Alaska Law Blawg

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Alaska Health Care Exchange Goes Live

So the Federal Government is shut down and Obama care marches on.  It’s not easy to figure out where to go to comply with the new act.  This article provides directions to where you need to go.

How does the Alaska Health Care Exchange Compare

Alaska had three choices to comply with the Affordable Health Care Act:

  1. Create their own exchange (18 states);
  2. Joint venture with the federal government (7 states); or,
  3. Let the Federal government set up the exchange (26 states including Alaska).

How do the Alaska costs Compare

There are so many variables that comparison for everyone is difficult.  However, the Government has prepared a report comparing the costs for 27 year olds across the 50 states.  Younger people generally have the lowest cost for health care because they are generally more healthy.  Accordingly, these rates may not show the rates they intend to charge for older citizens.

Where Do Alaskans Go to Sign Up for Affordable Health Care In Alaska

You go to https://www.healthcare.gov, more specifically you go to the Alaska page, here.

How do I sign Up?

Create an account: First give some personal information. Then choose a user name, password, and security questions for added protection.

Apply:  Starting October 1, 2013 you’ll enter your personal and your families personal information, including your income, household size, and more.  You can use this checklist to collect all the information they’ll want from you.  You’ll also need to collect the complete information about any employer plan that you are qualified for through another family member, found here

Pick a plan:  Next you’ll see all the plans and programs you’re eligible for and compare them side-by-side.  You’ll also find out if you can get lower costs on monthly premiums and out-of-pocket costs.

Enroll:  Choose a plan that you think you can afford and enroll.

So I Enrolled and I’m Sick Is the Doctor Visit Covered?

Your actual coverage starts no sooner than  January 1, 2014.  To get your coverage in place by January 1, 2014, you need to enroll no later than December 15, 2013.

What If I don’t Enroll?

Under the Affordable Care Act people must get  insurance coverage beginning in 2014 or face tax penalties called the Individual Mandate. This includes both yourself and your children who are legal US citizens.The fee in 2014 is 1% of your yearly income or $95 per person for the year, whichever is higher. The fee increases every year. In 2016 it is 2.5% of income or $695 per person, whichever is higher.In 2014 the fee for uninsured children is $47.50 per child.The most a family would have to pay in 2014 is $285.  Paying the Tax won’t give any health benefits. You still will be responsible for 100% of the cost of their medical care.

Can I Wait Until the End of 2014 to Get Coverage and Avoid the Individual Mandate.

No, you have to get your coverage before March 31, 2014.  The only exceptions are for qualifying life event.  A qualifying life event makes you eligible for a Special Enrollment Period to enroll in health coverage. Examples of qualifying life events are moving to a new state, certain changes in your income, and changes in your family size (such as, if you marry, divorce, or have a baby).  Life event planning may allow you to forego insurance early in the year and get coverage late in the year to avoid the tax.

It will be interesting to see how enrollments proceed over the next 180 days.  Will the uninsured embrace Obama Care?
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Surface Transportation Assistance Act — Whistleblower Claims

Eric J. Emerson, Donald E. Elder, and Abraham Sandoval published an excellent article on Surface Trasportation Act — Whistleblower claims.  The full article can be found on their web site Surface Trasportation Assistance Act — Whistleblower claims.  They report that these types of claims have risen 30% since 2006.  These matters are governed by OSHA and have provisions allowing for $250,000 in punitive damages.  The most common protected employee activity is a refusal to drive.  It is interesting that third-party logsitics firms, leasing agent and brokers also face potential exposure to STAA claims based on perceived control over employees.

A driver’s refusal to drive is protected under two different provisions. First, 49 U.S.C. sec. 31105(a)(1)(B)(i) provides protection to the driver when they refuse to operate the vehicle because it would violate a regulation, standard or order of the US related to commercial safety.  Second, 49 U.S.C. 31105(a)(1)(B)(ii) the driver may refuse to drive if they have a reasonable apprehension of serious injury “to the employee or the public because of the vehicle’s hazardous safety or security condition.”

