Non-Profit Tax Exempts Must File!

Non-Profit Tax Exempts Must File!

             Under the Pension Protection Act of 2006, beginning in 2007 all non-profits qualified under Federal Law 501(c)(3), must file some type of 990 Return annually.  Formerly, non-profit tax exempts with annual receipts of less than $25,000 did not need to file.  This reminder is important now, because three (3) years grace was allowed under the new law.  Starting in 2010, any non-profit tax exempt that does not file could lose its exemption, and thereafter, would have to reapply with the IRS to regain tax exempt status.

             This new requirement is not as onerous as it sounds, as a full 990 is appropriate only for sophisticated non-profits.  Many organizations that are over the $25,000 threshold can file a 990 EZ.  Private foundations are required to file a 990 PF.  Organizations with less that $25,000 in revenues that formerly did not need to file at all, are also eligible to file a 990 N, which is essentially a postcard filing with only eight pieces of information required. 

             Non-profit tax exempts on a calendar year are required to file by May 15^th of the following year.  They are allowed an extension to August 15^th, and a second extension to November 15^th.  The same timeframe applies to organizations that use a fiscal tax year, with initial returns due on the 15^th day of the 5^th month after the tax year ends. 

             More information for this is available for those who want to go on the IRS.gov website, or from your accountant, or, of course, from us.

                                                                 – Thomas M. Wells

Medicare Part D – 2009 Notification

Medicare Part D – 2009 Notification

It’s that time of year of again where employers must notify their employees whether or not the group prescription plan offered under the employer’s group health plan is equal to or better than that provided by Medicare Part D.  If the employer’s prescription plan is equal to or better than Medicare Part D, then it is considered “creditable.”  If it is not, then it is “non-creditable.”

Effective 2006, prescription drug coverage became available to Medicare eligible individuals.  An individual can join a Medicare Drug Plan when they first become eligible (typically the first day of the month on you turn 65) and each year thereafter between November 15^th and December 31^st.

If an employer’s prescription plan is non-creditable, an employee may want to consider joining a Medicare Drug Plan, which  is why all employers must notify their employees each year by November 15^th, whether or not the prescription plan is creditable or non-creditable.

Generally, if an employer’s prescription plan has a co-pay without an annual maximum, the coverage is more than likely creditable. If an employer offers a high deductible health plan to its employees, it is most likely non-creditable. Further information can be found on the medicare.gov website.

Jill F. Rosenfeld, Esq.

The Economy

IT’S STILL THE ECONOMY, STUPID!

                                                    By:    Thomas M. Wells

                        Experts are telling us the recession is over, and it very likely is, at least by the numbers.  Eight months ago I predicted unemployment would reach ten-percent.  Now, with just a couple tenths of a point to go, I am less sure, but still think it will go to about that number, and only then start to decrease….but very slowly.  Customers are nervously coming back to retail stores, ….cash for clunkers sold some cars….interest rates remain low…….the real estate market is starting to find its bottom……..are happy days here again?  For sure, not yet.  However, second great depression has been avoided (unless you are one of those who believe we could have a double-dip). 

                        If imminent disaster as been avoided, then the news now is the march back to prosperity is going to be a slow one indeed.   Several reasons account for the likely slow recovery.  First, re-employment is going to take a great deal of time.  Part of this is for a good reason.  American workers continue to be more and more productive, and thus are able to produce more goods and services with less people.  This is good in the big picture, but certainly does not help the job numbers.  Further, employers will be very slow to add the additional cost of more employees until they are sure the need for goods and services is immediately around the corner. 

                        The second big reason for the slow recovery is, most all of us “got scared…..good” this time.  Actually, not a bad thing, either.  It is hard to find any segment of the American economy, whether it be business or individuals, that was not “over-leveraged.”  Businesses, of all shapes and sizes, including those big and small banks, with less capital and more risk than they should have had, and individuals buying and enjoying all kinds of goods based on the increased value of their homes, tapped through endless cheap home equity loans,  just plain borrowed too much money.

