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Poole & Shaffery, LLP
 

March 2013

Poole & Shaffery, LLP is a full service business firm with attorneys who focus on a variety of different areas of litigation, counseling and transactional services, including: bankruptcy, business litigation, business transactions, commercial litigation, construction law, construction defect claims, employment and labor law, environmental law, government affairs, intellectual property matters, insurance law, land use, non-profit and tax-exempt organizations, product liability, premises liability, real estate law, and toxic torts.

Disclaimer: The articles contained herein are intended for general information purposes only. Nothing contained in this document is legal advice, nor should it be relied upon as such.




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By: Chris S. Jacobsen
CHARITABLE CONTRIBUTIONS—WHAT CHARITIES AND DONORS NEED TO KNOW

April 15th is around the corner. How are you doing with your income tax return preparation? Do you have all of your documentation in order? W-2s and 1099s should already have been issued, but have you received acknowledgments of the contributions that you made to charities last year?

Donors who itemize can claim a deduction on their federal income tax returns for contributions to qualified charities, but only if the donors have proper substantiation of their contributions. Charities who wish to keep their donors happy, and giving, should also have a good understanding of the substantiation required by the IRS. In a recent Tax Court case, Durden v. Commissioner, T.C. Memo 2012-140, a mistake made by a charity in the technical requirements of contribution acknowledgment resulted in denial of the donors' charitable deduction and, once made, the mistake could not be corrected.

In Durden, the donors made a series of monetary gifts to their church during 2007, mostly by check in amounts in excess of $250 each, and their church provided a written acknowledgment of contributions totaling $22,171. The Internal Revenue Code and related regulations provide that no deduction is allowed for any charitable contribution of $250 or more unless the donor substantiates the contribution by a "contemporaneous written acknowledgment of the contribution by the donee organization" that provides the following information:

1. the name of the donee organization;

2. the amount of any cash contribution;

3. a description (but not value) of any non-cash contribution;

4. a statement that no goods or services were provided by the donee organization in return for the contribution, if that was the case;

5. a description and good faith estimate of the value of goods or services, if any, that the donee organization provided in return for the contribution; and

6. a statement that goods and services, if any, that the donee organization provided in return for the contribution consisted entirely of intangible religious benefits, if that was the case.

In addition, to be "contemporaneous," the acknowledgment must be provided by the earlier of (a) the date the donor files his return for the taxable year in which the contribution is made or (b) the due date (including extensions) for filing such return.

When their church provided the Durdens with its acknowledgement of their contributions in January 2008, it failed to state whether any goods or services were provided in exchange for the contributions—this information is necessary to determine the allowable amount of the deduction as the value of any goods or services received reduces the amount of the deduction. Subsequently, after the IRS challenged the Durdens' charitable deduction, their church issued a revised acknowledgment in June 2009 that included the required statement that no goods or services were provided in exchange for the contributions. Unfortunately for the Durdens, both of these acknowledgments were defective—the first, because it did not include the required statement and, the second, because it was not timely as it did not meet the "contemporaneous" standard.

To avoid such a harsh result, taxpayers and the charitable organizations to which they contribute are encouraged to review their forms of acknowledgments of charitable contributions before tax returns are filed this year, so that corrected acknowledgments can be issued in a "contemporaneous" fashion. For more information on the substantiation rules, check out IRS Publication 1771, Charitable Contributions—Substantiation and Disclosure Requirements, on the IRS website at http://www.irs.gov/pub/irs-pdf/p1771.pdf.



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By: Cecilie E. Read
WAREHOUSE COMPANY CITED $1.3 MILLION IN FINES AND PENALTIES DUE TO INADEQUATE NUMBER OF TIME CLOCKS

In January, Quetico, LLC, a warehouse complex responsible for labeling, tagging, and packing apparel and shoes was cited by the California Division of Labor and Standards Enforcement for $1.3 million in fines and penalties. The state charges allege that Quetico failed to pay overtime and provide appropriate meal periods to its employees over a three year period. The real problem in this matter appears to be the employer's failure to have enough time clocks. The allegations by the state indicate that Quetico only had three time clocks for over 800 employees, which forced employees to report early for work and cut meal periods short in order to clock in at the appropriate time.

Under California law, employees must keep accurate time of employees work and meal periods and the employer cannot interfere with employees taking their full allotted meal periods. Further, if time clocks are used to track time, they must be provided within reasonable distance to all major work areas. However, in the case of Quetico, the labor commissioner alleges that the inadequate number of time clocks forced employees to be at work (waiting in line to clock in) without getting paid and also missing their full meal periods. In addition, the time records were inaccurate because employees' time sheets reflected they were getting full meal periods when according to the allegations they were not.

While Quetico has stated it strongly disagrees with the conclusions reached by the labor commissioner, the case can still be instructive for other employers. It appears the complaints against Quetico could have been avoided had the facility simply invested in additional time clocks or other technology which would allow employees to clock in and out more quickly. It is not required by the state that employers use time clocks, only that they maintain accurate records of hours worked. With the amount of employees at Quetico, it likely would have been more efficient not to use time clocks but select other methods of recording time. However, if an employer chooses to use time clocks and is aware that employees are coming to work early and/or cutting short their meal periods in order to properly clock, there should be immediate action to ensure that employees are able to take appropriate meal periods.