The elements of the employee claim are:

  1. The employee engaged in activity or conduct the statute protects;
  2. The employer took unfavorabel action against the employee;
  3. The employee’s protected activity was a contributing factor in the adverse action.

Adverse action inludes: termination; blacklisting; demotion; overtime denial; promotion denial; benefit denial; not rehired; threats; reassignment to low promotion prospect positions; reduction in pay or hours.

Super short statute of limitations of only 180 days from the adverse action.

The employer defense to the adverse action is very high.  The employer must show by clear and convincing evidence they would have taken the adverse action despite the protected activity.

It’s a great article and they discuss a lot more cases.

 

 

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Time running out for Creating Alaska 1202 Zero Tax Corporations

The Zero Tax rate Extension for Alaska 1202 qualified small business stock in 2012 and 2013 is Running Out

The American Taxpayer Relief Act of 2012 (the Act), Congress extended the Zero Tax rate on the sale of qualified small business stock (Section 1202 Stock).  This marks the second time the special provisions were extended. Section 1202 of the Internal Revenue Code – that individual taxpayers that receive gain on selling their qualified small business stock acquired after September 27, 2010, and before January 1, 2014, after they have held it for five years or more, can exclude it from their income for federal tax purposes.

The excluded gain under this temporary provision is not a nonpreference item under the alternative minimum tax (AMT) provisions. The gain exclusion in 2010 and later

Alaska Qualified Small Corporation
Alaska the top choice for 1202 Qualified Small Business Corporations

extended the special treatment to qualified small business stock acquired in 2011, but it did not provide for such treatment with respect to stock purchased in 2012. The latest Act both extends favorable tax treatment for such stock acquired in 2013 and retroactively applies such tax treatment to such stock acquired in 2012.

As usual there is no certanty that Congress will extend the 100% gain exclusion on small business stock acquired after 2013.  If you have a business idea in the works you should get it done before year end if you want to cash in on the Zero tax bonanza.

Gain Exclusion Limits

The gain exclusion is available only C corporations,  S corps and the unbiquitous LLC don’t get the Zero Tax.  If your C Corpration is under $50 million at initial capitalization you can qualify.  You will need to begin operations and actively engage in productive activities.   You can’t engage in a host of activities including banking, farming, natural resource extraction/production, or certain service businesses like consulting, engineering, or leasing activities.

The cap on the Zero Tax gain is the greater of (i) 10 times your stock basis or (ii) $10 million. The Zero Tax applies only for people not other corporations.  Gain over the cap is taxed at regular capital gains rates and the new 3.8% Medicare tax for capital gains starting in 2013. Since gain below the threshold is not included in computing taxable income, the gain is not a part of “net investment income,” which is subject to the new 3.8% Medicare tax.

It is also possible that half the eligible gain on the sale of qualified small business stock purchased outside the Zero Tax Rules window is excluded from the taxpayer’s income. In addition, some of the excluded gain is ordinarily treated as an AMT preference item and is added back into the taxpayer’s AMT income, which further reduces the benefit of the exclusion.

Opportunities

The gain exclusion for qualified small business stock under the Act should be addressed  in choice-of-entity decisions.  In Alaska  pass-through entities are the knee jerk choice of entity.  Alaska historically taxed C Corporations but not the Sub S or LLC entities.  Alaska however also passed legislation exempting 1202 qualified corporations from Alaska State Corporation income tax so long as the corporation is either incorporated in Alaska or is authorized to do business in this Alaska.

Lots of people a for most start-up businesses for several reasons, including they can do it themselves on the state web site.  Their CPA does it for them to avoid attorneys fees.  Their buddy has an LLC and they want to be like everyone else.  To discuss if the Zero Tax business entity is right for you call us at 907-375-9277.

 

 

 

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Great Business Attorney Questions

  • Prospective Business Attorney Questions and Answers.

If you’ve never hired a business attorney before, you might not know where to start.  You might also not know exactly what you are looking for.  These questions will help you in your quest for finding a business attorney that can help you start, grow and sell your business.

 

Business Attorney
Will your business attorney help your register ring?

  • Are you an experienced Business Attorney?

