New Energy Credits Available on your 2009 Michigan Tax Return

There are two new energy credits available to eligible taxpayers on their 2009, 2010 & 2011 Michigan tax returns. I am frankly shocked that these two credits where maintained during the budget cuts that came out of Lansing in October. In fact the state would have been far better off taking the tax monies from these credits and transferring them to its national award wining “Pure Michigan” advertising campaign.

Home Improvement/Appliance Credit

The credit is equal to 10% of EPA energy star certified appliances; the maximum credit is $75 for single taxpayers and $150 for married tax payers. This credit can be claimed on Michigan form 4764.

Energy Cost Recovery Surcharge Credit:

This non-refundable credit is available to both homeowners and renters who pay electric bills and is capped at $9 per meter in 2009. This credit can be claimed on Michigan Schedule 2.

For more information on these credits, including eligibility and income limitations please visit click here to visit the Michigan.gov taxes page.

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

Michigan Smoking Ban – Summary of House Bill No. 4377

The Michigan Legislature has passed a bill which bans smoking in almost all indoor public venues. This ban has been in the works for a long time; many other States have already enacted similar laws. Governor Granholm is expected to sign the bill into law, and it will go into effect on May 1, 2010.

“Smoking” is defined as “the burning of a lighted cigar, cigarette, piper or any matter or substance that contains a tobacco product.” There is a ban on smoking in “public places.” A “public place” includes areas owned and operated by the government; areas not owned or operated by the government, but used by the general public for certain specified purposes; and (unless otherwise exempt) a place of employment. The third one covers almost all of the businesses in the State. A “place of employment” is an enclosed indoor area that contains a work area for one or more people.

Business owners are expected to take steps to reasonably prevent customers, employees, or other people from smoking on their premises. Business owners are expected to do ALL of the following:

1. Clearly and conspicuously post no smoking signs (or the international no smoking symbol) at the entryway and in all buildings where smoking is prohibited.
2. Remove all ashtrays or other smoking paraphernalia from any place smoking is prohibited under the Act.
3. Inform individuals smoking in violation of the Act that they are in violation of state law and are subject to penalties.
4. Refuse to serve an individual smoking in violation of the Act.
5. Ask an individual smoking in violation of the Act to refrain from smoking, and ask them to leave if they refuse to stop.

If owners do all of the preceding things, they have an affirmative defense against any prosecution against them for a violation of the Act. This means that the business owner can be exempt from penalties under the Act, but only if all of the preceding conditions are met.

The Act includes a few exceptions. Casinos in existence before the Act can allow smoking in gaming areas only. Casinos built later cannot allow smoking. (The term casino in the bill does not include a casino operated under the Indian Gaming Regulatory Act. Thus, the smoking ban does not apply to these casinos.) An existing separate specialty tobacco shop may allow smoking. Cigar bars may also allow smoking (but only the smoking of cigars, not other tobacco products).  The ban also does not apply to motor vehicles.

Overall, business owners should be proactive in preventing smoking in their place of business by following the five requirements described above.

Download a copy of the Bill in PDF format by clicking here.

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

Decision of Michigan Court of Appeals Expands Rights of Minority Shareholders

On September 24, 2009, the Michigan Court of Appeals issued an important decision on the rights of minority shareholders in Michigan corporations.  The Michigan Business Corporation Act allows a minority shareholder to bring a lawsuit in circuit court if “the acts of the directors or those in control of the corporation are illegal, fraudulent, or willfully unfair and oppressive to the corporation or the shareholder.”

In Schimke v Liquid Dustlayer, Inc., the plaintiff owned less than 1/3 of the stock of the corporation.  The two other shareholders, who were also in control of the board of directors, planned to have their own stock in the corporation redeemed (purchased by the corporation), but the minority shareholder’s stock would not be redeemed.  The plan was never completed.  The circuit court ordered that the corporation must redeem (purchase) the stock owned by the minority shareholder as a remedy for the actions of those in control of the corporation.

The defendant majority shareholders argued that the corporation should not be required to purchase the stock of the minority shareholder, because their plan was not actually carried out.  The Court of Appeals ruled that the circuit court may intervene before an action is finalized, and may order a corporation to purchase a plaintiff’s shares of stock as a result of the defendants attempt to take an unfair and oppressive action.

The defendants also argued that they did not violate the rights of the minority shareholder because there was not a “continuing pattern of oppressive conduct.”  The Court of Appeals ruled that a pattern of conduct was not necessary for the minority shareholder to bring a claim.  Rather, “a single ‘significant action’ is sufficient to show willful and oppressive conduct.”

This decision expands the rights of minority shareholders to make claims of minority shareholder oppression, and makes it easier for minority shareholders to force the corporation to purchase their shares of stock.