                        The resulting pull back is painful, but necessary.  The good news is that most everyone is deleveraging some, putting more into our piggy banks and lowering our tolerance for debt.  However, this is also the bad news, as less money lowers purchasing power for new goods and services.  On the balance, I believe the the lower tolerance for debt is good.  We will just need to wait longer for the savings to increase and the spending to return.

                        A cautionary note, is that most banks, whether it be those big “too big to fail” institutions that got all the help from the government, or the myriad of smaller community banks that so many of our clients and individuals deal with, are still not lending like they should be.  Many financial institutions, not just those that got involved with sub-prime lending, and other esoteric financial products, but many community banks in high-growth markets, are still struggling with real estate and sometimes business loans that became “toxic” as a result in the precipitous drop in the economy. 

                        The result was that these institutions had to worry about their own “balance sheets,” and thus, inevitably to begin hunting for deposits and new capital.  Despite what advertising might say, these folks are not lending, at least not yet.  An unhappy result of this is that, I have more than once in recent months, gone with a client looking for a what would have been a very reasonable business loan, only to be sent home empty-handed by a financial institution that would have been a willing partner up until recently.  We are capitalists here in the United States and in the end the economy needs capital to run, so this must be corrected, even if it requires more government stimulus money to happen.  This will not be particularly popular if it is needed.

                        The smaller community banks (what I call “the too many to fail”) still very likely will need some assistance.  The alternative is Friday night bank closings every week for many months to come, an empty FDIC insurance fund, and banks that will not lend, thereby postponing the recovery.  However, what goes with this help, must be that all financial institutions (not just banks, but also brokers and hedge funds, certainly investments banks) need long-promised regulation that will prevent greed overwhelming common sense again in the future.  The government has more work to do here as well. 

                        The biggest thing we all need while this happens is patience.  Something the American people are not famous for.  Jobs will come back slowly, spending likewise.  The government may even have to help some more—–as disturbing as that is.  Our banks will not really start lending until they are no longer afraid of going out of business.  Businesses need loans and capital to grow.  Regular folks will not really start spending until jobs become more certain and futures more certain.  Round and round it goes.  We just need to make sure we circle up the mountain, not down.

                        Yes….the recession is over…..but all of the small businesses and individuals we represent, will do well to remain cautious as the economy gets to a point where we can all just start putting one foot ahead of the other marching back up the hill.

                                                                        Thomas M. Wells is the Senior Partner

of WJ&L who works in both our New Jersey and Vermont offices.  Among his areas of expertise are business, corporate, non-profit and banking law.

What do Good Business Lawyers Do?

          Good business lawyers are considered to be good for a reason.  We do a lot more than just draft documents. We work to get the deal done, but still protect our clients’ interest while giving them good service, for value.  Importantly, though, our job is also to help our clients see things clearly if their judgment may be clouded by excitement or anxiety. 

           After practicing for awhile, we lawyers begin to get a “feel” for a deal.  Yes, it’s a “feeling” we get – a sense that something isn’t right, or someone isn’t being forthright, or, is just down right dishonest.  If something doesn’t feel right, it doesn’t smell right, it doesn’t look right, or if the other side is not acting honorably, we don’t just sit there and say nothing.  At least we at WJL don’t.  We tell our clients what we think.  The fact of the matter is, we see a lot of deals, good and bad.  And for sure, we know that the climate of the pre-“closing” negotiations most definitely pervades the relationship after the closing (or the signing).  Many business transactions require the parties to work closely together once they sign a contract.  Take this to the bank:  If the other side is difficult, lazy, dishonest, unethical, or just rubs you the wrong way, don’t expect that to change.  This seems obvious, but it needs to be said.  Too many people take on “partners” that they don’t get along with.  It’s really the same as a marriage.  If you are not compatible, what’s the point?   

           Another thought, at least for now.  A good business lawyer doesn’t fight the other side for every single item or issue.  Experienced, effective attorneys know when to “give”, and when to negotiate and fight for something.  Our job is to protect you, but we also have to get the deal done, right?  If we spent time and money arguing about something that, at the end of the day, doesn’t effect our client in any meaningful way, we have wasted time, money, and goodwill. 

           A good business lawyer does a lot more than paper a deal.    A lot more. 

          Lisa R. Aljian, Esq.