What Clients Want from Your Law Firm’s Website

Correct Consults Logo

When a client comes to your office, they are expecting to meet a lawyer they can trust who respects them and will represent their case well. The same guiding principle applies to what prospective clients want from your law firm’s website: a trusted resource that will provide information and guide them to a lawyer they can trust. There are several ways you can be responsive to client needs on your law firm’s site.

Descriptions of Legal Proceedings

Your prospective clients will likely have many questions about the events that are going to take place surrounding their case. How many times can they expect to meet with you or a partner attorney? How many court hearings will they need to attend? Is there any background work required on their part? What sort of emotions might they experience as their case reaches a trial? You could provide a resource webpage, or even a thorough blog post, on your site that walks clients through the process and provides answers to their concerns.

Clear Explanations of Laws

Your legal training and expertise gives you have the ability to understand complex rulings and, using your strong relational skills, you also have the ability to explain the details of those rulings in layman’s terms. Your law firm’s blog is an excellent place to write about recently passed laws or judicial rulings. Particularly, if a law will directly affect your client base, you should consider devoting the time to explain the information to your site visitors.

Answers to Frequently Asked Questions

As you have practiced law you have more than likely encountered the same questions, or type of questions, from your clients. Questions such as: Do I have a case? What is a personal injury? How much will my attorney fee be? How much can I get in my settlement? Consider creating a section on your site to address these most frequently asked questions in a FAQ section. Your firm will be seen as a legal authority and will simultaneously build trust with potential clients.

Practical Tools and Resources

In a world of smartphones and apps, Web users crave information that is interactive and engaging. Think about a complicated question or process you could streamline and create an effective tool to guide your clients through the nuances. Personal injury lawyers may choose to include an interactive questionnaire for clients to determine the severity of their injuries. A family lawyer may feature a child support cost calculator on their site. Be creative and find a quality marketing team of designers and programmers to bring your vision to life.

Introduce Your Firm’s Attorneys

An often overlooked, but necessary element of any law firm site is the attorney bio pages. Your clients will instantly get a sense of your attorneys when they meet face to face in your office, but what about beforehand? That first impression almost always happens online. It is important to make a good impression. Consider including bits of personal information to show that your attorneys are well rounded individuals or, better still, include a professional video highlighting each of your partners. Remember to be engaging; your clients want to know they can trust you. In the 21st century, building trust oftentimes begins online.

Article By:

 of

Can You Hear Me Now? Tips for Communicating with Counsel

Dickinson Wright Logo

Imagine that some circumstance arises that leads you to need an attorney. Perhaps you have a dispute with a neighbor, are considering adopting a child, or have been wrongfully terminated from your employment. No matter what your legal matter may be, you may find that a common question arises in your mind: How do I best communicate with my attorney? Today’s technology provides many options for communication, ranging from social media websites like LinkedIN and Twitter to increased modes of communication such as Skype video-conferencing, and texting. It can be confusing for a client to know what the most effective way is to communicate with an attorney (especially if he or she is represented for the first time). Here are a few tips you may want to consider:

1. Ask your Attorney. Many attorneys have the ability to use different modes of communication. Your attorney, however, may prefer you contact him or her using a particular mode. Some may prefer email, while others may be better able to respond to telephone calls. You may find that your attorney’s preference for how you get in touch is based on the circumstances. If you are running late to a settlement meeting, a call may be more effective than an email, for instance. Open a line of dialogue with your attorney about their specific suggestions as to how you can best communicate with them.

You should also remember that your attorney may be able to better communicate with you if he or she knows your preferences. Most attorneys request of their clients an email address, phone number, and mailing address. If you do not use a cellular phone or other mobile device, allow your mail to pile up, or do not have privacy in your home to review sensitive emails, you will want to share this information with your attorney.

2. Consider the Length and Frequency of Messages. We may all have had the experience of leaving a voicemail so long that the recording turns off, resulting in an incomplete message. And we may all have had the experience of writing lengthy emails, especially when those communications are about concerning or pressing matters. When communicating with your attorney, you’ll want to consider the length and frequency of your messages. Ask your attorney to share with you his or her typical response time by posing a question like: “How long do you suggest I wait for your response before reaching out again?” You may find that you can avoid unnecessary fees and costs by preventing duplicate messages. You may also want to ask your attorney to share with you a few months into the attorney-client relationship whether he or she has suggestions for managing emails or other communications that are particularly lengthy. For instance, before writing a lengthy email on a particular subject, you may want to just drop your attorney a line and ask whether a call or email will be more effective.

