Tidbits from the Law – April 2012

The following are some new items about the law that we thought that you might have an interest in:

…The IRS has targeted gift tax returns to determine non-compliance. In particular, they are focusing on real estate transfers between related parties that do not have adequate consideration for the transfer. According to a report in Forbes Magazine in December of 2011, at least 15 states have provided IRS with documents on gifts of real estate interests. Many people think that you do not have to report such transfers, but the reality is that you do. Most of the time, though, there is no gift tax that is created by the transfers, as there is a $5.0 million lifetime gift tax exemption for gifts made through the end of 2012.

…When you are using employment covenants not to compete, you need to pass a three prong test in order to have the Illinois court be willing to enforce it. First, the covenant must be necessary to protect a legitimate business interest of the company. This may mean that the company had to spend a considerable amount of money and time to acquire that client that you are trying to “keep in the fold.” Second, the covenant cannot impose an undue hardship on the employee or the public. This generally means that you cannot preclude an employee from obtaining new employment within the state. Lastly, the scope of the covenant must be otherwise reasonable. Many times this is interpreted to mean reasonable in time and reasonable in geography.

…If an employee uses Facebook to complain about their wages, treatment by supervisors to another employee, such conduct may be protected under the National Labor Relations Act, where the employee is eliciting group action by the other employees. In certain circumstances, an employee may not be able to be terminated for certain postings in Facebook or other social media.

…Did you know that a parent, who voluntarily supervises his or her child’s party in his or her home where alcohol is consumed by minors, but not provided by the parent, can be liable? Also, there is civil liability if a person who is at least 18 years of age who supplies alcoholic liquor or illegal drugs to a person under 18 years of age, which impairs the child, resulting in injury to that child. Many homeowner’s insurance policies now have provisions to cover some social host liability claims. If you are in this position, you should check this with your insurance agent.

…Did you know that if you write checks or have the ability to sign checks for your business that you can be personally liable if the business falls behind in making its payroll deposits? In a recent case, a high-paid employee signed more than 1,700 checks for a firm, including paychecks. He had to go to trial and convince a jury that he was not one of the higher-ups who made decisions on which creditors to pay, he wasn’t a corporate officer and had no idea that the payroll taxes weren’t being deposited. The jury believed him and the district court held he was not liable for the 100% penalty.