Virgin Islands Law Blog

Virgin Islands Law Blog

U.S. Virgin Islands law & politics

FYI: Payroll Taxes for Your Employees are Deductible

Posted in Labor & Employment

Payroll tax picTo put it lightly, it can be difficult to keep up with all of the legal obligations you have as a small business owner.

One important thing to remember is that you must deduct payroll taxes from your employees’ salaries and wages. If you fail to do this properly, you could be forced to pay major fines—the last thing any business owner wants. How can you ensure you remain in compliance?

Business owner responsibility

You are only responsible for collecting payroll taxes from any workers who are classified as employees by the Internal Revenue Service. Although independent contractors do work for your company, they are responsible for filing their own taxes through form 1099. Therefore, you should keep up-to-date records of who works exclusively for your company and whether or not they are W2 employees. The IRS does have the ability to re-classify workers as employees and penalize business owners for not withholding those payroll taxes if the agency believes you are incorrectly paying your workers.

Some businesses may use the money they collect from payroll taxes to pay overdue bills or for use toward other purposes. However, doing this could land you in some personal financial trouble. The IRS has the right to take 100 percent of the taxes owed from a business owner’s personal assets if the agency is unable to collect payroll taxes. If this happens to you, you will not be able to get rid of your tax obligations through filing personal or business bankruptcy.

Collecting and submitting payroll taxes

The taxes collected from employees’ pay include federal, state and local income taxes, federal Medicare and Social Security taxes and state and federal unemployment taxes. The responsibility for paying these taxes is on both the employee and employer. Employers pay some of the taxes themselves, while deducting the rest from workers’ paychecks.

Employers must collect and submit these payroll taxes to the correct agency in a timely manner. Depending on the amount of payroll taxes you owe, you could be responsible for paying these taxes quarterly or monthly. You are required by the IRS to file several reports on your payroll taxes every year, including information on the amount of employees you have, the hours they work and the total amount they are getting paid.

All of this information can seem tough to understand, especially if you are a new business owner looking to bring on more employees. An experienced business and tax attorney can help you better understand payroll taxes and how you can meet your obligations, while still growing your business in a healthy, sustainable way.

Ravinder S. Nagi is Chair of the BoltNagi Labor & Employment Practice Group.  BoltNagi is a widely respected and well-established labor and employment law firm serving clients throughout the U.S. Virgin Islands.

Knowing the Best Methods for Passing on a Business to Your Heirs

Posted in Corporate & Financial Services, Tax & Estate Planning

Family Business picAfter you’ve worked so hard to build and grow your business, it’s important to know how to pass it on to your beneficiaries.

To do this, you need a sound succession plan in place that will guide the future of your business if you decide you no longer want to run it—or in the event that you pass away or become incapacitated.

Most business owners and entrepreneurs want to pass the family business down to children or grandchildren, if such an option exists. With this in mind, the following are some tips to help you create an effective business succession plan:

Begin planning early

If possible, you should begin your succession planning at least five years before you foresee yourself leaving the company. Obviously, you cannot anticipate a death or incapacitation, but if you foresee yourself departing for other ventures or retiring, then it’s best to get a head start on planning.

If you are still in the early phases of planning your business as a whole, it does not hurt to incorporate your exit strategy into your plan. Having your plan laid out in advance can give family members and employees a clear picture of what to expect should the day come when you decide to step away. This can also help you avoid unnecessary stress and hard feelings down the road.

Choose the most qualified successor

You need to be realistic about who is the most qualified person to run your business. If you have multiple children, for example, the fairest choice is not necessarily the oldest child or to split ownership equally among them. You need to choose someone you believe is best suited to follow in your footsteps and guide the company moving forward.

Keep in mind that approximately 70 percent of family businesses fail after being taken over by a child. You must appropriately train your successor or have them work in multiple areas of your company before you even consider passing on the business to them. Otherwise, the best decision might be to look outside of the family and go with a more qualified employee or partner.

