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Coleman & Horowitt, LLP was established in 1994 by William H. Coleman and Darryl J. Horowitt.
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COVID-19 Update: Additional Funding for Small Businesses
By Darryl J. Horowitt Download the PDF of this article here On April 23, 2020, in order to provide additional financial assistance to businesses, Congress enacted a $484 billion relief package entitled the “Paycheck Protection Program and Health Care Enhancement Act”, which was signed into law by the President on April 24, 2020. This legislation was deemed necessary due to the overwhelming success of the PPP loan program, which quickly exhausted the funds original appropriated. Of significance to businesses in the Act are: Congress provided an additional $310 billion in funding for the Paycheck Protection Program (“PPP”). The original $394 billion was exhausted within the first two weeks that applications for PPP loans were available. (Information on the PPP program is discussed in Daniel Rudnick’s Alert “Some Good News: How Businesses Benefit From The Recent Stimulus Legislation”, which can be found at https://ch-law.com/covid/.) Amounts appropriated for the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) were increased. This provides additional funds for economic injury disaster loans (“EIDL”; loans which can be requested in addition to PPP loans), hospital and other medical providers’ recovery, emergency grants and COVID-19 testing. On the same date, the SBA issued additional FAQs to guide those who might seek a PPP loan. Generally, before a borrower can obtain a SBA backed loan, the borrower must certify they are unable to obtain financing elsewhere. When PPP loans were created, the legislation eliminated the need for such a certification. Instead, the PPP applications included a certification that “[c]urrent economic uncertainty makes this loan necessary to support the ongoing operations of the Applicant.” This removed the requirement for a bank to investigate whether the certification was or was not true. In light of the unflattering disclosures that several publicly traded and well-funded companies, as well as other, well-funded privately held companies, obtained millions in PPP loans, the SBA felt it necessary to clarify the meaning of the certification. In doing so, the SBA confirmed that the certification was to be made in good faith. Borrowers were to take into account the current status of their business, the funds that may arise in the future and the ability to secure funds from other sources to allow their business to engage in ongoing operations in such a manner that it would not substantially impact their business. In other words, if you have access to private funds (i.e., venture capital or private financing) or a public company with the ability to obtain financing from banks through traditional avenues, you need not apply. The FAQs further clarified that if a company obtained a PPP loan and now believes that its certification may not be accurate, it can voluntarily return the funds to the bank by May 7, 2020, and the SBA will deem the certification to have been made in good faith and lenders will not be required to perform any additional research to rely on a borrower’s certification. This implies that, if a company does not return the PPP funds it has received by that date, and the SBA later determines that the borrower had other access to capital and did not need PPP funds, that company might be subject to criminal action for submitting a false certification. The SBA may also impose a burden on an issuing bank to conduct a further investigation to determine if a certification was accurate for those companies that received more than $2 million in PPP loans. In fact, the FAQs indicate that companies that received $2 million or more may be subject to audit. PPP loan applications will soon be available. This second round of financing, like the first, will be first-come-first-served. If your company had an application already submitted, check with your bank to determine if your company must reapply. Similarly, if your company qualifies for a PPP loan and did not submit your application in the first round of funding, you should act quickly. Gather your documents. Carefully complete the application so it is ready to submit. Most importantly, evaluate your company’s financial condition and avenues for other financing to determine if your company can ethically sign the certification. The PPP process is anything but clear. The recently issued FAQs did little to fully explain what is and is not acceptable for small businesses that do not have the same access to capital as larger, more established businesses. If you have questions, talk to your banker and accountant. We are also advising companies of their options. If you have any questions, please contact the author at (559) 248-4820, ext. 111 or firstname.lastname@example.org. This article was written by Darryl J. Horowitt. Darryl is the managing partner at Coleman & Horowitt, LLP, where he works in the firm’s litigation department and represents clients in complex business, construction, banking and real estate litigation, consumer finance litigation, commercial collections, casualty insurance defense, insurance coverage, and alternative dispute resolution. He has been named a Northern California Super Lawyer® (Thomson Reuters) in business litigation from 2006-2020, a Top 100 Northern California Super Lawyer® (Thomson Reuters) from 2015-2019, has received an AV®-Preeminent rating from Martindale-Hubbell and a perfect 10.0 rating from Avvo. He is a member of the Fresno County, Los Angeles County and American Bar Associations, the Association of Business Trial Lawyers (former President and Board Member). Darryl can be reached at email@example.com or (559) 248-4820, ext. 111.view the article
