Virgin Islands Law Blog

Virgin Islands Law Blog

U.S. Virgin Islands law & politics

Tips for Virgin Islands Business Owners to Get Ahead on Their Taxes for Next Year

Posted in Tax

By now you have hopefully filed your business’s 2017 tax return. It probably feels like a big burden off your shoulder, but next year’s tax season will be here sooner than you know it. When it does finally arrive, it’s important to be prepared.

You can help yourself better prepare for next season by beginning those preparations now while this year’s tax season is still fresh in mind. If you had any challenges to overcome in filing this year’s return or things you wish you would have been able to do differently, now’s the time to make those adjustments before the rest of the year flies by and you’re suddenly left to play catch up.

With this in mind, here are a few tips to help small business owners get ahead on their taxes for next year:

  • Develop a system now for tracking your expenses: If you were unable to list all of your business expenses on your tax return this year, it’s important you better organize your company’s expenses for next year. Save all your receipts and keep them in an organized filing system. It can help to digitize them as well. Make sure all expenses are entered into business spreadsheets or bookkeeping systems so you do not get behind with logging.
  • Budget money specifically for taxes: You should meet at least a couple times a year with a CPA to get a stronger sense of what your business’s taxes will look like in the coming year. This will help you also to form a clearer financial picture that will make it easier for you to budget the right amount of money for your next year’s tax payments.
  • Develop an emergency fund: Businesses should always have an emergency fund that will aid them with any unexpected expenses, such as market downturns, losses of major clients, sudden emergency building repairs or, in some cases, tax payments that are much higher than you might have expected. In your meetings with your accountant or your financial planning attorney, take some time to determine what is a reasonable figure to save up in your emergency fund this year.
  • Track your miles: If you travel a lot for business, one of the easiest ways you can save money during tax season is to claim a mileage deduction. To be able to do this, however, you must track your miles throughout the year. When driving, for example, you can deduct business travel mileage at a rate of 54 cents per mile. You can also deduct based on actual expenses, which include gas, maintenance, vehicle repairs, vehicle depreciation and other costs. Other travel-related expenses can also be deducted, including hotel stays, parking fees, meals while on business and more.

For more information about ways you can better prepare yourself for next year’s tax season, contact an experienced U.S. Virgin Islands financial planning attorney.

Adam N. Marinelli is an associate in the Corporate, Tax and Estate Planning Practice Group at BoltNagi PC and concentrates his practice in tax matters. BoltNagi is a full service business law firm serving the U.S. Virgin Islands.

Steps to Take if You’ve Been the Victim of a Contract Breach

Posted in Business

If your business is involved in a contract dispute with another party you believe did not live up to its contractual obligations, the first step to resolving the dispute is to provide a notice of breach. This notice will explain why you believe a breach exists and provides a list of actions that must be taken to resolve the issue or end the contract.

Here’s an overview of how to draft a notice of breach and the steps you can take following its delivery to resolve the situation.

  • Include the date: The notice should create a clear record as to the date on which the breaching party was informed of the breach. If your dispute goes to court, this date is important evidence.
  • Analyze the notice clause: Many business contracts contain notice clauses, which include contact information for each party to be used for communication of official notices. Failure to follow procedures laid out in this clause for delivery of official notices, such as a notice of breach, could affect your rights as the case proceeds.
  • Thoroughly describe the breach: The notice should include information about which aspect of the contract was breached. One of three things must have happened for the situation to contact a contract breach: a) the other party failed to perform according to the terms of the contract, b) the other party said it will not continue to perform its obligations in the future, or c) the other party conducted itself in a way that made it impossible for your business to live up to its end of the contract. Be thorough in describing which part of the contract was breached and how.
  • Note if it is a material breach: A material breach is an action by a party that essentially destroys the contract’s value and purpose. These are much more serious types of breaches that typically have larger penalties and stricter consequences associated with them.
  • Offer a solution: It might be too late to actually fix the problem, but your notice of breach can still include a possible “cure” to the damages that have been caused already.
  • Try to work out a deal: Either before or while you send a notice of breach, you should talk to the other party to attempt to work out a solution that will keep you out of the courtroom. You can formally end the contract, but this will require a separate agreement terminating the contract and should involve your attorneys.
  • Head to court: If you are unable to work out a deal with the other party or the other party refuses to comply with the solutions suggested in your notice of breach, litigation will likely be necessary. Your attorney can advise you with regard to how best to proceed according to the circumstances of your case.