Keep your family involved

Even if you are considering looking outside of the family for your successor, it’s important to keep the family notified. You do not want your loved ones to be blindsided by your decision should you suddenly pass away.

Remember, you can always amend your exit plan and succession decisions based on changing circumstances, but having a good plan in place will provide you with a great deal of peace of mind. Work with a skilled business law attorney for more information and guidance on drafting a sound succession plan for your company.

 

Steven K. Hardy is Chair of the BoltNagi Corporate, Tax and Estate Planning Practice Group.  BoltNagi is a well-respected, established business and corporate law firm serving a wide range of individuals and organizations throughout the U.S. Virgin Islands.

Resolving Business Disputes Through Small Claims Court

Posted in Litigation

Small-Claims picThe dollar limits within the Small Claims Division of the Virgin Islands Superior Court has increased to $10,000, which has made the court a viable option for business owners to resolve disputes quickly, easily and, perhaps most importantly, at a lower expense than was previously possible.

These types of disputes often occur between business owners and suppliers, customers or subcontractors. The most common cases in small claims courts involve business owners either collecting overdue bills or resolving disputes.

What types of disputes occur?

It’s quite common to see contractual disputes occur between two small businesses or a business and a customer. Many of these cases involve a disagreement that the goods or services provided were of poor quality, were provided late or were not provided at all. Other claims could involve simple breaches of contract.

Finding success in small claims court

If the parties involved in a dispute fail to resolve the problem through their own negotiations or through mediation, they then have the opportunity to present their case in front of a small claims court judge. The judge will most likely side with the party that is better able to articulate its argument, so it is important to be prepared going into the hearing with a succinct, persuasive claim. It’s best to work with a civil litigation attorney to ensure you are ready for the hearing.

Part of this process is collecting as much evidence as you can to support your arguments in court. If, for example, your claim is primarily over a breach of contract, you should be able to produce that written contract and evidence of the other party’s breach. If you are involved in a case in which you are forced to defend the quality of your work, you might consider getting an industry expert to write a letter stating how your work met industry standards.

In cases centering on the timeliness of work, you should be able to produce evidence as to when the work was delivered and when it was expected to be delivered. This means documenting communications between you and the other party and producing copies of any contracts you both signed.

Although small claims court might not necessarily seem like a big deal, it’s still important to consult a lawyer to help you figure out exactly which arguments you need to make and the types of evidence you need to support your claims.

If you find yourself engaged in a business dispute that will likely head to small claims court, speak with a skilled civil litigation attorney to protect your best interests.

 

Adam Marinelli is an experience civil litigation attorney in the Litigation Practice Group of BoltNagi PC, an established and widely respected civil litigation law firm serving individuals, businesses and organizations throughout the U.S. Virgin Islands.

U.S. Senate Faces Pressure to Repeal Estate Tax

Posted in Government Relations, Tax & Estate Planning

estate taxThe federal estate tax has been the subject of much debate in the United States for many years. Now, the federal government is facing pressure once again to repeal the tax for good—and the effort is generating a great deal of support.

A letter sent March 15 by the Family Business Coalition to Senate Majority Leader Mitch McConnell included the signatures of more than 100 organizations and business groups throughout the country. It calls for the Senate to take action to end the estate tax once and for all.

One of the key points made in the letter is that the House of Representatives already voted last April to repeal the tax, and that similar legislation to the House bill Sen. John Thune of South Dakota proposed has already received substantial support from lawmakers.

The state of the estate tax

Until 2012, estates paid a 35 percent tax if they were valued at more than $5 million. The estate tax, also commonly referred to as the “death tax,” was originally scheduled to revert to 2001 tax law in 2013, which would have meant a $1 million exemption and a 55 percent tax rate. However, the enactment of the American Taxpayer Relief Act of 2012 indexed the $5 million exemption cap for inflation and set tax rates to 40 percent instead.

