You need to talk to your lawyer right away.
Sincerely,
John Maier Jr.
Anthony A. Coletti
To learn more about this topic, or to submit a question for a future column, please contact us. We look forward to hearing from you.