Category Archives: Business and Corporate

Remote Online Notarization: One Year Later

The introduction of virtual notarization (aka remote online notarization, or “RON”) has recently been a hot topic thanks to the barriers created by the COVID-19 pandemic.  Now that it’s been over since the pandemic began, where does virtual notary law stand?  Some states have embraced RON, whereas others are more hesitant to codify RON into law. Set forth below is a quick summary of the respective New Jersey, New York, Pennsylvania and Florida laws surrounding remote online notarization, an essential tool during the pandemic.

New Jersey

New Jersey had entertained permitting RON access in 2019, before the pandemic struck, but has declined to impose permanent virtual notarization laws since then.  As a result of the pandemic, the New Jersey legislature enacted a temporary RON statute on April 14, 2020.  Under New Jersey’s temporary law, a notary public or notarial officer must authenticate the identity of the remotely located individual, which can be established (i) if the remotely located individual is personally known to the notary official, (ii) if a credible witness known to the notary official swears to the identity of the remotely located individual, or (iii) if the remotely located individual provides at least 2 forms of identification.  Additionally, the notary official must be reasonably able to confirm the document before the notary official is the same document that the remotely located individual signed and the notary official must create an audiovisual recording of the notarization, which recording must be retained for a period of at least 10 years.

New York

New York Governor Andrew Cuomo issued an executive order temporarily permitting notarization of documents via “audio-video technology”, provided that:

  • The person seeking the notary official’s services, if not personally known to the notary official, must present valid photo ID to the official during the video conference;
  • The video conference must allow for direct interaction between the person and the notary official (e.g., no pre-recorded videos of the person signing.);
  • The person must affirmatively represent that he or she is physically located in the State of New York;
  • The person must send by fax or electronic transmission a legible copy of the signed document directly to the notary official on the same date it was signed;
  • The notary official may notarize the transmitted copy of the document and transmit the same back to the person; and
  • The notary official may repeat notarization of the original signed document as of the date of execution, provided the notary official receives such original signed document together with the electronically notarized copy within 30 days after the date of execution.

Executive Order No. 202.7.  Originally, this Order lasted only through April 18, 2020, but has been continuously extended as the pandemic has worn on, most recently through April 25, 2021, and will likely continue to be extended.

Pennsylvania

Beginning on March 25, 2020, RON is permitted temporarily in the Commonwealth, but with the passage of Act 97 in October 2020, it is now permanently codified in Pennsylvania law in 57 Pa.C.S. Section 306.1. Virtual notarization is permissible in Pennsylvania if the electronic signature of the notary official, together with all other information required to be included by other applicable law, is attached to or otherwise associated with the signature or record. Notary officials are required to notify the Pennsylvania Department of State that they will virtually notarize certain documents.  Once the notification is approved by the Pennsylvania Department of State, the notary official must disclose the specific tamper-resistant technology he or she intends to use.

Florida

Florida’s RON statute permits a notary official physically located in the state to perform an online notarization regardless of whether the person or witnesses are physically inside the state.  The notary official must record the online notarization session and confirm the identity of the person and any witnesses.  If the person is not located in the state at the time of the online notarization, the notary official must confirm (verbally or in writing), that the person desires the notarial act be performed by a Florida notary public.  Florida’s RON statute has specific safeguards for more vulnerable people, such as the elderly residing in nursing homes, to help ensure the competence of the person executing the document.  An example of such safeguards is the requirement for the notary official to have the person answer at least five questions relating to the person’s identity and historical events records within a limited time frame and with high degree of accuracy. Fl. Stat. 117.295.

Before you virtually notarize any document, make sure you are in compliance with your state’s virtual notary rules.  If you or your business need legal advice, please consider contacting corporate attorney Kelly Barry, or any member of Flaster Greenberg’s Business & Corporate Department.

Pennsylvania Decennial Reports

Pennsylvania requires certain business entities file a Decennial Report every 10 years to confirm their continued existence or the continued used of their marks in the Commonwealth. If a company fails to file a required Decennial Report, it will no longer have exclusive use of its name or registered mark, as the Bureau will be able to reissue the name or mark to another entity.

The Decennial Report is required if a company has not made a new or amended filing with the Bureau of Corporations and Charitable Organizations (the “Bureau”) from January 1, 2012 through December 31, 2021. The Report is required to be filed by December 31, 2021 with a $70 filing fee.  New and amended filings do not include decennial filings, name reservations, name searches, consents to appropriate name or fictitious name registrations. 