Click to Download Case from Michigan Court of Appeals in PDF Format

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

What Happens With Employer-Provided Housing When An Employee Is Fired Or Quits?

It is not uncommon for employers to provide housing to employees as part of their compensation package. This frequently occurs in the hospitality, multi-family housing, and construction industries. Employers must be wary when an employee is terminated or resigns, because complications can arise when the employer attempts to oust the former employee from company housing.  The employer cannot simply change the locks or physically remove the employee from the premises without a Court Order. The employer must follow the same standard eviction procedures used for other landlord-tenant cases.

If the employer does not follow standard eviction procedures, he or she could be liable for violating Michigan’s Anti-Lock Out Statute, which states that the wrongly evicted employee “shall be entitled to recover the amount of his actual damages or $200.00, whichever is greater, for each occurrence and, where possession has been lost, to recover possession.” In other words, the employer would be responsible for paying damages and giving the property back (at least until the correct eviction procedure has been followed).

To avoid this liability, the employer should provide the discharged or resigned employee with a notice to quit. If the former employee does not leave after the notice to quit is provided, then the next step is to file a complaint for possession of the premises in the local District Court.

Leaders tout Entrepreneurship | Detroit Free Press

The Detroit Free Press (Freep.com) has been following all of the developments at the National Summit this week in Detroit and posting the latest to their blog (See excerpt below).  This morning the hot topic was the recent rise in entrepreneurship.

It is essential that new businesses have all of their ducks in a row so that they are protected personally from the debts and liabilities of their new ventures, they take the best advantage of tax laws, and so that they are prepared for future success.

We advise contacting an attorney, as opposed to going it alone.  Demorest Law Firm, PLLC provides these services and can help you start your new company, and then help it to grow.

Excerpt from Freep.com Blog

11:42 a.m. | According to several business and academic leaders at the summit this morning, now is the time to start that business you’ve always dreamed about.

“Entrepreneurism is going to be the key to the economic recovery not just in this country but in the world,” James Turley, CEO of Ernst & Young LLP, declared at a town hall this morning.

Nearly a decade after the dot com bust, becoming your own boss is hip again.

Mary Sue Coleman, president of the University of Michigan, boasted to the audience that 15% or 6,000 of the students recently admitted to the school had started a business during high school.

“We’re in the perfect time in the history of this country to encourage this,” she said. “Let them loose.”

U-M now provides 100 courses that are in some way engaged in entrepreneurism, Coleman said.

What exactly does being entrepreneurial mean?

One panelist, Eva Chen, CEO of Internet security firm Trend Micro Inc., had the perfect Twitter-like response: “Using limited resources to create something that you want.”

By Katherine Yung

via Leader: Ford ready to compete | Freep.com | Detroit Free Press.

Understanding Michigan Usury Law

Michigan Legislature Passes New Foreclosure Laws

On May 19, 2009, the Michigan Legislature passed a package of three bills designed to give homeowners facing foreclosure a ninety-day window to meet with their lender and modify the terms of their mortgage.  With the state facing one of the highest foreclosure rates in the nation, lawmakers hope these new laws will ease the strain on distressed homeowners and allow them to stay in their homes.  These laws may not be permanent.  Some of the provisions will be in effect for a period of only two years unless the “sunset” provision is amended.  Governor Granholm signed the bills on May 21, 2009, and the laws will take effect on July 5, 2009.

Under the legislation, a lender may not foreclose on a property claimed as a principal residence unless the lender first provides written notice to the borrower stating the reasons that the mortgage loan is in default and the amount due.  The written notice must also designate an agent of the mortgage holder whom the borrower can contact to attempt to rework the terms of the loan, and a list of housing counselors prepared by the Michigan State Housing Development Authority whom the borrower can request to attend a meeting with the agent of the mortgage holder to assist in modifying the loan.

The law further provides that foreclosure proceedings may not be commenced until ninety days after the initial notice was mailed if the borrower chooses to meet with the mortgage holder.  If the borrower and the mortgage holder reach an agreement to modify the terms of the loan within the ninety-day period, the mortgage cannot be foreclosed.  Potential modifications include an interest rate reduction, extension of the amortization period, deferral of up to 20% of the unpaid balance of the loan, and reduction or elimination of late fees.

If the homeowner meets minimum financial standards specified in the law, but the mortgage holder refuses to modify the terms of the loan, the lender is required to go before a judge to attempt to complete the foreclosure.  Additionally, if notice is not mailed to the borrower as required, the borrower may bring an action in the circuit court to enjoin the foreclosure.

The new restrictions apply only to property claimed as a principal residence by the property owner.  They do not apply to second homes, rental properties or other commercial properties.

For the full text of the new laws, click here (PDF format).

Michigan Legislature Website – House Bill 4453

Michigan Legislature Website – House Bill 4454

Michigan Legislature Website – House Bill 4455