For more information about the steps you should take if your business has been the victim of a contract breach, contact a skilled U.S. Virgin Islands business planning attorney.

Mark A. Kragel is a senior attorney in BoltNagi’s Civil Litigation Practice Group. BoltNagi is a full service business law firm serving the U.S. Virgin Islands.

What Virgin Islanders Should Know Before Filing their Taxes

Posted in Tax

There’s still a little bit of time left for you to get your tax return in. If you’ve put it off until the last minute, don’t worry—you’re not alone. Just make sure you have filled out all the paperwork correctly and have maximized the amount of money you stand to get back on your tax return.

Here are a few things to take into consideration before you officially file your taxes:

Income thresholds for tax brackets have gone up

First and foremost, you should be aware that the threshold that determines your tax bracket has gone up significantly. This means if you earned more than the previous tax year, you might not necessarily have moved into a higher tax bracket.

The rates for these brackets are still the same. But let’s say you fell into the 15 percent bracket last year when filing jointly with your spouse. You’d still be in that same bracket even if you earned up to $600 more than last year’s top threshold.

Be sure to look at all the new income thresholds for tax brackets before filing.

The standard deduction has increased

You can subtract the standard deduction from your gross income if you choose not to itemize, though for some people, itemizing makes more sense.

Last year, the standard deduction for a married couple filing jointly was $12,600. This year it raised $100 to $12,700. This might not seem like much of an increase, but it’s still something that will affect your taxes this year, so it’s important to take note of it.

Limits for personal exemption phase-outs increased

You are allowed to deduct a certain amount of money for each dependent (and yourself) from your income. These personal exemptions remained at the same level for this tax year. However, the exemptions are subject to phase-outs, meaning personal exemptions decrease by two percent for every $2,500 your adjusted gross income goes past a specific threshold.

These phase-out limits are adjusted for inflation, which means they increased from the 2016 tax year. Now, for example, the starting threshold is $311,300 for married taxpayers filing jointly.

HSA contributions increased

Your contributions made to a health savings account lower your taxable income. This money can be used to pay for certain medical expenses. There is a yearly limit to the amount of pretax money you can contribute to your HAS, but that limit went up in 2017 by $50. Again, while that’s not a significant figure, every little bit can count when it comes to reducing your taxable income.

Estate tax increased

Under the Republican Tax Cuts and Jobs Act, the estate tax will soon be eliminated. But for now, the threshold for the estate tax has increased for the 2017 tax year. The value of the estate must exceed $5.49 million before any estate taxes are applied to it.

For more information about things you should know before filing your taxes, contact an experienced tax planning attorney in the U.S. Virgin Islands.

Adam N. Marinelli is an attorney in Corporate, Tax & Estate Planning Practice Group at BoltNagi PC, a full service business law firm serving the U.S. Virgin Islands.

Issues to Cover in Your Employee Handbook

Posted in Uncategorized

Having an employee handbook is a great way to introduce new employees to your company and the various policies you have in place.

There are several issues you are required by law to cover in your handbook. For example, you must have family medical leave policies listed in the handbook under the Family Medical Leave Act (FMLA), as well as equal employment and non-discrimination policies and worker’s compensation policies. Other issues you might be required by law to cover include information regarding accommodation of people with disabilities, policies on military leave and policies for leave of victims with crimes.

But what about issues that are not legally required? What might you want to include in your handbook, or what could potentially be helpful for your employees? Here are a few ideas.