If a company is required to file a Decennial Report, its registered office should have received a post card from the Pennsylvania Department of State.  If there is any question as to whether a filing is required, please reach out to us or check the Bureau’s website: Decennial Filing (pa.gov)

If your business needs assistance with this or any other matter, please consider contacting corporate attorney Kelly Barry, or any member of Flaster Greenberg’s Business & Corporate Department.

Electronic Signatures in NJ, NY, PA & FL: What You Need To Know

The COVID-19 pandemic rocked businesses with its required social distancing protocols and work from home mandates.  However, one silver lining to the unforeseen chaos generated by the pandemic is the benefit of being able to execute most documents from the safety of home.  Laws and guidance have been in place for years addressing electronic signatures, but the prevalence of their usage during the pandemic have led many states to enact their own laws.  The Uniform Electronics Transaction Act (UETA) provides guidelines that most states have adopted to determine the legality of electronic signatures in certain commercial and government transactions, and the Electronic Signatures in Global and National Commerce Act (ESIGN Act) established the legality of certain electronic contracts in interstate and global commerce.  Below is a quick primer on the respective New Jersey, New York, Pennsylvania and Florida statutes surrounding electronic signatures, a tool that has become increasingly important over the past year.

New Jersey

New Jersey enacted an electronic signature statute largely mirroring the UETA.  N.J.S.A. § 12A:12-1 et seq.  New Jersey transactions are not subject to this law to the extent they are governed by laws concerning: (i) the creation and execution of wills, codicils or testamentary trusts; (ii) the UCC, with exceptions; (ii) adoption, divorce or other matters of family law; (iv) court orders or official court documents; (v) notices of the cancellation of termination of utility services; (vi) the default, acceleration, repossession, foreclosure or eviction, or (vii) the right to cure an individual’s primary residence. 

New York

In stark contrast with the overwhelming majority of other states, New York has not adopted its own version of UETA.  Rather, New York’s statute addressing the validity of electronic signatures is called the Electronic Signatures and Records Act (ERSA).  N.Y. State Tech L § 301 (2014).  ERSA does not apply to documents providing for the disposition of an individual’s person or property upon death (such as wills, trusts, orders not to resuscitate) with exceptions, negotiable instruments and other instruments wherein possession of the instrument is deemed to confer title, or any other document that the electronic facilitator has specifically excepted from ERSA’s regulations.

Pennsylvania

Pennsylvania was one of the first states in the country to adopt a modified version of the UETA in 1999, permitting electronic signatures in most circumstances.  Under Pennsylvania’s law, electronic signatures are permissible except for transactions invoking laws governing wills, codicils or testamentary trusts or the Pennsylvania Commercial Code, with exceptions.

Florida

Florida’s electronic signature statute was adopted in 2000.  Florida’s iteration of the law states that, unless otherwise provided by law, an electronic signature may be used to sign a writing and shall have the same force and effect as a written signature.  This statute prohibited virtual signatures for documents governed by laws concerning the execution of wills, codicils or testamentary trusts, the UCC (with exceptions), contracts governed by the Uniform Computer Information Transactions Act, and the rules of judicial procedure.  Interestingly, as of January 1, 2020, Florida’s Electronic Wills Act went into effect, which permits, as the name indicates, wills to be signed and notarized virtually.  By enacting this law, Florida is on the cutting edge of this area of law, being only one of a few states to loosen the traditional requirement that wills be signed in person.

Before you virtually sign any document, make sure you are in compliance with your state’s electronic signature rules.  If you or your business need legal advice, please consider contacting corporate attorney Kelly Barry, or any member of Flaster Greenberg’s Business & Corporate Department.

How to Make Filing Your 2020 Returns Less Taxing

How to Make Filing Your 2020 Returns Less Taxing

Unquestionably, 2020 was a year full of unforeseen challenges. As much as we may want to put last year completely behind us, we need to file our 2020 tax returns before completely letting go. Although we speak about the challenges and frustrations of the past twelve months broadly, a few specific events will present unusual tax considerations for some Americans.

Taxation of Unemployment Compensation Income

More than 25 million Americans became unemployed during the pandemic and relied on unemployment benefits. Unemployment benefits are includable in gross income and, therefore, are subject to tax. This may come as a surprise, especially to the thousands of Americans who applied for unemployment benefits for the first time this year. Withholding tax from one’s unemployment income is voluntary through the completion of a form referred to as a W-4V and submission to the agency paying the benefits. If their withholding amount is too low to cover their tax liability or if they did not authorize withholding, taxpayers can make quarterly estimated tax payments. Given the economic instability and uncertainty we are experiencing, many taxpayers relying on unemployment benefits are unlikely to have the financial wherewithal to withhold any portion of that income. Even worse, they may have no means available to pay the tax when due. If they were unaware of the tax impact when receiving unemployment benefits, they should be prepared for the unexpected tax now.