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Supreme Court Holds that NPDES Permits Can Be Required for Discharges to Groundwater
By Craig A. Tristao Download a PDF of this article here Do you need a National Pollutant Discharge Elimination System (NPDES) permit for a discharge to groundwater? Before the Supreme Court’s April 23, 2020, decision in County of Maui, Hawaii v. Hawaii Wildlife Fund (2020) __ U.S. ___, Docket No. 18-260, many believed, and the Environmental Protection Agency (EPA) had argued no. The Court, however, has provided the litigation assuring answer maybe, the “maybe” depending on whether the discharge to groundwater is the “functional equivalent of a direct discharge” to a Water of the United States (WOTUS). If yes, then the discharger must obtain a National Pollutant Discharge Elimination System (NPDES) permit from the EPA or delegated state agency (Regional Water Quality Control Boards in California). County of Maui, Hawaii v. Hawaii Wildlife Fund, supra, involved the County of Maui’s wastewater reclamation system facility, which collects sewage from its surrounding area, partially treats it, and then discharges the approximately four million gallons of treated water into groundwater. Chemicals in the discharged water then travel approximately one-half mile through the groundwater to the Pacific Ocean. Maui believed that no NPDES permit was required for its discharge, environmental groups disagreed and brought suit. The Court, after hearing arguments from the County, Environmental Groups, and the EPA, determined that the County’s discharge into groundwater was the “functional equivalent of a direct discharge” into the Pacific Ocean given the relatively short duration of time it took the chemicals contained in the discharge to travel the half-mile to the ocean, and held that such discharges require an NPDES permit under the Clean Water Act, thereby expanding the CWA’s scope to discharges into groundwater. Although the Court’s decision expands the reach of the CWA, the expansion is less than what could have resulted had the Court adopted the Ninth Circuit’s earlier interpretation of the CWA. The Ninth Circuit’s interpretation of the CWA would have required an NPDES permit if a pollutant in a navigable waterway was “fairly traceable” to a discharge of the pollutant into groundwater. It does, however, represent a departure from leaving the regulation of discharges to groundwater entirely to the states, as the EPA had argued. The ruling will lead to additional litigation since the Court did not provide a black and white method as to what constitutes the “functional equivalent of a direct discharge” that will require an NPDES permit, but rather provided two critical criteria to be analyzed: The amount of time it takes for the pollutant to reach navigable water; The distance travelled by the pollutant before it reaches navigable water. In addition to two critical criterion, the Court also set forth five additional factors that can be considered: The “material through which the pollution travels;” The “manner by or area in which the pollutant enters the navigable waters;” The “extent to which the pollutant is diluted or chemically changes as it travels;” The “degree to which the pollution has maintained its specific identity;” and, The ratio of the “amount of pollutant entering [navigable waters]” to the “amount of the pollutant that leaves the point source.” If your business discharges wastewater into groundwater or directly recharges a groundwater basin, and you have questions concerning whether you will now be required to obtain an NPDES permit, or if it is being claimed that your business is now required to obtain an NPDES permit, Coleman & Horowitt, LLP can assist you in making a determination and advocating it to state and federal agencies. For any questions, contact the author at (559) 248-4820 or at firstname.lastname@example.org. Craig A. Tristao is a Partner in the litigation and transactions departments of the firm’s Fresno office. He provides representation to clients in litigation matters involving agricultural law, environmental law, construction law, land use and natural resource law, water law, probate and estates, and eminent domain matters that involve the California High Speed Rail Authority. Craig also assists clients with regulatory compliance issues concerning the Clean Water Act (CWA), the Porter-Cologne Act, and the Clean Air Act (CAA). In addition to litigation, Craig also represents clients before the Regional Water Quality Control Boards and the State Water Resources Control Board, air districts, and the Contractors State License Board (CSLB). He has also been named a Super Lawyers “Rising Star” for 2015-2018 (2.5% of lawyers practicing under 10 years). You can contact Craig at (559) 248-4820 or email@example.com the article
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COVID-19 Court Update – Emergency Rules of Court and Court Orders