  • A statement that the handbook is the ultimate procedural document: To eliminate any potential for confusion if you had previously used other policy documents, there should be a clarifying statement that your handbook is the final word on all company policies, superseding any previous documents that existed. Be sure to note that its policies are subject to change as needed.
    Employee acknowledgement: To protect your business, you should have a page that your employee signs and returns to indicate he or she acknowledges the policies outlined in the book and that he or she is responsible for knowing and following the rules outlined in it.
  • Company history: It can be helpful to write a brief overview of your company’s history, and include a company mission statement, a market position overview and other information that will help set the tone of the handbook and provide more character and contextualization for your company.
  • Paid time off: If your company has a vacation or PTO policy, you should include that in the handbook. It should indicate the holidays your company observes, how vacation time is earned and how vacation can be scheduled. This is also a good place to discuss sick leave, FMLA leave and military spousal leave.
  • Behavioral guidelines: Lay out general behavioral expectations of employees, including attendance, breaks and employee conduct. Common specific examples include smoking bans, substance abuse policies, internet use policies, dress code and employee harassment and discrimination policies. You don’t need to go into too much detail.
  • Payment: Include information about payment methods, pay grade structure and promotion opportunities. If you have compensation packages such as stock offers, this is where you’ll want to outline them.
  • Benefits: Be sure to outline the various benefits your company offers, such as life insurance, health care, dental, vision and retirement plans. Don’t discuss any specific policies with companies here—your benefit offerings are likely to change. Instead, provide general information about the available benefits, who is eligible for those benefits and the criteria for eligibility for those benefits.

For more information about how to create a thorough employee handbook, contact an experienced corporate planning attorney in the U.S. Virgin islands.

Ravinder S. Nagi is Assistant Managing Attorney and Chair of the Labor & Employment Practice Group at BoltNagi PC, a full service business law firm assisting clients in the U.S. Virgin Islands.

When is a Contract “Irreparably Broken” in the Eyes of the Law?

Posted in Business

In U.S. contract law, a contract is considered “irreparably broken” after a “material” breach of contract—a breach that is so severe that essentially destroys the basis of the contract and goes to the root of the agreement between the contract’s parties. If a material breach occurs, the non-breaching party can end the agreement and attempt to collect damages resulting from the breach.

With this in mind, here are some factors to consider when determining whether a contract breach was a material breach.

The extent to which a party was deprived as a result of the breach

The main question in determining whether a breach was “material” is whether that breach deprived the other party the main issue or “heart” of what was being bargained for. Let’s say, for example, you entered into a contract with a party to install high-quality security features at your office building, but instead the contractor installed low-quality equipment not designed for improving office safety and security, this would be a material breach. Even though the contractor installed equipment, it did not fulfill the primary intent or “heart” of the contract, which was formed to increase safety.

It would not be a material breach of contract if the contractor installed equipment that met your safety standards, but used a different brand than had been agreed upon. The main intent of the contract has still been met, so it cannot be a material breach.

The ability of the other party to be compensated for the losses caused by the breach

Will money be able to solve the losses caused by the breach, and to what extent? A breach is less likely to be classified as material if it can be solved relatively easily with a reasonable amount of effort or money. For it to be material, the losses must be significant.

Whether the breaching party acted in bad faith

If the breach of contract was the result of bad faith or was purposeful, the court is much more likely to consider it a material breach. Compare this to breaches that result from carelessness or other circumstances beyond the control of the breaching party—these types of breaches are not likely to be considered material in nature.

The language of the contract

In some cases, language is inserted into contracts to explicitly define what will be considered a material breach of contract. This makes it much easier to classify a breach as material, as it is not up to a judge to interpret the circumstances of the case and determine whether those circumstances meet the standard of a material breach.

For more information about what is considered a material breach of contract and how you should proceed if you have been affected by such a breach, contact a U.S. Virgin Islands contract lawyer.

 

Nash Davis is a member of the Corporate, Tax and Estate Planning Practice Group, a full service business law firm serving the U.S. Virgin Islands.

Tips to Help Your Business Guard Against Intellectual Property Theft

Posted in Uncategorized

Just about every company has sensitive information it needs to protect. Many times this comes in the form of intellectual property, such as product designs or blueprints, service methods and patents.

It feels like there’s a new high-profile breach showing up in the news every week these days. In such an environment, it’s more important than ever before for business owners to take the appropriate steps needed to protect their intellectual property.

Here are a few steps your business can take to keep its IP and trade secrets safe:

  • Make protection a priority: Despite the growing need for businesses to implement greater protections for their IP, there are relatively few companies that actually have meaningful data protection practices and policies in place. Companies must approach data protection as if it is a necessity for their business’s viability. If it is not prioritized, it likely will not get done, meaning your business will stand to sustain a significant amount of damage if a breach occurs.
  • Determine which IP is most valuable: Beyond prioritizing your IP in general, you should also prioritize specific IP by determining which is the most valuable. You should know exactly where your IP is stored and which need to have greater protections in place. The most valuable pieces of IP are the ones an attacker would be most likely to go after.
    Protect those assets: Once you have identified sensitive assets or data, label them appropriately to give a visual cue to other employees that the document must be handled with care. Implement technologies to ensure your IP stays protected. You can encrypt files that are stored online. If you have physical files that need to be stored, you can set access control points and limit who has clearance to access the file storage area.
  • Train your employees: Stronger employee awareness of the importance of information security will go a long way toward preventing breaches. All internal documents should have data protection, including employment agreements and manuals. All of your employees, from executives to interns, should be trained in your policies regarding how your company handles confidential data. Additional security awareness training at regular intervals can help. Even your vendors should be made subject to your data protection policies to ensure a breach doesn’t occur as a result of the carelessness or wrongdoing of a third party.
  • Invest in data protection: Cybercriminals are constantly getting more sophisticated, and will attack any business they believe to be vulnerable. There are third-party cybersecurity professionals that offer plenty of solutions for businesses of all sizes and with varying degrees of security needs. If you have a lot of sensitive data, it makes sense to invest in a data protection plan from cybersecurity experts.

For more information about protecting your business’s intellectual property, contact a corporate planning attorney in the U.S. Virgin Islands.

Steven K. Hardy is an attorney with the Corporate, Tax and Estate Planning Practice Group at Bolt Nagi PC, a full service business law firm assisting clients in the U.S. Virgin Islands.

USVI Government Issues Guidance on Notifying Policyholders of ‘Underinsurance’

Posted in Insurance

The U.S. Virgin Islands Office of the Lieutenant Governor, Division of Banking, Insurance and Financial Regulation, has issued a guidance to all property and casualty insurance companies regarding how these entities should notify insured individuals of “underinsurance.”

According to the guidance, the Government of the Virgin Islands encourages all insurers to “use all available means” to provide quick relief to insureds, while noting that there have been numerous complaints of insureds being told that they do not have enough insurance to cover the damage done to their properties. With all the devastation caused by hurricane season this past fall, this has placed many policyholders in a precarious situation.

Responding to consumer confusion

The Division, regulates the Territory’s insurance industry, has found that many insureds are unaware of what it means to be “underinsured”. This is especially true for those who thought they were fully insured, only to find out that amendments to the formulas used to determine their properties’ value have changed.

This, according to the guidance, has resulted in a need for the Division of Banking, Insurance and Financial Regulation and insurance companies to better educate policyholders on what it means to be underinsured and how it may affect their claims when damage does occur.

To that end, the Division calls on insurance companies to take the following steps:

  • Provide homeowners’ insurance policyholders with a full explanation of underinsurance, along with examples of how it could affect their ability to collect on a claim.
  • Ensure that policyholders are fully notified of whether or not they are underinsured, and how their status might impact a potential claim in the future.
  • Require that all policyholders review and sign an official Notice of Conditions of Underinsurance whenever they are obtaining or renewing a homeowners’ insurance policy.
  • Inform policyholders of all the common factors that could lead to being underinsured.

Additionally, the Division is directing all insurance companies to provide policyholders with the option to receive a midterm endorsement to increase their policy limit “to an adequate level using a pro rata share” before this year’s hurricane season. These policies may not be back-dated, however.