Home Offices

On the flip side of the employment coin, another tax quirk created by the COVID-19 pandemic comes in the form of working from home. Many taxpayers spent time working from home last year (and some of us still are!). Had this pandemic occurred before the 2017 enactment of the Tax Cuts and Jobs Act (“TCJA”), millions of Americans would be eligible for a deduction for expenses incurred creating and operating a home office. However, the TCJA limited deductions for home office expenses to those who are self-employed and whose home office areas are a “room or separately identifiable space” used “regularly and exclusively” for work. Thus those of us who have properly designated home offices as a result of the pandemic that might otherwise qualify, but receive W-2s as employees are ineligible for such deductions.

CARES Act

Similarly, many Americans received government aid in the form of stimulus checks through the CARES Act. These payments are tax-free and are not required to be included in gross income on one’s federal tax return. Rather, they are treated as advances of 2020 tax credits and must be reflected that way on our 2020 tax returns. Some tax professionals anticipate many taxpayers will have discarded or misplaced documentation related to those distributions, which, in turn, increases the likelihood that returns will be inaccurate, which may delay refunds. Additionally, some tax professionals have recommended that the IRS setting up an online portal for taxpayers to look up the exact amounts they received in government aid under the CARES Act to ensure their 1040s are accurate, but no such portal has been created as of the writing of this post. Thus, it is important for taxpayers to locate and organize their documentation relating to any stimulus check payments.

PPP Income

On top of these challenges presented to individuals filing their 2021 tax returns, some businesses face the uncertainty of whether business expenses paid for with loans received from the Paycheck Protection Program (PPP) will be wholly or partially deductible on their 2020 returns.  Under the PPP, certain small businesses whose operations were directly impacted by the COVID-19 pandemic were able to secure loans to fund specified expenses, including eligible payroll costs, payments on business mortgage interest payments, rent and utilities during a period of 8 or 24 weeks after disbursement. Borrowers may apply for forgiveness of these loans within 10 months of their issuance, to the extent they are used for these purposes in the year the expenses are incurred. It was unclear under the original CARES Act whether the expenses paid with the forgiven loan proceeds would be deductible. In December 2020, Congress passed the Consolidated Appropriations Act, which finally clarified that business expenses paid with forgiven PPP loans are, in fact, tax deductible. This act supersedes prior guidance from the IRS, issued as recently as November 2020. While this came as a welcomed holiday gift to many, there may be S corporation shareholders and partners in partnerships with a lump of coal thrown in; the benefit may be somewhat less timely than anticipated given the quirks of pass-through entity taxation, effectively deferring the tax benefit another year. 


Carefulness has always been key when completing a tax return, but even more so when filing returns for tax year 2020. Any taxpayer who received a stimulus check should start looking for that piece of paper now — tax time will be here before you know it! As the COVID-19 pandemic persists while we await widespread distribution of the vaccine, the IRS has emphasized the need for taxpayers to complete their tax returns from the safety of home, and provides a number of services to assist taxpayers in doing so.  If you encounter any legal issues regarding your taxes, Flaster Greenberg can help; give us a call.

For more information on any of the information contained in this post, contact Kelly Barry or any member of Flaster Greenberg’s Taxation Practice Group

Kelly Barry is a member of the firm’s Business and Corporate Department and Taxation Practice Group assisting clients in a wide range of corporate matters, including those involving transactional law, tax, and trusts and estates.  She can be reached at kelly.barry@flastergreenberg.com or 856.382.3305.

Is Your Click Through Agreement in Compliance with New Jersey State Law?

Click Through Agreement Compliance in New Jersey

We have all done it. Clicked or checked the “I agree” box and agreed to terms, conditions or waivers just to get on the slopes, complete an online purchase or register our kids for sports or some other activity.  Most people secretly think, “This can’t be legal anyway.”  Well, in the words of Billy Joel, “You may be right.” However, in states like New Jersey, you may be wrong!  Now, more than ever, businesses are streamlining their processes by relying more and more on electronic waivers and agreements, especially as a result of the COVID-19 pandemic.  Business owners view online agreements and waivers as a quick method of completing the sale. However, business owners need to be mindful that these agreements could be loaded with possible pitfalls if they are not in compliance with state law. 

If a click through agreement was to be disputed by a consumer, how would this play out in New Jersey court?

Enforceability comes down to how easily the terms can be viewed and agreed upon by the user.  To dispense with the popular argument, the user (or consumer) cannot be relieved of their contractual obligations in New Jersey by arguing that they did not read the agreement before clicking “I agree” or affirming the terms. It’s a long standing principal in the Garden State that one cannot be relieved of their contractual obligations because they did not read the contract.

