As a result of the COVID-19 pandemic, many states implemented temporary measures allowing public notaries to perform notarial acts virtually. Over a year and a half after the initial states of emergency were instituted, some states have allowed these temporary measures to lapse, while others have codified them into law. Here is how New Jersey, New York, Pennsylvania and Florida have addressed the usage of remote online notarization (“RON”) as these emergency permissions have expired:
New Jersey: On July 22, 2021, New Jersey governor Phil Murphy signed A-4250/S-2508 into law, permanently allowing RON. The new law permits the use of “communication technology” to perform notarial acts. Communication technology is defined as an electronic device or process that “(a) allows a notarial officer and a remotely located individual to communicate with each other simultaneously by sight and sound; and (b) when necessary and consistent with other applicable law, facilitates communication with a remotely located individual who has a vision, hearing, or speech impairment.” The notary public’s obligations are fulfilled when using such communication technology, subject to the following: (1) the remotely located individual (A) signs the document and a declaration under penalty of perjury during the course of an audio-visual session, and (B) sends that document and declaration to the notary by no later than three days after the signing, and (2) the notary records the audio-visual session of the individual signing the document and declaration and, after receiving the record and declaration, executes the “certificate of notarial act” as otherwise required by the statute. This law goes into effect on October 20, 2021.
Florida: Florida presciently implemented a RON statute that became effective on January 1, 2020 and is codified at Fl. Stat. 117.295. Florida has not implemented any additional statutes addressing RON since then. Notably, Florida notaries must complete an additional registration to be permitted to conduct RON services. The registration process is explained in Section 1N-7001 of Florida’s Administrative Code, and involves paying a $10 fee, and submission of an application to the Florida Department of State. We provided an overview of this law in our prior Legal Alert, Remote Online Notarization: One Year Later.
New York: Former New York Governor Andrew Cuomo enacted temporary RON authorization in March 2020 which expired on June 24, 2021. To date, the New York legislature has declined to codify these temporary RON measures and, as a result, the previous notarization rules established in Article 6 of the Consolidated Law Service of New York govern.
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 any member of Flaster Greenberg’s Business & Corporate Department.
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 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 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.
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’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 any member of Flaster Greenberg’s Business & Corporate Department.
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 any member of Flaster Greenberg’s Business & Corporate Department.
The Senate passed President Biden’s $1.9 trillion COVID-19 relief package late Friday night. While the bill must go back to the House of Representatives for reconciliation with the bill they passed in late February, it is a major step forward in getting financial relief to those in need.
Here’s what you need to know about the COVID-19 Relief Bill:
It extended the $300 weekly unemployment benefit through September 6th, thereby avoiding the deadline of mid-March for that benefit established by the December 2020 stimulus bill.
It promises $1,400 in stimulus money to a narrower selection of individuals than had been eligible for prior stimulus checks. Individuals who earn more than $80,000 and married couples earning more than $160,000 combined are excluded.
The $15 minimum wage provision that was a highlight of the House bill did not make it into the Senate’s version.
It allows an individual’s first $10,200 earned through unemployment to avoid taxation. This applies to those who made less than $150,000 in adjusted gross income in 2020. If you earned more than $10,200 and have already filed your 2020 tax returns you may consider amending your return to reflect that information. Talk to a tax professional to see if such an amendment would change your tax liability.
The Senate bill included many other provisions, including a change to the child tax credit, providing further relief to state and local governments, and funding for COVID-19 testing, vaccinations, and contact tracing. We will have to wait for the reconciled bill to see if any of these provisions change, but it is notable that the bill was passed and is heading towards reconciliation. Stay tuned.
Beginning in March 2020, millions of Americans were forced to work from home as a result of the COVID-19 pandemic. While the absence of a commute and the option of wearing sweatpants rather than slacks during meetings were initially welcome changes to the workday, it did not seem likely that we would still be “Zooming” to work from our kitchen tables in 2021. With the pandemic still surging, many Americans have not returned to the office and will have to reckon with possible tax implications stemming from their forced exile.
Physically commuting from home in one state to work in another, such as from New Jersey to Philadelphia or New York City, is not new. Likewise, the tax implications for employees who commute are not surprising. Generally, the employee is taxed in both her home state (residence-based tax) and the state where she works through what is often referred to as a commuter tax (source-based tax), with the home state giving a credit or other accommodation to mitigate the duplicate tax cost.
Telecommuting, however, is not commuting. Employees who telecommute work from their home states. Thus, it would be reasonable for those employees to expect to only be taxed in their home state because they’re not physically crossing state lines, right? Not so fast! If Pennsylvania, New York or Delaware are involved, both employees and employers might find surprising tax results from telecommuting, even when they are simply complying with mandatory work–from-home orders. For employees of employers in these states this means that dutifully working from home across state lines in accordance with the law, they may still be subject to tax in a state they have not set foot in for nearly a year as if they were physically commuting. In turn, this may create an unintended connection between the employer and the state where the employee lives, thereby subjecting the employer to taxation there. This conundrum also underscores the internecine struggle between the states over tax dollars derived from wages earned while telecommuting.