You may also wish to discuss with your attorney limiting each email to one issue, or to start a new “thread” or email conversation once your exchange reaches a particular length.

3. Format your Messages for Clarity. One suggestion I often share with clients is to use numbered lists or bullet-points when exchanging emails with me. This not only helps me to more easily digest lengthy emails, but it speeds up the process of responding, which can save the client time and money in return. I have also found that when a client sends a lengthy email with many questions interspersed, I can respond more quickly by typing my response into the body of the client’s original email. In those circumstances, I will use a bold and colored text to respond, and instruct the client to respond in all capital letters. While the formatting of your messages may not have an impact in a single instance, over the life of a case these kinds of strategies may be effective for you and your attorney.

4. Be Prepared. When you are planning to exchange email, teleconference, or otherwise speak with your attorney, attempt to reasonably anticipate what questions she or he may have for you. At times, you may want to reach your attorney’s legal assistant or office staff to ask whether your attorney suggests you review or provide documents. Being properly prepared can help you make the most of the time you and your attorney spend in discussion.

Whatever your legal needs may be, speaking with your attorney about how best to communicate can lay the foundation for a more pleasant and effective attorney-client relationship.

Article By:

 of

Your Face is for Sale! The 4 Most Interesting Things About the Proposed Update to Facebook’s Governing Documents

Mintz Logo

If you use Facebook (and you likely do, if only to play some game that apparently involves crushing large amounts of candy), then you received an email last week informing you that Facebook is proposing changes to its Data Use Policy and Statement of Rights and Responsibilities.  The proposed changes are largely in response to the $20 million settlement, approved last month by a federal judge, of a class action brought against Facebook in response to its use of user names and photos in “Sponsored Stories”.

facebook on office wall

In January 2011, Facebook implemented the Sponsored Stories advertising mechanism, which turned user “likes” into product endorsements.  The claim argued that Facebook did not adequately inform its users that profile photos and user names would be used by advertisers to recommend products and services.  The claim also argued that Facebook inappropriately did not give users the ability to opt out of the Sponsored Stories advertising feature and allowed the use of the likeness and photos of minors who, the claimants argued, should have automatically been opted out of the program.  Arriving just days after the approval of the settlement, the proposed changes include an interesting mix of responses and clarifications.  These are the most noteworthy:

Your face is for sale.  Under the approved settlement, Facebook agreed to pay $20 million and give its users greater “control” over the use of information by advertisers.  Facebook did not, however, agree to let its users opt out of allowing advertisers to use information entirely.  Under the revised Statement of Rights and Responsibilities, each user gives Facebook permission to use his or her name, profile picture, content and information in connection with commercial, sponsored or related content.  Facebook further clarifies that this means that businesses or other entities will pay Facebook for the ability to display user names and profile pictures.

  • Kids, be sure to ask your parents’ permission.  By using Facebook, each user under the age of 18 represents that at least one parent or guardian has agreed to Facebook’s terms, including the use of the minor’s name, profile picture, content and information by advertisers, on that minor’s behalf.
  • Your profile photo is fair game for facial recognition scanning.  Facebook scans and compares pictures in which you are tagged so that when your friends post more photos of you, it can suggest that they tag you.  The updated Data Use Policy makes it clear that your profile photo will be scanned for this purpose as well.
  • There’s a renewed emphasis on mobile phone data.  The updated policies make it clear that Facebook and, in certain cases, third-party integrated applications, will have access to a broad array of mobile data.  This includes the use of friend lists by third party mobile applications to advertise mobile applications used by an individual’s friends.  Whereas Facebook encountered substantial difficulty in implementing Sponsored Stories and similar advertising mechanisms, Facebook’s program of allowing mobile applications to market themselves as “Suggested Apps”has been a bright spot for the company’s bottom line.  Moreover, Facebook has signed on to an agreement with California Attorney General Kamala Harris that mobile applications constitute “online services” and, as such, are governed by the same disclosure and transparency regulations applicable to websites.  The clarifications related to mobile devices and applications suggest that Facebook intends to further develop the use of mobile data as a revenue stream without risking the same type of legal action.

Facebook’s proposed revisions remain open for public comment.   While the proposed revisions are unlikely to stoke the kind of furor that past changes have inspired, they remain an interesting display of the developing give-and-take between consumers and online service providers who provide a “free” service in exchange for the right to use and monetize personal data.

Article By:

 of

A Continued Examination of Charitable Patient Assistance Programs Part Seven in a Series: Charitable PAPs: Donations and Transparency 2013-09-03

Mintz Logo

In today’s challenging health care environment, Charitable Patient Assistance Programs (Charitable PAPs) have emerged to meet the needs of the nearly 30 million Americans that are underinsured and have difficulty paying out-of-pocket medical costs. As potential donors make strategic decisions to invest in Charitable PAPs, there are many elements that must be considered to ensure compliance with all applicable laws and regulations. For the previous alerts in the series, please refer here.

As Charitable PAPs are entrusted with donations to help patients, it is important that the organization is accountable to its donors and is in compliance with all relevant audit requirements. When considering a donation to a Charitable PAP, it is important to evaluate the organization’s commitment to regular and thorough independent, third-party reviews to verify program and financial transparency and to validate operations:

  • Does the organization undergo regular, independent financial audits? In most cases, non-profit 990s are prepared by an accredited and industry-recognized financial auditing firm typically named on the 990. Researching the firms can provide insight into the thoroughness of the audit.
  • Does the Charitable PAP agree to operate in a certain manner with its donors? Is compliance audited? It is possible to request copies of compliance audits to make sure the organization is adhering to applicable requirements and restrictions as outlined to donors.
 of

Fast Food Comes to Indian Country

Dickinson Wright Logo

In-N-Out Burger, the quintessentially Californian burger chain, will open its first restaurant on tribal land in early 2014 at the Morongo Casino on the Morongo Indian Reservation on the heavily trafficked Interstate 10. The reservation lies 90 miles west of Los Angeles and 20 miles east of Palm Springs. Similarly, the Wyandotte Nation of Oklahoma will open a Sonic restaurant on non-Indian land in Seneca, Missouri, about 10 miles from its Oklahoma reservation.

Fast-food restaurants have been noticeably lacking in Indian Country, primarily due to the lack of familiarity of restaurant franchises with tribal law. This is unfortunate as fast food is a perfect fit for tribal economic development. Fast-food restaurants are a magnet for highway traffic, bringing customers into the tribal business development that would otherwise not think to stop there. They complement tribally owned gas stations, gaming venues, and shopping centers with an inexpensive food alternative and bring in consistent revenue.

Deals may be as simple as a lease arrangement, as in the Morongo In- N-Out Burger, in which the franchise owner leases the land from the tribal owner and builds a restaurant there. Alternatively, the operation may be owned and operated by the Tribe, as in the Sonic restaurant, which is wholly owned by the Wyandotte Nation.

While tribally owned businesses operating on non-Indian land are clearly subject to local taxes, confusion surrounds taxation of non- Indian businesses on tribal land. In July, the Ninth Circuit precluded Thurston County in Washington State from imposing a property tax on Great Wolf Lodge, a waterpark on leased trust land, holding that state and local governments lack the power to tax permanent improvements built on Indian land. This means that a building owned by a non- Indian franchisee on tribal land is not subject to non-tribal property taxes. However, the Second Circuit recently decided that non-Indian personal property on tribal land – in that case, slot machines leased to the Tribe – is taxable.

Some fast-food restaurants on tribal land collect sales taxes for the tribe and other local governments. For example, while most businesses operating on the Navajo Reservation collect only a tribal sales tax of five percent, the McDonald’s restaurant in Shiprock, New Mexico, charges a 6.3 percent sales tax for San Juan County on top of the Navajo tax. While it is unclear that such a tax is required by law, some businesses may find it easier to pass sales taxes on to their customers than fight them.

With an ambiguous taxation framework, stand-alone businesses such as fast-food restaurants operating on tribal land must negotiate in advance who will pay these taxes should they be imposed and memorialize these decisions in the lease agreement.

Taxation is just one issue that makes doing business with Indian tribes unique. Other issues include tribal regulation, dispute resolution, and sovereign immunity. It is vital that experienced legal counsel be involved early in negotiations to ensure lasting and mutually beneficial businesses in Indian Country.

Article By:

 of

It’s the Words, Not the Ideas, that Are Copyrightable

McDermottLogo_2c_rgb

The U.S. Court of Appeals for the Seventh Circuit dismissed a lawsuit claiming that Elton John and his songwriter partner Bernie Taupin had plagiarized their hit song “Nikita” from a song called “Natasha,” explaining that copyright law does not cover general ideas, but only the specific expression of an idea.  Guy Hobbs v. Elton John, Case No. 12-3652 (7th Cir., July 17, 2013) (Manion, J.).

Guy Hobbs composed “Natasha,” a song about a love story between a British man and a Ukrainian woman.  In 1983, Hobbs registered his copyright in the song and then sent the song to several music publishers, one of them being Elton John’s publisher, Big Pig.  However, the song was never published.  John released the Nikita song in 1985, wherein the singer from the west describes his love for a girl named Nikita, who he saw through the wall and who was on the other side of the line.  The copyright in Elton John song was registered with the U.S. Copyright Office by Big Pig.

Hobbs claimed that he first learned of the Nikita song in 2001.  He alleged that the lyrics infringed his copyright of Natasha and sought compensation from John and Taupin.  Hobbs later sued John, Taupin, and Big Pig for copyright infringement.  Hobbs claimed that his work was entitled to copyright protection because his selection and combination of the elements in Natasha constituted a “unique combination.”  Hobbs argued that the number of similar elements between the two works supported a claim for copyright infringement.

The district court held that the elements identified by Hobbs were not entitled to copyright protection when considered alone.  Hobbs had not established a “substantial similarity” between Natasha, a song about a British man and a Ukrainian woman who did meet, and John’s Nikita song describing an East German woman peering through the Berlin wall at a man she never met.  The district court also rejected Hobbs claim that the elements in the song created a unique combination that was copyrightable.  The district court held that although the theme of the two songs had some similar elements in common, the elements identified were not protectable under the Copyright Act.  Hobbs appealed.

The 7th Circuit agreed, concluding that “Natasha and Nikita simply tell different stories, and are separated by much more than small cosmetic differences.”  The 7th Circuit stated that the Copyright Act does not protect general ideas, but only the particular expression of an idea.  In addition, the Copyright Act does not protect “incidents, characters or settings which are as a practical matter indispensable, or at least standard, in the treatment of a given topic.”  The 7th Circuit concluded that “as a matter of law Natasha and Nikita are not substantially similar because they do not share enough unique features to give rise to a breach of the duty not to copy another’s work.”

Article By:

 of

Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) and Financial Institutions Anti-Fraud Enforcement Act (FIAFEA): A Novel Approach To Protecting Financial Institutions From Themselves

tz logo 2

In a matter of first impression, Judge Lewis Kaplan of the U.S. District Court for the Southern District of New York ruled that the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”) not only prohibits fraud perpetrated by a third party that harms a financial institution, but also renders unlawful fraudulent conduct committed by a financial institution that results in harm to itself. In the case of U.S. v. Bank of New York Melon (“BNYM”), the Government alleged that BNYM violated FIRREA by engaging in a scheme to defraud its clients regarding the pricing of foreign exchange trades and that the bank was ultimately harmed by its own misconduct.

FIRREA was passed in the late 1980s in reaction to the savings and loan crisis, and although it has been around for nearly a quarter century, it has not been utilized very often until recently. The law allows the Government to bring a civil action against any individual or entity for violating a number of criminal statutes prohibiting fraud, including mail and wire fraud, if the fraud affects a federally insured financial institution. In the case against BNYM, the Government asserted that the bank committed mail and wire fraud by making false representations regarding its pricing of foreign currency trades in connection with its “standing instruction” program. Under BNYM’s standing instruction program, the bank automatically set the price of foreign currency trades, relieving the client of the need to contact the bank directly and negotiate a price. BNYM allegedly represented that its standing instruction program provided “best execution” with respect to its foreign currency trades, which within the financial industry was commonly understood to mean that the client received the best available market price at the time the trade was executed. According to the lawsuit, however, BNYM did not provide best execution as the term was understood within the industry and instead priced its currency trades within a range least favorable to its clients.

Over time, BNYM’s clients allegedly learned about its pricing practices, which led to a number of lawsuits being filed against the bank by investors and customers, potentially exposing the bank to billions of dollars in liability. In addition, many of BNYM’s clients allegedly terminated their relationship with the bank in the wake of the revelations about its currency pricing policies. Thus, according to the lawsuit, BNYM’s fraudulent misrepresentations with regard to its currency pricing practices ultimately harmed the bank by causing it to lose customers and exposing it to liability.

In response, BNYM argued that it could not be held liable under FIRREA because the financial institution harmed by the fraud must be the victim of the fraud or an innocent bystander, not the perpetrator of the fraud. The Court rejected this argument explaining that, in passing FIRREA, Congress’s goal was to broadly deter fraudulent conduct that might put a federally insured financial institution at risk. Accordingly, it was entirely consistent with Congress’s intent to render unlawful fraudulent conduct perpetrated by a financial institution and its employees that affects the financial institution itself in order to deter these institutions from engaging in such misconduct in the future.

This decision represents a potentially important breakthrough for whistleblowers. Under the Financial Institutions Anti-Fraud Enforcement Act (“FIAFEA”), a whistleblower that provides information to the Government regarding fraudulent activity affecting a financial institution that constitutes a violation of FIRREA may be entitled to a reward if the Government obtains a monetary recovery. Unlike other whistleblower statutes, a whistleblower recovery under FIAFEA does not hinge on whether the Government has suffered a monetary loss. If a whistleblower is aware of fraudulent conduct affecting a financial institution-even if the only financial institution that is harmed by the fraud is the very same institution that engaged in it-FIAFEA provides an avenue for disclosing the fraud to the authorities with the potential upside of a substantial reward for doing so. Given the recklessness and misconduct that led to the Great Financial Disaster, the Government’s use of FIRREA and FIAFEA to protect financial institutions from their own excesses is not only warranted, but may also deter future misconduct, just as Congress intended.

 

WildTangent Files its Supreme Court Certiorari Petition in Patent Infringement Case – Part 1

Schwegman Lundberg Woessner

In September of 2009, Ultramercial, Inc. sued WildTangent, Inc., Hulu and YouTube in the Central District of California for alleged patent infringement of U.S. 7,346,545 (the ’545 patent).  The ’545 patent claims trading advertisement viewing for access to content over the Internet.  The Abstract of the ’545 patent reads:

The present invention is directed to a method and system for distributing or obtaining products covered by intellectual property over a telecommunications network whereby a consumer may, rather paying for the products, choose to receive such products after viewing and/or interacting with an interposed sponsor’s or advertiser’s message, wherein the interposed sponsor or advertiser may pay the owner or assignee of the underlying intellectual property associated with the product through an intermediary such as a facilitator.

Claim 1 of the ’545 patent is more detailed:

1. A method for distribution of products over the Internet via a facilitator, said method comprising the steps of:

a first step of receiving, from a content provider, media products that are covered by intellectual-property rights protection and are available for purchase, wherein each said media product being comprised of at least one of text data, music data, and video data;

a second step of selecting a sponsor message to be associated with the media product, said sponsor message being selected from a plurality of sponsor messages, said second step including accessing an activity log to verify that the total number of times which the sponsor message has been previously presented is less than the number of transaction cycles contracted by the sponsor of the sponsor message;

a third step of providing the media product for sale at an Internet website;

a fourth step of restricting general public access to said media product;

a fifth step of offering to a consumer access to the media product without charge to the consumer on the precondition that the consumer views the sponsor message;

a sixth step of receiving from the consumer a request to view the sponsor message, wherein the consumer submits said request in response to being offered access to the media product;

a seventh step of, in response to receiving the request from the consumer, facilitating the display of a sponsor message to the consumer;

an eighth step of, if the sponsor message is not an interactive message, allowing said consumer access to said media product after said step of facilitating the display of said sponsor message;

a ninth step of, if the sponsor message is an interactive message, presenting at least one query to the consumer and allowing said consumer access to said media product after receiving a response to said at least one query;

a tenth step of recording the transaction event to the activity log, said tenth step including updating the total number of times the sponsor message has been presented; and

an eleventh step of receiving payment from the sponsor of the sponsor message displayed.

As you can see, there are 11 method steps recited in Claim 1, so it is a very detailed claim and it cannot be summarized in a sentence or two.

The history of the case is not easy to summarize either.  In short, the District Court found that the subject matter of the patent was not patent eligible and dismissed the district court action before interpreting the claims.  In 2011, the Federal Circuit reversed the District Court decision, but the Supreme Court vacated the Federal Circuit’s decision in 2012 based on its recent opinion in Mayo v. Prometheus.  And in June of 2013 the Federal Circuit again reversed the District Court decision, leading to WildTangent’s Petition for Writ of Certiorari filed last week.

WildTangent’s cert petition is attached.  I will be discussing the petition and the ongoing patent eligibility battle in more detail in future posts.

Article By:

 of

 

Women, Influence and Power in Law Conference – October 2-4, 2013

The National Law Review is pleased to bring you information about the upcoming Women, Influence & Power in Law Conference:

WIPL2013_250x250

When:

Where:

The Only National Forum Facilitating Women-to-Women Exchange on Current Legal Issues

Women, Influence & Power in Law Conference is presented by Summit Business Media’s Legal Suite – InsideCounsel magazine, InsideCounsel.com (website), producers of the 13th annual IC SuperConference, the prestigious Transformative Leadership Awards, and creators of Project 5/165.

Presented by InsideCounsel Magazine, the pioneering monthly magazine exclusively serving general counsel and other top in-house legal professionals, the first annual Women, Influence & Power in Law Conference offers an opportunity for unprecedented exchange with women outside counsel. This unique event was created with the assistance of an unheralded advisory board comprised of highly placed women attorneys who are all direct reports to the general counsel and were drawn from across the country. These attorneys have the highest levels of expertise and experience in key practice areas.

The Women, Influence & Power in Law Conference is not a forum for lawyers to discuss so-called “women’s issues.” It is a conference for women in-house and outside counsel to discuss current legal topics, bringing their individual experience and perspectives on issues of:

  • Governance & Compliance
  • Litigation & Investigations
  • Intellectual Property
  • Government Relations & Public Policy
  • Global Litigation & Transactions
  • Labor & Employment
  • Executive Leadership Skills Development

Treasury Department Recognizes All Legal Marriages for Tax Purposes

Michael Best Logo

On August 29, 2013, the Treasury Department issued Revenue Ruling 2013-17, Internal Revenue Bulletin 2013-38, which states that same-sex couple legally married in jurisdictions that recognize their marriage will be treated as married for ALL federal tax purposes. As a result, legally married same-sex couples are treated the same as legally married opposite-sex couples for federal tax purposes if the state of ceremony of their marriage recognizes same-sex marriage even if their state of residence does not recognize same-sex marriage.

This Ruling has significant impact for legally married same-sex couples and their tax advisors. However, it does not impact state law rules regarding the definition of marriage and may complicate income tax filings for same-sex couples legally married but living in a state that does not yet recognize their marriage, like Wisconsin and Illinois.

Background Leading Up to the Ruling

The Defense of Marriage Act (DOMA) was enacted by President Clinton in 1996. Section Two of DOMA says states do not have to recognize same-sex marriages performed in other states. Section Three of DOMA defined marriage for all federal purposes as only between one man and one woman.

On June 26, 2013, in Windsor v. United States (Windsor), the United States Supreme Court held that Section Three of DOMA was unconstitutional. Therefore, any same-sex married couple that lives in a state that recognizes same-sex marriage is to be treated the same for all purposes as any other married couple, and thereby are entitled to all of the 1,138 rights and privileges under federal law that are granted to married persons, which includes federal tax law.

Section Two of DOMA was unaffected by Windsor. Therefore, a same-sex couple that marries in one of the thirteen states that recognizes same-sex marriage who then moves to one of the thirty-seven states that does not recognize same-sex marriage would not be treated as married if the state of residence determines whether a couples is considered married, as opposed to the state of ceremony determining if a couple is married.

Absent guidance from the Treasury Department, a same-sex couple legally married in a recognition jurisdiction who then move to a state that does not recognize same-sex marriage, would most likely not be treated as married for federal tax law purposes. This is because the majority of federal tax laws are determined by a couple’s state of residence, not the state of ceremony of their marriage.

State of Ceremony Versus State of Residence

Consider the following examples to illustrate Windsor and this Ruling:

Britney and Jason are married in a drive-through chapel by an Elvis impersonator in Las Vegas and then go home to California. Their opposite-sex marriage is recognized for federal tax law purposes in California (and all other states) because California recognizes legal Nevada marriages. Sadly, Britney and Jason’s marriage only lasted 55 hours.

Mitchell and Cam are a same-sex couple married in New York (New York being a state of ceremony that recognizes same-sex marriage) and move back to Milwaukee (Wisconsin being a state of residence that does not recognize same-sex marriage). Prior to the Revenue Ruling, Mitchell and Cam are not married for federal law purposes, even though their marriage would be recognized if they stayed in New York. This is because Article Two of DOMA says that Wisconsin does not have to recognize New York marriages.

After the Revenue Ruling, with an effective date after September 16, 2013, Mitchell and Cam in Wisconsin will be treated as married for federal tax law purposes just like Britney and Jason in California. Mitchell and Cam will be able to utilize all federal tax laws Britney and Jason would be able to utilize (if Britney and Jason had respected the sanctity of their marriage).

Federal Tax Impact of Ruling

As a result of the Revenue Ruling, regardless of a couple’s state of residence, if they are married in a state that legally recognizes their marriage, the couple will be entitled to the following federal tax law benefits (among others): filing status as married filing jointly, claiming personal and dependency exemptions, taking the standard deduction, employee benefits, contributing to an IRA, spousal rollovers of IRA’s, unlimited marital deduction for estate and gift tax purposes, gift tax splitting, and estate tax exemption portability.

The Revenue Ruling does not apply to registered domestic partnerships, civil unions, or similar formal relationships recognized under state law that are not considered “marriage” under state law.

Legally married same-sex couples must file their 2013 income tax returns as either “married filing jointly” or “married filing separately.” They may also, but are not required to, file amended returns for open years (generally 2010, 211, and 2012) to be treated as married for federal tax law purposes.

Also, if an employee purchased health insurance coverage from their employer on an after-tax basis for their same-sex spouse, they may now treat the amounts paid for that coverage as pre-tax and excludable from their income, and file amended returns for a refund for open years. Further, if their employer paid Medicare and Social Security tax on those taxable benefits to the employee, the employer may file for a refund for both the employee and employer portions of those overpayments for open years.

Continuing Issues in Non-Recognition States

As of August 30, 2013, the District of Columbia and thirteen states (California, Connecticut, Delaware, Iowa, Maine, Massachusetts, Maryland, Minnesota, New Hampshire, New York, Rhode Island, Vermont, and Washington) recognize same-sex marriage. Therefore, clients who get married in those states or have employees who get married in those states, but subsequently reside in a non-recognition state, need to be aware of the new federal tax law benefits and obligations.

Even though married same-sex couples may now file as “married filing jointly” for federal income tax purposes, states like Wisconsin and Illinois that do not recognize same-sex marriage would still require those couples to either file as single or as married filing separately on their federal returns. This is because most state income tax forms use federal income tax amounts as the starting point for preparing the state return, and most state returns require the federal return to be attached to the state return. Without further guidance from state tax authorities, this could complicate income tax filings for same-sex married couples in non-recognition states.

Estate, gift, and generation skipping transfer tax laws now treat all legally married same-sex couples the same as opposite-sex couples, but, like opposite-sex couples, the Revenue Ruling does not mitigate the need for same-sex married couples to prepare estate plans. Many property law issues are driven by whether someone is classified as a “spouse” under state law, including who inherits under intestacy and other survivorship rights, all of which can be controlled by a will or trust in non-recognition states (like Wisconsin and Illinois). Finally, some states (like Illinois) have state estate and gift tax exemptions that are lower than the current federal estate and gift tax exemptions, which requires careful estate tax planning for all married couples, be they opposite-sex or same-sex.

The impact of Windsor and how same-sex couples are recognized for federal and state laws is a fast changing arena, and additional federal and state guidance will be required.

Article By:

 of

Powered by
►
Necessary cookies enable essential site features like secure log-ins and consent preference adjustments. They do not store personal data.
None
►
Functional cookies support features like content sharing on social media, collecting feedback, and enabling third-party tools.
None
►
Analytical cookies track visitor interactions, providing insights on metrics like visitor count, bounce rate, and traffic sources.
None
►
Advertisement cookies deliver personalized ads based on your previous visits and analyze the effectiveness of ad campaigns.
None
Powered by