One of the primary topics of discussion as the House worked through the issue was the burden that estate taxes place on family-run farms and businesses. The coalition argues in its letter that the estate tax is unfair—so much so that permanent repealing of the tax is the only option moving forward to adequately protect business owners.

The coalition is using an emotional argument here, stating that it’s in poor taste to force families who have recently lost a loved one to pay a tax on that person’s assets and savings. In many cases, the coalition claims, this tax is paid by selling off family assets, including business and farms, while in other cases, employees must be paid off and payrolls must be cut to ensure the business is able to continue operating.

Challenges to overcome

Despite the coalition’s urgings and Republican support, there appears to be some significant hurdles in getting the estate tax repealed. For one, repealing the tax is largely opposed by members of the Democratic minority in both houses of Congress. For another, President Barack Obama has already made it known that he would veto the bill if it reached his desk.

All that’s known for sure is that this will continue to be a hotly debated issue in Congress, and the pressure will likely continue to mount from organizations like the Family Business Coalition. Meet with an experienced U.S. Virgin Islands tax and estate planning attorney to learn more about how you can best protect your loved ones, your business and your assets.

 

Steven K. Hardy is Chair of the Corporate, Tax and Estate Planning Practice Group at BoltNagi PC. BoltNagi is a highly respected and well-established business and tax planning law firm serving clients throughout the U.S. Virgin Islands.

How to Search for Conflicting Trademarks

Posted in Labor & Employment

Trademark logoHaving an idea for a new company, product or service is incredibly exciting. You may wish to get your idea off the ground as quickly as possible—but there are few things you must do to make sure you’re not infringing on anyone else’s intellectual property.

Your first step is to make sure the name you have in mind has not already been trademarked by a different individual, business or organization. To do this, there are a number of state and federal databanks that list registered trademarks that you can search. You will also want to conduct general internet searches to make sure you are not violating any common law standards for marks that are not registered, but would still be protected under U.S. trademark laws.

The following are a few specific tips to keep in mind as you begin your trademark search:

  • Matches don’t have to be exact: Trademarks do not only protect against exact name matches. They also protect against similar names. You should be on the lookout for trademarks that use purposeful misspellings or phonetic spellings, as a similar name spelled differently could still be considered infringement. If any matches occur, figure out what type of brand or products it protects, as you still might be able to use your name if it is a different enough industry or product.
  • Browse federal trademarks: Your first place for searching for conflicts should be the Trademark Electronic Search System provided by the U.S. Patent and Trademark Office. This will provide you with both exact matches and similar terms. It will also give you information like when the mark was filed, what its purpose is and who owns it.
  • Browse state trademarks: You are also able to file trademarks with the state or territorial office. If your business is located in the U.S. Virgin Islands, you may file to have your trademark protected only in the territory. As with federal trademarks, you should be on the lookout for any trademarks that are exactly the same or similar to the one for which you’re searching.
  • “Common law” marks: Trademarks do not necessarily have to be registered before they are able to be enforced. This can add some additional challenges if someone has a “common law” trademark, as there is no database for such marks. Your best bet when searching for existing common law marks is to perform thorough web searches. “Thorough” is the key word here—you’ll likely need to go beyond the first few pages of search results.

In addition to all of these steps, you should also seek the assistance of an intellectual property attorney to perform searches for trademarks on your behalf. These attorneys have significant experience in searching for and finding potentially conflicting marks, and will give you or your business an added level of protection and assurance.

Steven K. Hardy is Chair of the BoltNagi Intellectual Property Practice Group. BoltNagi is a widely respected and well-established intellectual property and business law firm proudly serving individuals, businesses and organizations throughout the U.S. Virgin Islands.

Ensuring You Keep Employee Records Private

Posted in Labor & Employment

employee-disciplineAs an employer, you handle some very sensitive information regarding the people who work for you.  Employee personnel files often contain private information, including everything from Social Security numbers to medical records and bank account information. There are some very stringent federal and territorial laws regarding who is able to access these records and why.