“Click the box” agreements and terms are not per se unenforceable in New Jersey because they are presented to a party in electronic form. The court will first consider the substance of the term at issue and the policy reasons in support of its enforcement. If the term at issue passes the first test, the court will then consider the mode of presentation of the term or how easily is it accessed and viewed by the user. It’s here that online terms and agreements run into trouble.

In order for terms of agreement to be valid in New Jersey, the term must be fairly presented and not submerged or concealed in a way that makes it difficult to find or access.  For example, while clickwrap agreements or hyperlinks are also not per se unenforceable in New Jersey, a business will most certainly run into trouble if they start burying key terms in secondary agreements that the user must click on to view.  Lastly, if a party tries to argue that “He made me an offer I could not refuse”, a.k.a. the adhesion contract argument, the court will likely uphold the term provided the above conditions are met. 

To sum up, the language of each term of your electronic agreement must comply with New Jersey law and must be easily accessible to the user. To the furthest extent, avoid requiring the users to click on multiple agreements and links to complete the process.  When in doubt, contact corporate attorney Chris Chiacchio, or any member of Flaster Greenberg’s Business and Corporate Department, to review your electronic agreements and waivers.

Chris Chiacchio is a shareholder in Flaster Greenberg’s Corporate Department. He provides small to midsized companies with guidance with their day to day operations, contract negotiations, and mergers and acquisitions. He can be reached at christopher.chiacchio@flastergreenberg.com or 856.382.2207.

Ten Tips for Avoiding Litigation: Tip # 2: Avoid Doing Business with Members of your Family.

green dracaena plant with white pot on white wooden surface

Photo by Designecologist on Pexels.com

This tip might sound counterintuitive to you, and, in any event, it might be unachievable, given that most of the businesses in this country start out, at least, as family businesses, but let me explain. Business people make their best decisions when they are able to be objective, analytical, and emotionally detached from the issue. Now, think about disagreements you have had with members of your family. I rest my case!

If your family is like mine, family squabbles are usually highly subjective, irrational and overly emotional. It is difficult to be emotionally detached when family members are on the opposite side of a dispute. Overlaying family issues on top of business issues can lead to very nasty conflicts. Although it can be difficult to resolve a disagreement with your business partner of 20 years, it is even more difficult when your business partner is also your brother-in-law.

When family members are involved in a business decision, remaining emotionally detached and trying to make a rational decision can be impossible.  Too often, historic personal issues and feuds between family members rear their ugly heads. “Mom always liked you better!” This makes it more difficult to make the tough decisions with which business owners are faced on a daily basis. As a result, all too often the owner avoids making tough decisions just to avoid causing domestic strife. It is difficult enough having to fire an employee. How much harder is it to fire that employee when it is your brother’s son, the slacker, and you know, as a result, your mother might never speak to you again? And, when the owner makes a decision that implicates family politics, the result can be explosive and contentious litigation that combines the worst aspects of business litigation and family court.

Another problem faced by family businesses is that owners who are not actively involved in managing the business might lack the full knowledge needed to make informed decisions about crucial management and policy issues affecting the future of the company. Often, such owners are more focused on their own short term economic interests at the expense of the future growth and health of the company. They might, for example, choose to bypass an opportunity that could be very lucrative for the company in the future, such as adding a new product line or moving into a new geographic territory, because the opportunity requires an investment today of the company’s profits.

So how do you deal with these inherent problems as the owner of a family business? First, consider clearly defining management responsibility as separate and distinct from the ownership structure of the company. Allow the ownership to continue to be spread across members of the family, but focus management responsibilities in the hands of the people who understand the challenges and opportunities that the company must address if it is going to continue to be successful. Management of the company should be viewed as distinct from the ownership structure; just because someone owns a share of the company does not entitle him or her to be involved in management. The more you can isolate management from family disputes, the better for the company.

Second, the added complications of running a family business offer one more good reason why a strong business operating agreement is essential to any company, but especially a family business. Your family business operating agreement should include a detailed description of both the ownership structure and management responsibilities of your company.

These steps will help you avoid litigation and maintain peace and harmony in your family and growth and prosperity in your company.

 

Phil Kirchner of Flaster Greenberg

Phil Kirchner of Flaster Greenberg

Philip Kirchner is a member of Flaster Greenberg’s Litigation Department headquartered in Cherry Hill, NJ. He concentrates his practice on resolving business disputes, including complex litigation of all types of business issues in both the federal and state courts of New Jersey and Pennsylvania. He can be reached at 856.661.2268 or phil.kirchner@flastergreenberg.com.

 

<span>%d</span> bloggers like this: