Detroit Business Law

Michigan’s Wind Industry

Did you know that the state of Michigan has been the fastest growing wind manufacturing region in the nation over the last two years? You probably were unaware of this good news since it has been lost in the media’s coverage of doom and gloom for the Michigan economy.

The American Wind Energy Association (AWEA) posted a blog titled “Getting the scoop on wind at Michigan supply chain meeting” written by Chris Madison. This article provides a brief summary of the projects that have been announced and the jobs that this industry now supports in Michigan.

To read the rest of article click the following link AWEA Into the Wind Blog.

This article was written by Gary Field, CPA at Numerico, PC. Click here to view Numerico’s website.

Liability For Sports Injuries

In a recent decision the Michigan Court of Appeals considered the liability of an arena and an opposing player for an injury in a soccer game. (Click here to view the decision). The plaintiff was injured when an opposing player made a slide tackle and took the plaintiff’s legs out from under her.

The arena had a rule against slide tackles, which the defendant violated, causing the plaintiff’s injury. The Court of Appeals ruled that there was no basis for a lawsuit. A participant in a sporting event accepts the risk of injuries that are inherent in the activity. Violation of a rule of the sport does not by itself create liability.

A player is liable for injuring another player during a game only if the defendant engaged in “reckless misconduct.” The defendant’s conduct must “exceed the normal bounds of conduct associated with the activity,” and “demonstrate a willingness or indifference to the injury” of the other player.

This article was written by Mark S. Demorest, Managing Member of Demorest Law Firm.

Obama Care Provisions Effective 2011

Here are some of the major provisions that will affect most taxpayers starting in 2011:

Employers will be required to report the value of your health insurance coverage on your W-2.

What does this mean to you?

Well technically nothing since insurance coverage won’t be subject to an excise tax until 2018. Furthermore the excise tax of 40% would only apply to the employer-sponsored health insurance coverage amount that exceeds $10,200 for individuals and $27,500 for family coverage.

However once politicians start to see how much revenue could be generated from employer sponsored health insurance coverage, they may decide to apply the excise tax sooner rather than later to help pay for the deficit.

Effective January 1, 2011 only doctor prescribed medicines and insulin will be eligible for tax free reimbursement from one of the following plans.

Under current law insulin, prescribed and over the counter medicinal expenses qualify for tax free reimbursement from Flexible Spending Accounts (FSA), Health Reimbursement Accounts (HRA), Health Savings Accounts (HSA) and Archer Medical Savings Accounts (MSA)

If you are enrolled in one of the preceding plans you may want to consider stocking up on over the counter medicines this year.

This article was written by Jay Kossen, CPA at Numerico, PC. Click here to view Numerico’s website.

Update on the Asian Carp Dispute

Over the past several months, we have posted updates about the Lake Michigan Asian carp dispute.  This week, five states – Michigan, Minnesota, Ohio, Pennsylvania, and Wisconsin – filed a federal lawsuit in Chicago against the U.S. Army Corps of Engineers and the Metropolitan Water Reclamation District of Greater Chicago.  The lawsuit alleges that the defendants have created a public nuisance by operating infrastructure through which the Asian carp could enter the Great Lakes, and also requests that the court order the closing of the locks between the Chicago-area waterways and Lake Michigan.

In addition to the lawsuit, various members of Congress from the affected states have been working to find a solution.  Michigan and Illinois lawmakers agree that it is necessary to permanently separate the Mississippi River watershed from the Great Lakes watershed, but have not yet reached an agreement on the specific methodology, or even on short-term solutions to be implemented before the permanent solution is put in place.  Illinois lawmakers seem to be more concerned about protecting the shipping industry in Chicago than in protecting Lake Michigan from ecological destruction.

Even this action could be too late to fully protect Lake Michigan, as a 20-pound Asian carp was found in Lake Calumet, south of Chicago, in June.  Lake Calumet is 6 miles beyond an electronic barrier that was set up in Chicago waterways to prevent Asian carp from getting to Lake Michigan.

Besides the threat to Lake Michigan, there is now a concern that Asian carp could also enter Lake Erie, through rivers in Indiana and Ohio.  Asian carp are already present in the Wabash River in Indiana, which connects via marshlands and floodwaters with the Maumee River in Ohio.  The Maumee River connects to Lake Erie.   Earlier this month, Indiana placed mesh fences in marshes between the two rivers to attempt to keep Asian carp out of the Maumee River.

Stay tuned for further updates.  Also, see these articles in The Detroit News for more information: http://bit.ly/bPaiaA, http://bit.ly/bqt8dU, http://bit.ly/brspfu, http://bit.ly/amEzQb, and http://bit.ly/bVObfQ.

Click on the following for links to the first article on the dispute, the second article, and the third article.

This article was written by Melissa L. Demorest, Associate at Demorest Law Firm.

Forbes.com Article by Stephen J. Dunn

Click here to access a new article written by our own Tax Attorney Steve Dunn. It discusses common estate planning problems.

Gary Field’s Views: Concerns About Michigan’s Economic Future – The Next Big Economic Crisis

Dick Morris targets not only the United States, but also the State of Michigan in particular, when he indicates that we aren’t far removed from the crushing wave of the economic tsunami now sweeping over Greece and other members of the EU. To those of us that have resided in Michigan most of our lives and watched the financial mismanagement that comes out of Lansing, financial collapse has always seemed inevitable. Though it seemingly took forever for the auto industry to melt down because of “Bad Management” it ultimately did and the State’s economic crisis isn’t far behind.

President Obama’s goal of “spending this country’s way to wealth” has failed miserably and can only add to the “EU effect” here in the United States. Locally we can expect a similar effect as our soon to be Ex Governor’s management style has been equally irresponsible.

Taking this to the private sector for a minute, when a client of ours leverages by borrowing so that they can continue to invest in the business, if the return on investment which is driven by sales isn’t there, the client must cut costs, including payroll and related benefits, in order to survive. The client simply cannot “deficit spend its way to prosperity” forever. Its bank, at some point, will stop “papering over” the deficits with more money and the client will ultimately be bankrupt. When there is no longer an adequate return on investment and as a result positive cash flow, the private sector does what it must to survive; manage the expense side of the equation. Our clients understand “The only way they can take you out of the game is if you run out of cash.” State of Michigan under its current leadership has been more about taxing and spending versus cutting.

In addition to the federal government funding which has been used to feed the insatiable appetite of the unions in this state, the other source of funding which is drying up is debt sold by the State and its Municipalities. More and more, sophisticated investors are less and less inclined to buy what is quickly becoming regarded as junk bonds from either source. Case in point: Two months ago we were charged with investing one million dollars for a client in Michigan Municipals. However, the market has become so fragile that the money remains in cash as we look to a safer venue.

Morris points out, just as Athens has turned to Berlin, bankrupt states like Michigan will turn to the federal government to guarantee their debt. That my friends will be a pivotal point in this great country’s future in that it will determine whether we become financially responsible going forward by just saying NO or continue as we have recklessly “spending our way to wealth.”

Morris is literally on the money on his analysis and recommendations regarding what the next steps should be and what they mean to the United States of America. This is an excellent piece well worth the read.

To read the entire article please click the following link The Next Big Economic Crisis.

This article was written by Gary Field, CPA at Numerico, PC. Click here to view Numerico’s website.

Parent’s Waiver of Minor’s Personal Injury Claim is Unenforceable.

On June 18, 2010 the Michigan Supreme Court decided, in Woodman v. Kera, LLC, that pre-injury waivers signed by parents on behalf of their minor children are unenforceable. Generally, a minor is not capable of contracting with another party (Read the Court’s opinion by clicking here). Moreover, neither a parent nor a legal guardian may contractually bind a minor. As a result, when a parent signs a pre-injury waiver on behalf of his or her minor child, that waiver is unenforceable.

This ruling does not mean that a business will automatically be found negligent in a court of law when a child is injured. Rather, it means that when a lawsuit is filed on behalf of an injured minor, the case will not be summarily dismissed based on a pre-injury waiver. A parent does not have the authority to waive his or her child’s right to sue in court.

A parent may not personally sue a business in his or her own name for injuries sustained by their child. Michigan requires that a parent or guardian be named “next friend” or “guardian” by the Probate Court in order to sue for damages on behalf of the child. Because a child may not bring a lawsuit, the parent or guardian steps into the shoes of the child in bringing the action. The added supervision ensures that the best interests of the child are protected.

Despite the unenforceability of the pre-injury waiver as to the child, waivers are still important. The ruling does not affect the use of waivers that foreclose a parent’s ability to bring a suit for the parent’s own damages as result of the defendant’s negligence towards a child. In the absence of an enforceable waiver, a parent or guardian might sue the negligent party for damages that the parent or guardian suffered as a result of seeing the injury.

Because pre-injury waivers for children are unenforceable, it is important that businesses be very careful in preventing negligent injuries from occurring. Risk assessments should be completed in order to determine if there are areas or equipment that are not properly maintained that may lead to an injury. It would also be prudent to update and revise your release language.  Insurance should also be purchased, both to provide a defense against a lawsuit, and to protect against a judgment.

This article was written by Michael K. Hayes, Legal Clerk at Demorest Law Firm.

Michigan Texting Ban Takes Effect Today

The State of Michigan has enacted a new texting ban that prohibits drivers from reading or typing into their phones while behind the wheel.  The ban will slap first-time offenders with a $100 ticket. Subsequent offenses will cost drivers $200.

Texting while driving is considered a primary offense by law enforcement officers; which means drivers can be pulled over for that offense alone.

Are Employee Text Messages Private?

Last week the U.S. Supreme Court unanimously ruled, in City of Ontario v. Quon, that the search of a police officer’s government issued pager, without a warrant, did not violate the Fourth Amendment. This case arose after a police department audited the text messages a police officer was sending and receiving on his pager. The department wanted to determine whether the per month character limit was sufficient to handle work-related messages. The officer was reprimanded after the audit showed that he was sending and receiving racy text messages on his department issued pager, while on duty.

In fearing that a broad ruling “might have implications for future cases that cannot be predicted,” the Court did not issue a “broad holding concerning employees’ privacy expectations vis-à-vis employer-provided technological equipment.” Rather, the Court’s ruling was narrow as it refused to decide whether the officer had an expectation of privacy. Rather, they assumed that there was an expectation of privacy in order to determine that the search was reasonable.

Despite the fact that Quon involved a government search on a government employee (with the resulting Constitutional issues), and the Supreme Court did not address the question of whether an employee has a reasonable expectation of privacy, employers can still take guidance from the case. Private employers should be aware that the Court noted that the search of the officer’s phone would have been “reasonable and normal in the private-employer context” because there was a legitimate reason for the search and “the search was not excessively intrusive.”

Given the rapid advances in technology and the proliferation of social media, employers should consider what extent they have the right to check on their employees’ communications. Companies should develop specific policies on employees’ use of computers, smart phones, and other devices owned by the employer, or in connection with work.

This article was written by Michael K. Hayes, Legal Clerk at Demorest Law Firm.

What To Do If You Receive An IRS Notice

The most important thing is that you do not panic or ignore the notice. Most of these notices are for simple things like mathematical errors or even for items that you missed on your return that now may result in a favorable outcome to you.

The IRS has an excellent list of things you should know about when receiving a notice in IRS Summer Tax Tip 2009-22.

Item 8 from the list is extremely important. In practice there have been numerous times that clients have had to send in the requested items two or even three times due to paperwork being misplaced at the IRS, a different agent being assigned or that the case has been transferred to a different office.

You should also send any response to a notice via certified mail to prove that you have submitted your response by the specified timeline in the notice.

To access the list please click the following link from the IRS’ website. IRS Tax Tip 2009-22

This article was written by Jay Kossen, CPA at Numerico, PC. Click here to view Numerico’s website.