To be sure, these issues are of particular importance to insurance companies and consumers in the aftermath of Hurricanes Irma and Maria—and the enormous amount of damage they caused throughout the U.S. Virgin Islands. If you have questions about how this guidance could impact your homeowners’ insurance policy or claims process, speak with a skilled insurance law attorney right away.

Mark A. Kragel is a senior attorney in BoltNagi’s Civil Litigation Practice Group with a concentration in insurance defense. BoltNagi PC is a full service business law firm serving the U.S. Virgin Islands.

Questions You Should Never Ask a Job Applicant

Posted in Labor & Employment

Employment law doesn’t just dictate the ways you can and cannot discriminate in your business hiring practices—it also gives some guidelines about the kinds of questions you can and cannot ask job applicants. Therefore, anyone responsible for hiring for your business should familiarize themselves with some of these basic tenets of employment law to ensure they do not land their business (or themselves) in legal trouble.

There are three general categories of questions hiring managers and HR professionals should avoid in interviews: criminal history, credit history and salary history.

Here’s a quick overview of why these questions are prohibited.

What’s your criminal history?

Most of the time, employers are prohibited from asking potential employees about their criminal history in an interview and/or on a job application. Employers are allowed to perform criminal background checks, but there are also special rules that apply in these scenarios. Applicants must be informed in writing that they will be subjected to a criminal background check, and that the findings of that check could influence the decision making process.

Employers should also keep in mind that in some cases there are regulations indicating which types of criminal records can be disqualifying.

What’s your credit history?

Bans on asking questions about credit history vary from jurisdiction to jurisdiction, but they saw a significant boost in popularity in the time immediately following the recession. Sometimes there is a total ban on asking about credit history, in other cases it is allowed to ask about credit history after giving an applicant a conditional offer letter.

These bans were implemented because credit history trouble is typically associated with people who do not come from affluent backgrounds, which meant performing credit history checks as part of a job application process could be classified as discrimination against low-income individuals.

There might be some cases, however, in which it is permissible to ask about credit history. The most common example is in certain types of finance positions, in which an applicant’s credit history could actually be material to his or her job responsibilities.

What’s your salary history?

There has been a growing movement to ban employers from asking about applicants’ salary histories. The idea behind these bans is that employers should be capable of determining a reasonable level of compensation for a position based on that position’s responsibilities and the candidate’s qualifications without having to factor in the person’s previous salaries.

Companies that set a salary based on the individual’s salary history are positioning themselves to continue a cycle of inequitable compensation, which is unfair to the applicant.

While some locations around the United States have already implemented these bans, and even more are considering them, the U.S. Virgin Islands has yet to implement same. The tide however, continues to move in the direction of banning those types of questions entirely, it is best for employers to get into the habit of not asking them.

For more information about hiring best practices, contact an experienced labor attorney in the U.S. Virgin Islands.

Ravinder S. Nagi is Assistant Managing Attorney and Chair of the Labor and Employment Practice Group at BoltNagi PC, a full service business law firm that serves the U.S. Virgin Islands.

Department of Labor Unable to Act Against Employers to Fail to Make Unemployment Insurance Payments

Posted in Government, Hurricane

Officials from the Department of Labor recently told lawmakers in the U.S. Virgin Islands that understaffing in the DOL has prevented the department from pursuing legal action against employers who have failed to make their unemployment insurance payments. These delayed and missing payments have, in turn, delayed the payment of benefits to newly unemployed citizens.

The DOL representatives revealed this information during a hearing of the Legislature of the Virgin Islands’ Committee on Workforce Development, Consumer Affairs and Culture. At the hearing, the Department of Licensing and Consumer of Affairs, the Department of Tourism and the Virgin Islands Carnival Committee also all testified.

A look at the issue

Elton George, who is the director of the Unemployment Insurance Division, said that when employers do not make their required unemployment insurance payments, the Virgin Islands Department of Labor then begins garnishing the claimant’s financial records to determine the amount of the unemployment check. However, understaffing at the Department of Labor has led to none of the typical legal action being taken against delinquent companies. According to George, the delay has been made even worse by a larger than usual number of unemployment claims coming into the UID.

Virgin Islands lawmakers were not satisfied with the explanation. According to Senator Jean Forde, unemployment has increased dramatically in the wake of the hurricanes that hit the Territory last fall. As such, the Department of Labor should not have understaffing problems, especially considering the vacancies are fully funded. The positions must be filled to allow the Department to process unemployment benefits to help the people in need throughout the territory.

Virgin Islands media became aware of the issue when former employees of the Schneider Regional Center and Juan F. Luis Hospital told reporters they had not received their promised unemployment benefits since losing their jobs. Resulting investigations revealed widespread issues throughout the Virgin Islands with people not receiving the unemployment benefits they are owed.

Considering the harsh living conditions Virgin Islanders have had to deal with since Hurricanes Irma and Maria hit the Territory, it is even more important than it might typically be for citizens to get these benefits in a timely manner so they can afford basic living necessities, not to mention ongoing repairs to their properties.

According to Senator Nereida Rivera O’Reilly, some people who have lodged complaints with the government have not received any unemployment checks since October 2017—that’s months’ worth of missing payments caused by dysfunction in the government.

This is an issue affecting employers and employees alike. For more information about the state of the Department of Labor and how this issue will affect your business’s long-term planning, contact an attorney in the U.S. Virgin Islands.

 

Ravinder S. Nagi is a shareholder and Chair of the Labor and Employment Practice Group of BoltNagi Pc, a full service business law firm serving the U.S. Virgin Islands.

Tourists are Returning to the U.S. Virgin Islands, but Hotel Rooms are Lacking

Posted in Hurricane

It’s been about six months since the U.S. Virgin Islands were devastated by a pair of Category 5 hurricanes. Some sense of normalcy is finally returning to the Territory—services are back up and running, businesses and homes are rebuilding, and tourists have begun coming back to the U.S. Virgin Islands.

In fact, some airlines are even preparing to launch new flights to the U.S. Virgin Islands. Spirit Airlines, for example, announced that it would begin providing a brand new nonstop flight between Fort Lauderdale and St. Croix running three times a week (Tuesdays, Thursdays and Sundays).

The U.S. Virgin Islands Department of Tourism also announced Spirit along with Delta Air Lines and JetBlue Airways would be expanding its services to St. Thomas, and that in April, United Airlines will resume its services to St. Thomas from cities including Houston, Texas; Washington, D.C. and Newark, New Jersey.

Challenges with accommodations

Still, it will be a long time before the Territory is able to truly return to normal. The hurricanes did a tremendous amount of damage to the islands.

While tourists are starting to come back to the territory, flights are still far below their levels at this time in 2017. St. Thomas is down about 50 percent in flight capacity, and St. Croix’s flight levels are about 15 percent below where they were at this point last year.

The tourists that have been coming back to the Virgin Islands have been having some difficulty finding accommodations. Many of the larger hotels are still closed and awaiting repairs. The lack of available accommodations has wide-reaching effects on the tourism industry, including the Territory’s ability to collect hotel occupancy taxes, as well as the various activities and adventures offered primarily to tourists. The taxi industry and other vendors have also suffered, as there have been significantly fewer visitors so far in 2018.

The U.S. Virgin Islands has been hit perhaps the hardest by the significant decrease in cruise ships arrivals to the Territory since the hurricanes. There’s expected to be a drop off of 30 percent of cruise ship visits to the area. It will be some time before cruise ship visits begin to stabilize and reach their figures before the hurricanes hit, and there’s no denying the economic impact that has on the Territory. These cruise ships are packed with tourists who flood the islands’ restaurants, bars, shops and activities.

Leadership in the tourism industry remains positive about the growth and recovery efforts after the hurricanes, but everyone understands there is still a long way to go.

For more information about recovery efforts and the outlook for your business in 2018, contact a trusted corporate planning attorney in the U.S. Virgin Islands.

 

Tom Bolt is Managing Attorney of BoltNagi PC, a full service law firm in St. Thomas U.S. Virgin Islands.