However, despite all of the reasons why employers might feel most comfortable keeping these records under lock and key, there are certain circumstances in which employees might need to access personnel records in the scope of their duties. So how can employers be sure that this information stays private—even when there’s the potential that people will be looking at it?

The following are a few tips that can help you ensure all personal information stays confidential:

  • Know the laws: Make sure you are completely familiar with all of the applicable territorial and federal laws that deal with employee records, and have processes in place internally to follow them. The law requires you, for example, to keep employee medical records in separate confidential files.
  • Embrace security: All personnel files containing sensitive information should be kept in secure locations. Physical files should be locked away in filing cabinets that are not accessible by other employees—potentially in an offsite facility. Digital files should be encrypted and password protected, and should be kept behind a number of security systems. Again, they should never be available to the general public.
  • Keep access restricted: The number of people who have the authority to access personnel records should be kept as low as possible. Only those who have a legitimate need should be able to access them. Examples of people with a legitimate need include employees attempting to access their own records, HR personnel and certain managers.
  • Have a written privacy policy: This policy should explain who will be able to access employee files, how employees may go about obtaining copies of their own files and how the company will handle medical documents and other special records with sensitive information. This privacy policy should be distributed to all employees, and there should be an open-door policy to ensure anyone with questions is comfortable with the process.

As an employer, you should also make it a point to occasionally review all personnel files to make sure all of the pertinent information is included and up to date, and to make sure you are abiding by all rules and regulations regarding this information. Reviewing documents and correcting any errors is an important aspect of compliance in this area.

Consult an experienced labor and employment lawyer for more information about how you can protect your employees’ privacy and abide by all relevant privacy laws.

Ravinder S. Nagi is Chair of the BoltNagi Labor & Employment Practice Group.  BoltNagi is a widely respected and well-established labor and employment firm proudly representing management clients throughout the U.S. Virgin Islands.

Minimizing Your Estate Tax Impact with a Few Simple Steps

Posted in Tax & Estate Planning

via Flickr Creative CommonsEstate tax laws in the United States and its territories are constantly in a state of flux, so it might seem difficult to create an estate plan that avoids or minimizes the amount of taxes to which your estate will be subject. However, keep in mind that the minimum estate value for paying estate taxes to the U.S. government is very high as it is, as they only apply when the estate is worth more than $5.45 million.

If you do have a large, valuable estate, here are some tips that can help you to increase the amount of assets you can pass to your beneficiaries without having to worry about costly estate taxes:

  • Leave all of your assets to your spouse: The exemption amount excludes any assets you leave behind to your spouse. You are allowed to leave your entire estate to your spouse under federal law without being subject to taxes. However, once your spouse dies, the exemption amount still applies, so this tactic is more used as a means to delay these estate taxes than to entirely avoid or minimize them. Still, it can be a sensible “first line of defense” against estate taxes.
  • Put assets into irrevocable trusts: Assets placed into revocable trusts are still taxable if they exceed the exemption amount, as a revocable trust is merely an extension of the grantor. Irrevocable trusts are different because the grantor gives up control of the trust assets, as ownership is technically passed to the trust. This means that any assets placed in that trust go to beneficiaries without being subject to taxes.
  • Being smart with beneficiary choices: Estate taxes depend entirely on your estate’s value. Retirement accounts and insurance policies could impact your estate taxes, so you might consider designating beneficiaries aside from your estate for these types of accounts.
  • Downsize: You may effectively decrease your estate’s value to minimize estate taxes or get your estate below the exemption limit. Keep in mind that the Internal Revenue Service has rules governing how much you can give to beneficiaries within a given year, so you if you are not aware of these rules, you could still be subject to gift taxes.
  • Look into other trusts: There are a number of other types of trusts that can help you protect your assets and avoid estate taxes. A knowledgeable attorney will provide you with more information on the options available to you based on your personal circumstances and objectives.

Every individual’s estate is different, which means it’s best to seek the assistance of an experienced estate planning attorney to help you decide the best ways to minimize or avoid estate taxes for you and your loved ones.

 

Steven K. Hardy is Chair of the BoltNagi Corporate, Tax and Estate Planning Practice Group. BoltNagi is a respected and well-established tax and estate planning law firm serving clients throughout the U.S. Virgin Islands.

Is it Time to Renew Your Section 9 Patent?

Posted in Corporate & Financial Services

copyrightofficeDo you have a patent or trademark under Section 9 that is about to expire? If so, you likely need to prepare for renewal soon. If you do not take the appropriate steps to renew your trademark, the U.S. Patent and Trademark Office (USPTO) will ultimately cancel your registration, thereby allowing others to profit off of your previously held trademark.

Registered trademarks must be renewed every 10 years in a process called a Section 9 filing. Renewals do come at some expense—currently, it costs $400 for renewal in each class in which you’re filed. However, after successfully filing your application and paying the fee, your trademark is covered for the next decade. In other words, it is a one-time fee that keeps you protected for years into the future.

You may conduct the renewal process through the USPTO website using an electronic filing system. There, you will enter in all of the required data, submit your credit card information and some photographs and receive confirmation of your application via email.

Completing the application in a timely manner

One of the most important aspects of the renewal process is making sure you abide by all of the dates associated with it. If you miss any of these dates, the USPTO may decide to cancel your registration and toss out your application for renewal.

All of the dates for renewal are measured by starting at the date your trademark registration was issued to you, and not from the filing date. This is important to keep in mind as you begin the process. You are allowed to begin filing for a renewal exactly nine years after your trademark registration was first issued.

The following is an example of a list of dates of which you’ll need to keep track. For the purpose of this example, let’s say your trademark registration was issued on May 20, 2015.

  • Earliest date you will be allowed to file for your first renewal: May 20, 2024
  • Due date of the first renewal: May 20, 2025
  • Last possible date to file your first renewal while paying extra fees: November 20, 2025

The time between the due date of your first renewal and the due date that would involve extra fees essentially gives you a six-month grace period if you were for some reason delayed in filing your renewal or simply did not remember to do so in a timely manner. The extra fees you have to pay vary based on the year and the circumstances involved in your renewal.

Considering all this, it is highly recommended that you file your renewal relatively early so that you can avoid these extra fees and address any potential complications that might arise with your application. Should there be a problem, you do not want to run the risk of losing your registration because you do not have enough time left to correct and re-file.

To ensure the success of your renewal application and prevent unnecessary headaches, consult an experienced civil litigation and intellectual property lawyer.

 

Steven K. Hardy is Chair of the BoltNagi Intellectual Property Practice Group.  BoltNagi is a widely respected and well-established intellectual property and business law firm proudly serving individuals, businesses and organizations throughout the U.S. Virgin Islands.

Tips for Managing Teams Across Multiple Locations

Posted in Labor & Employment

VC ImageWith the rise of cutting-edge technology, it is becoming more common than ever for businesses to have individual workers or teams working remotely across numerous different locations. Here at BoltNagi, we have attorneys based in the U.S. mainland and working from home in the U.S. Virgin Islands.  There are certainly some challenges associated with these setups, especially in terms of communication and organization, but with strong practices and accountability, organizations can continue to thrive, even when they are decentralized.

The following are a few tips to help provide some structure and organization to your business when some or all of your employees work remotely:

Make sure you have the technology you need

This is important both in terms of communication and fulfillment. All workers should have reliable Internet and telephone access. Videoconferencing software may also be of great use, depending on how you prefer intra-office communication amongst employees.

On the fulfillment side, you should not solely rely on email in 2016. Having a project management tool like Basecamp can help your entire staff better coordinate work, while the use of cloud software such as Google Drive or Google Docs allows for simple collaboration across multiple locations.

Make an effort to meet face-to-face when possible 

Even the best technology will not create the types of relationships and working environment that a centralized location can. Thus, make it a point to get everyone together once a month, once every few months or once a year—depending on how spread apart you are and what works best for your business. Having that time to bond in person is valuable to the health of your organization and its people.

