Monday, January 24, 2011
Article: The ABCs of RECs
New article on the ABCs of RECs, authored by Alan I. Robbins, and published in District Energy Magazine is available on our website.
Thursday, January 13, 2011
Client Alert: The New Estate and Gift Tax Law
Washington has, at last, acted to interject some certainty, albeit temporary, to the area of estate and gift tax planning. Under the recently enacted “Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010,” the federal estate tax, which disappeared for 2010, springs back to life in 2011 and is imposed at the top rate of 35% of the estate’s value after the first $5 million. Following is a brief overview of the new law.
The New Law
The new law brings back the estate tax, and for 2011 and 2012, the top rate will be 35%. For 2011, the exemption amount (the Unified Estate Tax Credit equivalent) will be $5 million per individual (indexed for inflation after 2011). At those levels, the vast majority of estates (all but an estimated 3,500 nationwide in 2011) will not be subject to any federal estate tax.
The new law also gives estates of decedents who died in 2010 certain choices as to which tax rules to apply. Certain elections and filings must be timely made to claim the benefits of such provisions. If you experienced a death in your family in 2010, you should consult with us as to your course of action.
Under the new law, the estate and gift tax exemptions will be reunified starting in 2011, which means that the $5 million estate tax exemption will also be available for lifetime gifts at the same level. The law in effect prior to 2010 provided a $3.5 million lifetime exemption for estates, but the lifetime exemption for gifts was only $1 million for years prior to 2011. The gift tax rate, starting in 2011, is 35%. The exemption from the generation-skipping tax (GST) – the additional tax on gifts and bequests to grandchildren or lower generations when their parents are still alive – will also rise to $5 million from the $1 million it would have been without the new law. The GST rate for transfers made in 2011 and 2012 will be 35%.
From a planning standpoint, a convenient feature of the new law effectuates the transfer of the unused portion of the $5 million exemption to a surviving spouse, so married couples can shield $10 million of their assets from estate taxes. In the language of tax professionals, the estate tax exemption will be “portable.”
We are revisiting a number of the estate planning techniques with our wealthier clients, including, to name but a few, transfers to grantor retained interest trusts, installment sales of assets to irrevocable grantor trusts, gifting or other transfers to multi-generational trusts, the creation and funding of family limited partnerships and family limited liability companies, and outright gifts of substantial values of assets to younger generations. Washington will likely act again in the next 24 months, which is the duration of these temporary estate and gift tax laws under the new Act. There can be no assurance that the efficacy of these planning techniques will survive any further changes in these laws.
If Washington fails to act before 2013, then the unified credit amount for gift and estate taxes will revert back to $1 million per individual, the GST exemption will return to $1.3 million per individual, and the maximum marginal rate of 55% will apply to such transfers.
Estate Plan Tune-Up
Many clients have been delaying the periodic review and tune-up of their estate planning documents pending the new legislation. Regardless of whether you are impacted by provisions of the new Act, now may be the appropriate time to contact us to initiate a comprehensive review of your related documents, such as wills, trusts, medical powers of attorney, living wills, and general or limited powers of attorney.
If you would like more details about the estate or gift tax or any other aspect of the new law, please do not hesitate to call any of Jennings, Strouss & Salmon’s estate and gift tax professionals identified below.
John R. Christian 602.262.5805
William A. Clarke 602.262.5886
Stephen E. Lee 602.262.5824
Nancy C. Pohl 602.262.5927
Jack N. Rudel 602.262.5951 (Author)
Richard C. Smith 602.262.5972
Wayne A. Smith 602.262.5953
Wednesday, January 5, 2011
Labor & Employment Client Alert: Arizona's Minimum Wage Increases
On January 1, 2011, Arizona's minimum wage increased to $7.35 per hour. This increase made Arizona's minimum wage higher than the federal minimum wage, which is currently $7.25 per hour.
Arizona voters enacted a voter initiative, known originally as the "Raise the Minimum Wage for Working Arizonans Act," in 2006 (the "Arizona Minimum Wage Act"). The Arizona Minimum Wage Act, which became effective January 1, 2007, established an Arizona minimum wage and also provided that the minimum wage was subject to annual increase based on the increase in the cost of living. The cost of living is measured by the federal Consumer Price Index for All Urban Consumers, U.S. City Average, for all items during the 12 months ending each August 31. Pursuant to the authority granted by this law, the Industrial Commission reviewed the cost of living information and determined that Arizona's minimum wage would be increased for calendar year 2011.
Under federal law, a state may require a minimum wage that exceeds the federal wage. If there is a difference between the laws, the employer must follow the requirement that is the most beneficial to the employee. Thus, an Arizona employer that is subject to both the federal and state laws must pay the Arizona minimum wage rate. Further, Arizona employers must make sure they are in compliance with both the federal and the state laws. Our labor and employment attorneys can answer questions regarding the laws and regulations, and advise you on compliance issues. As you review your individual compliance, some further information regarding the Act and regulations may be helpful.
Exceptions
The Arizona Minimum Wage Act provides only a few exceptions from its coverage. One exception is for small businesses that generate less than $500,000 in gross annual revenue, if that small business is not covered by the federal Fair Labor Standards Act (FLSA). From a practical standpoint, most employers are subject to the FLSA. Another exception applies to the state of Arizona and the U.S. government. Additionally, the Arizona Minimum Wage Act does not apply to any person who is employed by a parent or a sibling, or who is employed performing babysitting services in the employer's home on a casual basis.