By Darryl J. Horowitt Download the PDF of this article here With all the changes being forced on us by COVID-19, the Courts are trying to keep up. Fortunately, Governor Newsom has given the Judicial Council the ability to make emergency rules so the courts can make changes needed for the individual courts. To that end, on April 6, 2020, the Judicial Council issued new emergency orders that affect civil cases. The new emergency rules (“ER”) that affect civil matters, effective as of April 6, 2020, include: ER 1: Changes the rules for unlawful detainer actions as follows: Prohibits unlawful detainer actions from being commenced unless necessary to protect public health and safety; Prohibits a default or default judgment from being entered unless necessary to protect public health and safety and the defendant has failed to file a timely response; Sets the time for a trial for no earlier than 60 days from the date set, unless an earlier date is needed to protect public health and safety; Limits the effect of the rule until 90 days after the Governor declares the COVID-19 emergency lifted; ER 2: Suspends proceedings relating to judicial foreclosures absent a finding that the foreclosure is necessary to protect public health and safety and tolls the statute of limitations for the filing of such an action or redemption of real property after a prior foreclosure sale; ER 3: Permits the use of remote appearances in courts using video or audio, including in criminal proceedings until 90 days after the Governor declares the COVID-19 emergency lifted; ER 8: Extends the duration of a temporary restraining (“TRO”) or protective order that might have otherwise expired during the state of emergency caused by the COVID-19 pandemic by up to 90 days before a renewal of the injunctive relief is sought; requires court to provide the means for the submission of ex parte requests for TROs either physically at the courts or electronically; and eliminates the need for personal service of an order on the responding party if that party appears the hearing by video, audio or telephonically and the court issues the order during that hearing; ER 9: California has mandatory time periods within which civil actions must be filed, known as statutes of limitations. ER 9 tolls the statute of limitations from April 6th through 90 days after the Governor declares the COVID-19 emergency lifted; ER 10: California has mandatory time periods within which a civil trial must be commenced – the court has discretion to dismiss a case if no action is taken to prosecute the case 3 years after it is filed and must dismiss if trial is not held 5 years after being filed. ER 10 extends the time in which to bring a case to trial (three and five year statutes) by six (6) months for a total time of either 3 years and 6 months or 5 years and 6 months, depending on which time period applies; and, ER 11: Current law permits a video deposition only where the parties agree in advance. ER 11 permits a video deposition at the election of the party requesting the deposition. The rule, however, expires 90 days after the Governor declares the COVID-19 emergency lifted. For a copy of the rules, see https://assets.documentcloud.org/documents/6826551/20- 141-Emergency-Rules-Complete-Rule-Set-as.pdf Following the direction of the Judicial Council, Fresno County Superior Court issued an order, effective April 6 through May 1, that provides as follows: Courtrooms will remain closed to all judicial business except: Temporary restraining orders (“TRO”); Ex parte proceedings, including injunctions; Emergency probate proceedings for temporary conservatorships and guardianships; All matters set between April 6 and May 1 will be reset for a later date; The time period between April 6 and May 1 will be deemed a “court holiday”, meaning that any dates to file or respond to a pleading, will not be due until after May 1 (the expiration of the court holiday) if COVID-19 prevents the filings from being made (i.e., the court is not staffing the clerk’s office or refuses to accept filings due to COVID-19); If a TRO would expire between April 1 and May 1 is extended by no more than 30 days; and, The time period for a trial to be completed is extended by 60 days from the last date on which the statutory period would have otherwise expired. Thus, if the five year statute of limitations to bring a case to trial might have otherwise expired during the time in which the court’s emergency orders are in effect, the time is extended – though the court can hold the trial earlier if it finds good cause or the trial can be used through remote technology. (For the Fresno Court order, see http://www.fresno.courts.ca.gov/_pdfs/pjOrders/Order%20of%20the%20Presiding%20Judge%20re%20Implementation%20of%20Emergency%20Relief%20Authorized%20Pursuant%20to%20GC%2068115.pdf) As the courts issue more directives that affect you and your business, we will provide updates. If you have any questions in the meantime, please contact the author at (559) 248-4820, ext. 111 or firstname.lastname@example.org. This article was written by Darryl J. Horowitt. Darryl is the managing partner at Coleman & Horowitt, LLP, where he works in the firm’s litigation department and represents clients in complex business, construction, banking and real estate litigation, consumer finance litigation, commercial collections, casualty insurance defense, insurance coverage, and alternative dispute resolution. He has been named a Northern California Super Lawyer® (Thomson Reuters) in business litigation from 2006-2020, a Top 100 Northern California Super Lawyer® (Thomson Reuters) from 2015-2019, has received an AV®-Preeminent rating from Martindale-Hubbell and a perfect 10.0 rating from Avvo. He is a member of the Fresno County, Los Angeles County and American Bar Associations, the Association of Business Trial Lawyers (former President and Board Member). Darryl can be reached at email@example.com or (559) 248-4820, ext. 111.view the article
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Employer Documentation Required by IRS to Claim the Tax Credit Under EPSL or EFMLA