Quetico has indicated it will appeal the Division of Labor and Standards Enforcement citation.



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By: Michael S. Little
UPDATE: Santa Clarita COUNTY SUPERIOR COURT TO INSTITUTE NEW PROCEDURES

Due to significant budget constraints impacting the Santa Clarita County Superior Court, ten (10) courthouses are scheduled to be closed in 2013, including: Huntington Park, Whittier, Pomona North, Malibu, West Los Angeles, Beverly Hills, San Pedro, Beacon Street, Catalina and Kenyon Juvenile Justice Center.

Further, more drastic cuts and changes are expected to be instituted by the Santa Clarita County Superior Court in the coming months with the goal of reducing all court operations, including the number of courtrooms and court staff, while attempting to maintain everyone's access to justice in all litigation types. With respect to civil litigation, the Court appears to be focused on achieving cost savings by hubbing cases in dedicated courts with dedicated judges handling one case type. The Court also intends to utilize different case management techniques for certain types of cases (i.e. collection matters, personal injury suits and limited civil cases) to more efficiently adjudicate these disputes.

While the anticipated changes and new procedures to be imposed by the Santa Clarita County Superior Court have not yet been finalized, Supervising Judge Dan Buckley recently outlined the following anticipated new procedures and changes that will be instituted by the Court:

Small Claims

All small claims cases will be filed and heard only at the following five (5) courthouses:

  • Central (Mosk);
  • Alhambra;
  • Downey;
  • Van Nuys; and
  • Inglewood.

Small claims matters currently filed in other courthouses will be transferred to the above courts.

Unlawful Detainers

Likewise, unlawful detainer (UD) cases will be hubbed into four (4) courthouses:

  • Central (Mosk);
  • Pasadena;
  • Long Beach; and
  • Santa Monica.

Limited Civil Cases

All collection cases would be filed in two newly-assigned "collection courthouses." All remaining limited civil cases would be filed at the Mosk Courthouse to be assigned to a Master Calendar Department.

Personal Injury (PI) Cases

The most drastic procedural changes to be implemented will impact the personal injury cases (including wrongful death and medical malpractice). More than 18,000 personal injury cases were filed last year alone and these matters, as well as all other qualifying PI cases, will be pulled from their current courthouses and reassigned to two Master Calendar (MC) courtrooms in the Mosk Courthouse. The transfer of these PI cases is expected to occur throughout April and May 2013. Each MC judge is expected to have as many as 8,000 cases at any one time.

Parties will receive trial and final status conference dates at the filing window when the Complaint is first filed. However, under the Master Calendar system, pre-trial matters, hearings and trials will be heard by different judges (perhaps in different courthouses).

At this time, the "personal injury" cases subject to the master calendar system appear to include: auto tort, uninsured motorist, product liability (other than asbestos or toxic/environmental torts), medical malpractice, intentional bodily injury/personal property damage (including assault, vandalism and intentional infliction of emotional distress). The Individual Calendaring ("IC") systems will still apply to all other cases. The Court decided to move PI cases to a Master Calendar system because personal injury cases typically require far less "judicial hand-holding" and hearings and are practically suited for the master calendar system.

The Court intends to allow for a mechanism whereby parties can petition to have certain personal injury cases (i.e. involving catastrophic injuries) removed from the Master Calendar system and handled in a court with individual or direct calendaring.

Importantly, personal Injury cases in the Master Calendar system will be assigned out to a trial court by Department 1 in the Mosk Courthouse. At present, the following thirty-one (31) courthouses have been assigned designated trial courtrooms for PI cases:

  • Central (Mosk) – 10 trial courtrooms;
  • Pomona – 1 trial courtroom;
  • Pasadena – 2 trial courtrooms;
  • Chatsworth – 1 trial courtroom;
  • Van Nuys – 7 trial courtrooms;
  • Long Beach – 2 trial courtrooms;
  • Torrance – 3 trial courtrooms; and
  • Santa Monica – 5 trial courtrooms

Limited Hearings & Motions

For the remainder of the cases in Individual Calendar (IC) courts and for complex cases in Central Civil West (CCW), significant procedural changes will not be implemented. However, due to the significantly reduced staff in the IC courts and in CCW, judges will be less likely to hear often inconsequential motions, such as discovery motions, opting instead to have the parties work out their issues through court-supervised meet and confer sessions. It is also expected that IC courts will place a limit on the number of ex parte hearings per day.

ADR System Eliminated

Due to budget cuts, the Santa Clarita County Superior Court's Alternative Dispute Resolution Program will largely be eliminated. It is expected that private mediators will take on the bulk of this overflow. However, the Court is working on alternate programs for litigants who cannot afford private mediation.

No Electronic Filing Anytime Soon

Many attorneys have suggested that the LASC allow for electronic filing as a way of reducing costs related to the storage and management of voluminous paper pleadings, motions, transcripts and various court documents. However, the Court's inability to upgrade its technological infrastructure, at this time, will likely prevent e-filing from being implemented in the foreseeable future.

No Court Reporters

Finally, the Court will no longer provide court reporters for all civil hearings and trials. Costs associated with the use of court reporters will be borne by the litigants.

While these changes are likely to be implemented in the coming months, we expect further adjustments, alterations and modifications to occur.



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