Tipped Employees
"Tipped Employees" have special rules under the Arizona Minimum Wage Act and the regulations relating to the Act. With regard to an employee who customarily and regularly receives tips or gratuities from patrons or others, an employer may pay a wage up to $3.00 per hour less than the minimum wage if the employer can establish by its records that for each week, when adding tips received to wages paid, the employee received not less than the minimum wage for all hours worked. If an employee's tips combined with the employer's direct wages do not equal the Arizona minimum hourly wage, then the employer must make up the difference.
For purposes of the Arizona Minimum Wage Act, it is the employer's responsibility to maintain a record of the tips considered for purposes of asserting a tip credit. Further, if an employer elects to use the tip credit provisions, then the amount per hour that the employer takes as a tip credit must be reported to the employee in writing each workweek. Employees who customarily and regularly receive tips may pool, share or split tips between them, and the amount each employee actually retains is considered the tip of the employee who retains it. Employees may also pool, share or split tips with employees who do not customarily and regularly receive tips in the occupation in which the employee is engaged, including management or food preparers, however, such tips may not be credited toward that employee's minimum wage. Further, a tip credit is available only for the hours spent in the tipped occupation. If a tipped employee is routinely assigned to duties associated with a non-tipped occupation, no tip credit may be taken for the time spent in such duties.
Employers should carefully review the laws and regulations for determining who is a "tipped" employee, the application of tip credit rules and regulations and record-keeping requirements, and consult counsel with any questions.
Each case an employer may face is unique and may require legal advice. If you need further information regarding the Arizona Minimum Wage Act, please contact the author, Jan Hutchison, or one of the other attorneys in our Labor & Employment Department.
About the Author:
Janet Hutchison is a commercial transactional attorney and litigator whose practice focuses on the areas of labor and employment, real estate and general business matters. Ms. Hutchison has extensive experience in employment matters, including discrimination, wrongful discharge and wage and hour matters. She frequently advises clients on employment policies and procedures and represents employers in federal and state court litigation, as well as before the various administrative agencies. Read more... Contact Ms. Hutchison at jhutchison@jsslaw.com or 602.262.5945.
Arizona voters enacted a voter initiative, known originally as the "Raise the Minimum Wage for Working Arizonans Act," in 2006 (the "Arizona Minimum Wage Act"). The Arizona Minimum Wage Act, which became effective January 1, 2007, established an Arizona minimum wage and also provided that the minimum wage was subject to annual increase based on the increase in the cost of living. The cost of living is measured by the federal Consumer Price Index for All Urban Consumers, U.S. City Average, for all items during the 12 months ending each August 31. Pursuant to the authority granted by this law, the Industrial Commission reviewed the cost of living information and determined that Arizona's minimum wage would be increased for calendar year 2011.
Under federal law, a state may require a minimum wage that exceeds the federal wage. If there is a difference between the laws, the employer must follow the requirement that is the most beneficial to the employee. Thus, an Arizona employer that is subject to both the federal and state laws must pay the Arizona minimum wage rate. Further, Arizona employers must make sure they are in compliance with both the federal and the state laws. Our labor and employment attorneys can answer questions regarding the laws and regulations, and advise you on compliance issues. As you review your individual compliance, some further information regarding the Act and regulations may be helpful.
Exceptions
The Arizona Minimum Wage Act provides only a few exceptions from its coverage. One exception is for small businesses that generate less than $500,000 in gross annual revenue, if that small business is not covered by the federal Fair Labor Standards Act (FLSA). From a practical standpoint, most employers are subject to the FLSA. Another exception applies to the state of Arizona and the U.S. government. Additionally, the Arizona Minimum Wage Act does not apply to any person who is employed by a parent or a sibling, or who is employed performing babysitting services in the employer's home on a casual basis.
Tipped Employees
"Tipped Employees" have special rules under the Arizona Minimum Wage Act and the regulations relating to the Act. With regard to an employee who customarily and regularly receives tips or gratuities from patrons or others, an employer may pay a wage up to $3.00 per hour less than the minimum wage if the employer can establish by its records that for each week, when adding tips received to wages paid, the employee received not less than the minimum wage for all hours worked. If an employee's tips combined with the employer's direct wages do not equal the Arizona minimum hourly wage, then the employer must make up the difference.
For purposes of the Arizona Minimum Wage Act, it is the employer's responsibility to maintain a record of the tips considered for purposes of asserting a tip credit. Further, if an employer elects to use the tip credit provisions, then the amount per hour that the employer takes as a tip credit must be reported to the employee in writing each workweek. Employees who customarily and regularly receive tips may pool, share or split tips between them, and the amount each employee actually retains is considered the tip of the employee who retains it. Employees may also pool, share or split tips with employees who do not customarily and regularly receive tips in the occupation in which the employee is engaged, including management or food preparers, however, such tips may not be credited toward that employee's minimum wage. Further, a tip credit is available only for the hours spent in the tipped occupation. If a tipped employee is routinely assigned to duties associated with a non-tipped occupation, no tip credit may be taken for the time spent in such duties.
Employers should carefully review the laws and regulations for determining who is a "tipped" employee, the application of tip credit rules and regulations and record-keeping requirements, and consult counsel with any questions.
Each case an employer may face is unique and may require legal advice. If you need further information regarding the Arizona Minimum Wage Act, please contact the author, Jan Hutchison, or one of the other attorneys in our Labor & Employment Department.
About the Author:
Janet Hutchison is a commercial transactional attorney and litigator whose practice focuses on the areas of labor and employment, real estate and general business matters. Ms. Hutchison has extensive experience in employment matters, including discrimination, wrongful discharge and wage and hour matters. She frequently advises clients on employment policies and procedures and represents employers in federal and state court litigation, as well as before the various administrative agencies. Read more... Contact Ms. Hutchison at jhutchison@jsslaw.com or 602.262.5945.
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