By Gregory J. Norys Download a PDF of this article here On March 31, 2020, the Internal Revenue Service (“IRS”) provided employer’s guidance on what documentation it will require to support the tax credit taken under the Emergency Paid Sick Leave (“EPSL”) and the Emergency Family and Medical Leave Expansion Act (EFMLA) sections of the Families First Coronavirus Response Act (“FFCRA”). This article will discuss what your company may need to provide the IRS to obtain the tax credits available under the EPSL or EFMLA. Information to be Obtained and Retained This guidance suggests that the IRS will require any employee who is taking EPSL or EFMLA to provide documentation containing the following: (1) the employee’s name; (2) the dates for which the leave is being requested; (3) the qualifying reasons for the leave, which can be found in the EPSL and EFMLA sections of the FFCRA (see link to article here); and, (4) a statement from the employee or written note in the file that the employee is unable to work because of a qualified reason. As this is a new program, the IRS may require additional documentation depending upon the reason for the leave. If the employee is taking EPSL based on a quarantine order or isolation directive (either from the government or a health care provider), the employee must provide the name of the governmental entity or the health care provider that issued the directive (i.e., Governor Newsom’s Stay at Home Order). The employer should keep a copy of the order or directive in the employee file, as well maintain a separate payroll file – or other file that separately maintains the amount of payroll for all employees who have taken EPSL – supporting the employer’s tax credit (while remembering to restrict access to this file since it may contain an employee’s personal health information in a tax related file). The same documentation is required if the employee takes leave to care for their self or to care for the employee’s spouse, child, or parent with a serious health condition related to COVID-19 or symptoms related to COVID-19 or to take care of their child due to school being closed or child care being unavailable. The employee may also be eligible for EFMLA to take care of a child out of school or without childcare due to the virus. When EPSL is based on children being out of school for the remainder of this school year, the immediate need for EPSL and EFMLA will likely be childcare related. If the employee is claiming leave due to some type of childcare, the employee must provide: (1) the name of their child; (2) the name of the school or place of childcare that has closed (i.e., or closure letter from the school district or child care facility); and, (3) a representation that no other suitable person will be caring for the son or daughter during the period of leave. The IRS instructs that this last requirement will help avoid the situation where both parents are utilizing EPSL and EFMLA, only one parent is needed to care for their children. Note, however, that the regulations also allow employers to request additional documentation that may be needed in the future to support a request for tax credits for providing the employee with EPSL and EFMLA. The IRS requirements for tax credit largely follow the Department of Labor’s temporary regulations, but there is a major difference when it comes to paid leave for childcare purposes. The IRS requires that the documentation include the age of the child and if the child is 14 or over, the documentation must include a statement that special circumstances exist requiring the employee to provide care during daylight hours. So, while the employer may grant leave to an employee to care for any child under 18, the employer will only be eligible to take a tax credit if the EPSL or EFMLA is for children 14 and under (absent some exceptional circumstance). Based on this new guidance, employers need to gather the needed documentation to capture as much tax credit as possible. Given the possible financial implications to the employers, the employers should include these documentation requirements in their policies (even though this requirement expires on December 31, 2020) to ensure compliance with both Department of Labor and also IRS eligibility for tax credits. Employers should deny the EPSL and EFMLA if the employee fails to provide the documentation, after giving the employee notice and an opportunity to correct the failure. Payment of the Sick and Family Leave Credit The law provides that qualified EPSL and EFMLA wages are not subject to the taxes imposed on employers (i.e., social security and medicare). A credit is instead allowed against the taxes imposed on employers. If the amount of the credit exceeds the employer portion of these federal employment taxes, the excess is treated as an over payment and refunded to the employer. (See link to article here). This article is not intended to provide tax advice. Employers should therefore talk with an accounting professional to ensure your business receives a credit in the full amount of the qualified EPSL and EFMLA wages, plus allowable qualified health plan expenses and the employer’s share of Medicare tax, paid for leave during the period beginning April 1, 2020, and ending December 31, 2020. Employers who claim the tax credits for EPSL and EFMLA, plus allowable qualified health plan expenses and the employer’s share of Medicare taxes, must retain records and documentation supporting each employee’s leave to substantiate the claim for the credits. The employer must also retain the Forms 941, Employer’s Quarterly Federal Tax Return, and 7200, Advance of Employer Credits Due To COVID-19, and any other applicable filings made to the IRS requesting the credit. For more detail on specific documentation required, on refundable tax credits or the procedures to receive payment of the advance credit, see: https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs#how_to_claim This article was written by Gregory J. Norys, a partner at Coleman & Horowitt, LLP, where he manages the firm’s Visalia office. As head of the firm’s labor & employment practice group, Greg works in the firm’s litigation department representing clients in complex commercial and real estate litigation, construction litigation, labor and employment counseling and litigation, and professional liability defense litigation. He has been named a Northern California Rising Star® by Super Lawyers (Thomson Reuters) and is a member of the Tulare and Fresno County Bar Associations and the Association of Business Trial Lawyers. Greg can be reached at firstname.lastname@example.org or (559) 248-4820, ext. 161.view the article