    Ask direct questions about your prospective lawyer’s experience.  Accounting is the language of business — Have they ever taken an accounting course?  What was your undergraduate degree?  What practical experience do you have in business? If you know you want to incorporate your business, for example, ask if he or she has ever handled an incorporation.  Alaska Law Offices, Inc. is experienced in business. We have two Certified Public Accountants on staff, with more than fifty years experience in business.  We have experience, starting, running and growing businesses.  In addition to growing our own we have audited, managed and consulted in manufacturing, service, construction, real property, transportation and medical businesses.  We have assisted in entity selection, employment contracts, and a host of other business needs.

 

  • Are you a well-connected Business Attorney?

    Your business attorney will know a lot about business.  However, there will come times when you are going to need a specialist in something they don’t know.  You want your lawyer to know when you need a referral to a specialist.  They should keep you from needing to finding those specialists when you need them.  Alaska Law Offices, Inc. is a connected business law firm.  We have extensive contacts in Alaska and among lawyers across the nation in specialized practice areas.  When our clients needs call for it we consult with other counsel to streamline their work.  If a referral will be more efficient or expeditious we are happy to make the referral.

 

  • Do you have other Business Clients in my industry?

    A good business attorney will be familiar with your industry or interested in learning more about it.  This is a double edged sword.  The more they are entrenched in an industry, the more efficient they become for you.  Improvements to a business documents and models frequently are shared with all of their clients.  However, this may keep you from enjoying the market advantage or your own developments for as long.  Alaska Law Offices, Inc. has business clients in several Alaska industries.  We are always discuss potential conflicts of interest with prospective clients before starting a new engagement.  We also bring a wealth of information from our experience having managed and audited business in the: transportation; construction; manufacturing; real estate; medical practice; banking; finance; sales and marketing sectors.

 

  • Are you a good Business Attorney teacher?

    Business attorneys do their most valuable work when they teach you and your staff how to stay out of trouble.  They do this by providing you the law applicable to your business and assisting in creating documents or procedures to stay compliant.  A good business lawyer contributes to your business by staying up with the changes in your business.  Alaska Law Offices, Inc. has fourth generation teachers.  Our staff has taught courses in vocational schools, community colleges and the university level.  The classes have covered topics including: business communication; secured transactions; collection practices; entity selection; taxation; business modeling; business simulation; accounting; management; personnel; negotiation; real property finance; computer programming and systems management.   We really enjoy working with people and teaching them new skills.

 

  • Are you a salesman, a manager, or a worker?

    Every business needs all three types of people, law firms are no different.  The “salesman” looks for new clients; the “manager” makes sure the client’s work gets done; the “worker” gets your work done. You want an attorney with a good mix of manager and worker.  Ask to meet the worker  and be sure you are comfortable with them.  Alaska Law Offices, Inc. are a good mix of manager and worker.  We get the job done in an efficient cost effective way.

 

  • What are your billing options?

    Unlike personal injury lawyers, business lawyers don’t generally work on “contingency fee.” Most lawyers will charge a flat one-time fee for routine matters, such as forming a corporation or LLC.  Find out if the flat fee includes out of pocket expenses, like filing fees and courier charges.  Most business attorneys will require a retainer before starting work.  Typically Alaska Law Offices, Inc. will engage businesses on an annual retainer basis for the regular and routine business advice and reminders that businesses need.  For retainer clients we also offer flat fee services for additional services that are outside the regular annual schedule.  We also provide additional serves on an ad hoc time and hourly fee.

 

  • Limits on Flat Fees?

    Flat fees generally are not quoted when the  the matter involves litigation or negotiations with third parties.  “Even though it’s a transaction I’ve done dozens of times, if the other side’s lawyer turns out to be a blithering idiot who wants to fight over every comma and semicolon in the contracts, then I can’t control the amount of time I will be putting into the matter, and will end up losing money if I quote a flat fee.” In such situations, you will have to pay the lawyer’s hourly rate. You should always ask for a written estimate of the amount of time involved, and advance notice if circumstances occur that will cause the lawyer to exceed his or her estimate.

 

  • Is the Retainer Refundable?

    Ask whether the retainer will be used and not held indefinitely in escrow., and that the lawyer commits to return any unused portion of the retainer if the deal fails to close for any reason.  Alaska Law Offices, Inc. uses two types of retainers, the annual service retainer and the ad hoc service retainer.  The annual retainer is earned throughout the year as the services are performed.  The ad hoc service retainer in contrast is an estimate of fees and is refundable when the job is complete if any amount remains unearned.

 

  • Whether You Should Give Your Business Attorney an Interest in Your business.

    You should be suspicious of any lawyer who offers to take an ownership interest in your business in lieu of a fee.  Giving your attorney an interest in your business creates a potential conflict of interest.  When attorneys interests are conflicted they can no longer fully serve your interests.  You should keep the blue sky value of your business for yourself.

 

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What Can a Business Attorney do for Me?

Business Attorney Documents
From Negotiable Instruments to the Sale of your Business — a Business Attorney can help

Most Lawyers Are Not Business Attorneys

Most lawyers address criminal and family matters. Someone who does “non-business” matters is probably not the best fit for your business. Business owners need an attorney with the skills in contracts, organizations, real estate, taxes, personnel and collections.

1. Business Attorneys focus on Contracts.

You will need a lawyer that speaks the language of business and can quickly understand your business.  They should regularly prepare standard form contracts for you to use with customers, clients and suppliers.  They should review contracts that other people will want you to sign. Continue reading “What Can a Business Attorney do for Me?”

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Alaska Administrative Hearings

Alaskan Crude Corporation v. Alaska Oil and Gas Conservation Commission

Alaska Supreme Court S-14148

August 30, 2013

There was only one Alaska Supreme Court decision this week.  It involved an appeal from an administrative hearing decision back in 2006.  The short take on the opinion is:  You can’t avoid oil spill response regulations by calling your oil well a gas well.  If we just left things there, than most business people wouldn’t learn anything useful for their own business.  How many of us actually have an old oil well that we might want to consider changing to a gas well.  I’ve previously written on administrative hearings here.

Continue reading “Alaska Administrative Hearings”

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ALASKA COMMERCIAL LEASE DEFINITIONS PRIMER

Alaska Commercial Lease Definitions
Commercial Space in Alaska

COMMERCIAL LEASE DEFINITIONS PRIMER

 Commercial leases contain terms that many people don’t know and definitions would help them.  Some commercial leases are the subject of complex, lengthy, and intense negotiations.  To be proficient at such negotiations, one must be familiar with certain basic concepts and be able to anticipate and protect one’s client from problems that may occur during the term of the lease.  This post addresses definitiions of some of the principal legal and financial terms applicable to commercial leases.  The most important legal and financial terms in commercial leases include the following:

Rent, including base rent, percentage rent, increases in rent, taxes, and operating expenses, and rent abatement;

  •             Renewals or extensions of the lease;
  •             Security deposits;
  •             Promotional funds;
  •             Uplift allowances;
  •             The condition of the premises;
  •             Lease term;
  •             Options to terminate;
  •             Options to purchase;
  •             Casualty and condemnation;
  •             Maintenance and repairs;
  •             Indemnities;
  •             Defaults (landlord as well as tenant);
  •             Attorneys’ fees;
  •             Guaranties of lease;
  •             Assignment and subleasing;
  •             Americans with Disabilities Act provisions;
  •             Entry by landlord;
  •             Environmental issues;
  •             Anticompetition clauses;
  •             Landlord limitation of liability;
  •             Substitution of premises;
  •             Mandatory remodeling;
  •             Rights to lease adjacent space;
  •             Landlord’s lien; and

Rules and regulations of landlord

  Continue reading “ALASKA COMMERCIAL LEASE DEFINITIONS PRIMER”

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IRA Beneficiary Designation Mistakes

August 17, 2013

IRA Beneficiary Designation Mistakes

Americans held over $18 Trillion in IRA and other retirement assets. Retirement assets are protected from judgment execution in most states and grow tax deferred or tax free.  Putting money in has been a very wise decision. You still need to address your beneficiary designation issues to keep from losing all that value. Continue reading “IRA Beneficiary Designation Mistakes”

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Alaska Wrestles with Veil Piercing

In an Alaska Supreme Court opinion issued on Friday, August 17th, the court wrestled with corporate veil piercing issues and their interplay with bankruptcy law.  Only corporations are normally liable for their debts.  The officers, shareholders and directors aren’t liable for corporate debts.  This concept of limited corporate liability is referred to as a veil.  Veil piercing refers to a court’s decision to disregard the veil and hold people behind the veil liable.   In a split decision the court ruled that the jury award for damages against the officer, shareholder and directors would stand.

The Claim

An employee sued a  corporation and its president for back wages in superior court. The corporation filed for Chapter 11 bankruptcy the very next day. The bankruptcy court discharged the corporation’s debts.  The superior court dismissed the corporation, but  allowed the employee to proceed to trial  against the president on a veil-piercing theory. A jury found that the corporation was a mere instrumentality of the president, and that the president owed the former employee wages under a bonus agreement. Continue reading “Alaska Wrestles with Veil Piercing”

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Alaska Online Workman Compensation Coverage Checker

Workers’ Compensation Requirements for Employer
Requirements for Employers

The Alaska Workers’ Compensation Act requires each employer having one or more employees in Alaska to get workers’ compensation insurance, unless the employer has been approved as a self insurer. Determining employee status is accomplished utilizing the relative-nature-of-the-work-test as set out in Alaska Regulation 8 AAC 45.890.

There are few exceptions to those who must be covered under a workers’ compensation policy. Generally speaking, those include: sole proprietors in a sole proprietorship; general partners in a partnership; executive officers in a nonprofit corporation, members in a member managed limited liability company, part-time baby-sitters, cleaning persons (non-commercial), harvest help and similar part-time/transient help, sports officials for amateur events, contract entertainers, commercial fishers, taxicab drivers whose compensation is by contractual arrangement, a participant in the Alaska temporary assistance program, and professional hockey team players and coaches if those persons are covered under a health care insurance plan. In addition, executive officers in a for-profit corporation may exempt themselves by filing an Executive Officer Waiver with the department.

Businesses get Insurance coverage from commercial insurance carriers. Employers should contact their insurance agent or broker to buy a workers’ compensation policy. Businesses unable to get coverage from an insurance company, may buy insurance through Alaska’s Assigned Risk Pool.  The National Council on Compensation Insurance (NCCI) administers Alaska Pools. Alaska does not have workers’ compensation group pools. Once an employer has coverage, they must give proof of workers’ comp insurance to the Division of Workers’ Compensation on form 07-6119 (usually submitted by the insurance company). There are huge civil and criminal penalties that apply to an employer who fails to keep up coverage and/or fail to pay compensation.

The the employer’s payroll, type of business risk (classification assignment), and the employer’s loss history determine the cost for coverage. If an employer believes that their premium is too high, or that their business is improperly classified, they can request arbitration from the NCCI, and the Alaska Review and Advisory Committee.

Alaska Online Workman Compensation Coverage Checker

So, who wants to know if a given employer has worker’s compensation coverage.  Employees want to know, because if they are hurt they would like insurance to pay for the hospital bills.  Property owners hiring contractors want to know because they are liable for injured workers if the contractor fails to insure his workers.  General contractors want to know because they hire subcontractors and need to know they are hiring insured workers.  Business owners want to know if their leased employees are actually covered by the employee leasing company.  Business owners also want to know that their competitors carry insurance — because they want to make sure the competition is paying their fair share of injured worker claims.  Alaska provides the following checker here:

Alaska Employer Workman Compensation Coverage Verification

This link takes you off site.  When clicking on the coverage verification link above, you will be leaving our site and going to an external web site not maintained by us or the Alaska Department of Labor.  This is the same site the Alaska Department of Labor would presently uses for verification.  The list does not include self insured businesses nor those employers for which coverage is provided on a statutory basis.  The site requires cookies and javascript to be enabled in order for it to function correctly.

If you are an employer and have been served with a Failure to Insure for Workers’ Compenstion Liablity, a discovery demand and give us a call at 907-375-9226.