Understand that not everyone is capable of working remotely

It takes a lot of self-control and a very specific temperament to be successful in a remote working environment. Even someone who is extremely qualified for the position might not necessarily be at his or her best when not working in an office setting. Look for people who are excited about their work and who demonstrate a clear ability to make progress and do great things without a significant amount of managerial oversight.

Leaders need to adjust their styles for remote workers

Business leaders need to regularly check in with remote staff members, even more often than they do when their staff is just down the hall. Make sure that these check-in calls offer employees a chance to give their feedback, as well.

Realize people will question your model

Even though remote workplaces and online businesses are becoming more common than ever before, they are still not the norm. There will be plenty of people who don’t understand how a business of your model could actually succeed. Don’t shy away from your model—embrace it, and make sure potential clients understand that you are capable of doing excellent work no matter where you and your employees are located.

For more information on potential legal issues related to remote business models, consult a knowledgeable labor and employment attorney in the U.S. Virgin Islands today.

 

Ravinder S. Nagi is Chair of the BoltNagi Labor & Employment Practice Group. BoltNagi is a widely respected and well-established labor and employment firm proudly representing management clients throughout the U.S. Virgin Islands.

EEOC’s Proposed Enforcement Guidance Reflects Agency’s Changing Views

Posted in Government Relations, Labor & Employment

corporateformalitiesThe U.S. Equal Employment Opportunity Commission (EEOC) recently released a new Proposed Enforcement Guidance on Retaliation and Related Issues. This proposed guidance specifically includes attempts to expand the scope of the participation clause and the definition of protected opposition conduct.

These proposals represent a shifting viewpoint on the part of the federal agency. Let’s take a closer look at these two particularly important elements of the proposal.

Expanding the participation clause

To be able to prove retaliation existed, plaintiffs must be able to show they engaged in “protected activities,” which consist of either “opposition activities” or “participation activities.” Under the proposed enforcement guidance, what is classified as a participation activity would be expanded.

This potentially could be troublesome for employers. Many American courts have consistently held for years that filing a complaint internally before filing an agency discrimination charge is considered an opposition activity, not a participation activity. This new guidance would represent a departure from this long-held understanding. Any internal complaint would, under the new rules, be considered participation activity—even if there has not been an EEOC charge filed.

To that end, there could be situations in which employees who make meritless or bad faith claims out of malice would still be protected from retaliation.

Defining protected opposition conduct

The new EEOC guidance proposal also implements a broader definition of opposition conduct in the world of employment law. Generally, opposition conduct is the subject of significantly more litigation than participation conduct. It involves any conduct in which an employee opposes a practice of their employer that is unlawful. This could include providing eyewitness accounts, participating in EEO proceedings and filing discrimination lawsuits.

The new definition of protected opposition conduct includes the following scenarios:

  • Accompanying coworkers to human resources offices to file EEO complaints internally;
  • Complaining to management about instances of discrimination against other workers;
  • Refusal to follow orders from supervisors to fire a worker for discriminatory reasons;
  • Engaging in any sort of slowdown of production, including picketing or petitioning; and
  • Informing an employer about one’s intention to file an EEOC charge

This expanded definition of opposition activities protects all employees, including EEO advisors and HR professionals.

Employers should be aware of these changes

As the rules governing the definitions of various aspects of employer retaliation are set to change, it is important for employers in the U.S. Virgin Islands to stay up to date with this story. Employers need to understand the types of actions that could land them in legal trouble and make sure they have processes in place at all levels of their organizations to curb potential incidents of retaliation before they occur in the first place.

Reach out to an experienced labor and employment attorney for more information on EEOC guidelines and how they may affect your business or organization.

Ravinder S. Nagi is Chair of the BoltNagi Labor & Employment Practice Group. BoltNagi is a widely respected and well-established labor and employment firm proudly representing management clients throughout the U.S. Virgin Islands.