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What You Need To Know About Fictitious Business Name Statements
By Lawrence E. Westerlund If your last name is not your company’s name, you need to file a “Doing Business As” or a Fictitious Business Name Statement! That is right, you read that correctly. If your last name is not in your business name, you are required by law in California to file a Fictitious Business Name (“FBN”) Statement, also known as a “Doing Business As” (“DBA”) statement. The California legislature a long time ago determined that it is good public policy for customers and the general public to be able to determine who owns a company, so they passed a law that requires all persons doing business under a name different than their own name to file a fictitious business name statement. Who is required to file a FBN Statement? The law says that anyone doing business for a profit in California as a corporation, Limited Liability Company or limited partnership under any name that is not exactly the name on record with the California Secretary of State’s Office must file a FBN Statement. By the way, a FBN Statement and a DBA are the same thing. Let’s break down the requirements more; a FBN Statement is necessary when: A sole proprietorship will be doing business under a name that does not include the owner’s last name. So “Mike Wazowski’s Plumbing” does not require a FBN because his last name is in the business name and the public knows who owns the business. “Mike’s Plumbing” needs a FBN because it does not have his last name in the business name. The public cannot determine who owns the company from the name alone. A partnership or other association will use a name that does not include the last name of each general partner. So if you have a partnership of investors and you call the partnership “Shaw Avenue Investors,” you will need to file a FBN Statement; If the name of the business suggests other owners, like “Wazowski and Sons.” The “Sons” suggests additional owners and doesn’t include their last names, so a FBN Statement is required. A limited partnership, corporation, or Limited Liability Company (“LLC”) is doing business under a name not stated in the Articles of Incorporation or Articles of Organization filed with the California Secretary of State. So if your Articles of Incorporation filed with the Secretary of State say “Mike’s Business,” you have to do business as “Mike’s Business” unless you register a FBN Statement. Basically, you need to file a FBN Statement anytime you are doing business under a name that is not your entity’s legal name that is on file with the California Secretary of State. Why do I need to file a FBN Statement? Failure to file a FBN Statement may create some real problems for those who do not file. California has a statutory incentive to comply because the statute provides that a person transacting business under a fictitious business name contrary to the provisions of the statute may not maintain any action upon or on account of any contract made, or transaction had, in the fictitious business name in any court of this state until the fictitious business name statement has been executed, filed, and published as required. Also, the business owner or officer or other agent entering into a contract on behalf of an entity using an unregistered fictitious business name may find himself personally liable if he fails to disclose the name of the entity on whose behalf he is acting. Both of the above issues are very serious when weighed against the little time needed to file a FBN Statement. How do I file a FBN Statement? First you have to check to see that the name is not being used by someone else. You can search for entity names on the California Secretary of State website . In some counties, you can do online searches for fictitious business names. You submit an Application for Fictitious Business Name to the county clerk or county office tasked with this function. Applications are usually processed within three to five business days after receipt, not including delivery timeframes. Pay the application fee and ensure the statement is correct and complete before filing. Once your statement has been filed, changes cannot be made and refunds are not usually issued. Most counties need an original or “wet” signature on the application. New FBN Statement filings must be published by the applicant in a newspaper of general circulation in the county in which the principal place of business is located. The notice must appear once a week for four successive weeks. You must then file an affidavit of publication with the county or city office. FBN statements are to be filed no later than forty (40) days from the start of conducting business. FBN statements are valid for five (5) years. You must re-file every five years and pay current fees, even if there are no changes. You are not required to republish a renewal if the information does not change. FBN statements have a 40-day grace period following the date of expiration for filing a renewal. There are a couple of important things to note. Simply filing a FBN Statement will not change any of the tax consequences for your business. Also, filing a FBN Statement in California does not grant you exclusive rights to use that name. The only way to legally protect your exclusive use of a name is to register a trademark under that name. Finally, this blog is not a substitute for legal advice. We would be happy to assist you to set up your business entity, consider tax issues, and help you file your FBN Statement.view the article