Employees: While most employees in the country are not currently impacted by this kind of law, a problem arises for employees of employers located in Pennsylvania, Delaware and New York because they have enacted the “convenience of the employer” rules. If an employee works remotely because her employer requires it, perhaps because that is where a customer is located, the employer’s state would not tax the employee on the income earned from that work. However, if the employee works outside of the employer’s state for any other reason, the employer’s state can tax that employee’s income regardless of where it was actually earned. The convenience of the employer rule in the current environment begs this question: is a mandatory work-from-home order a requirement or a convenience? This is a question that has yet to be answered. Some states, such as New Jersey, have offered credits for its residents who are adversely impacted by this rule for the length of the pandemic.
Employers: It is uncontested that states and municipalities can impose income taxes on businesses that have a physical location in the state or have employees who work in the state. These connections create tax nexus. The question that comes up when an employer has employees working from home in another state is whether telecommuting across state borders alone creates tax nexus to a state to which they were not otherwise connected. If nexus is created for the employer with the employee’s home state, the employer is subject to that state’s taxes. However, the universal nature of the COVID-19 pandemic has motivated some states to address this issue, at least in the short-term. New Jersey’s Division of Taxation has stated that nexus for corporate tax and sales and use tax purposes will not be imposed on out-of-state employers during the pandemic through telecommuting employees. Likewise, Pennsylvania’s Department of Revenue indicated it will not impose Corporate Net Income Tax nexus or Sales and Use Tax nexus on non-Pennsylvania businesses based solely on employees working from home in the state. The state of New York, on the other hand, has declined to issue guidance on this topic, meaning that non-New York employers of New York residents may find themselves unexpectedly exposed to New York State (and potentially City) tax.
States without the convenience of the employer rule might become envious as out-of-state employees continue working from home even after the conclusion of the pandemic and the tax dollars associated with their wages remain home with them. Perhaps a harbinger of things to come, one state, Massachusetts, reacted to this tax conundrum created by the pandemic by enacting a temporary “convenience of the employer” policy. This new rule states that employees who work for Massachusetts-based employers and are working remotely outside the state because of a work-from-home order in a neighboring state are still required to pay income tax in Massachusetts. This arrangement is slated to remain in place until ninety days after the governor of Massachusetts ends the state of the emergency created by the pandemic.
Although this measure is temporary, Massachusetts has experienced backlash from other states and numerous tax organizations. In October 2020, New Hampshire petitioned the United States Supreme Court for relief, requesting that it strike down this law as an unconstitutional tax on its citizens who telecommute. The lawsuit also raises questions as to whether such convenience of the employer rules violate the Dormant Commerce Clause, which bars states from unduly burdening interstate commerce, even in the absence of federal legislation regulating the activity. This lawsuit has attracted a lot of attention in the tax community, with over a dozen amicus briefs filed in the matter, including those from Connecticut, Hawaii, Iowa, and New Jersey, as well as public policy groups such as the National Taxpayer Union, the Tax Foundation, the Cato Institute, and Americans for Tax Reform. The states joining New Hampshire did so because many of their citizens are directly impacted by “convenience of the employer” rules subjecting them to taxation in a state to which they have no physical connection and thereby draining tax revenue from the residence state. The Court has not determined whether it will hear the case, but the controversy is generating interest as other states might follow suit.
With many employees likely to continue teleworking even after COVID-19 vaccinations permit safe return to the office, it is critical to fully appreciate the impact these decisions may have on where tax is owed by telecommuters and their employers.
David S. Neufeldhas practiced law for more than 35 years, advising individuals and businesses around the globe on sophisticated federal income and estate tax planning, state tax residency planning and audits, asset protection, and insurance and investment planning. In addition, he helps business clients engaged in both inbound and outbound transactions (most notably involving China and India) as well as the individual tax issues that arise from cross-border business transactions. He can be reached at firstname.lastname@example.org or 856.382.2257.
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.
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.
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.
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 any member of Flaster Greenberg’s Taxation Practice Group.
On August 28, 2020, the world mourned the loss of movie star Chadwick Boseman, who passed at the age of 43. Known for his portrayals of iconic characters in films such as 42, Marshall, and Black Panther, Boseman quietly fought pancreatic cancer for four years before his untimely death. Given Boseman’s stardom, it was surprising to learn that he did not have a Last Will and Testament in place, causing the late actor’s wife, Simone Ledmond, to petition the probate court in Los Angeles County to be named administrator of his estate last month. According to court documents, Boseman’s probate estate has an estimated value of $939,000, which likely does not encompass the entirety of his wealth. His non-probate assets, which include assets such as life insurance, 401ks, and other retirement accounts, would not be included in that estimate.
While it may seem shocking that such an accomplished actor (with a terminal illness, no less) would decline to create a Will and other end-of-life documents, Boseman was not alone. Numerous other celebrities and public figures, including Aretha Franklin, Prince, and former Chief Justice of the United States Supreme Court Warren Burger, died without properly memorializing how they wanted their estates distributed.
What can we learn from this tragic situation? In short, it is important to prepare documents that contemplate end-of-life and incapacity, including Wills, Testamentary Trusts, and Powers of Attorney. Doing so ensures that your family and friends can respect your final wishes, which may bring them comfort and assurance while they are in mourning. As the COVID-19 pandemic continues to ravage the country, creating a Will is more important than ever. Otherwise, your home state’s intestacy laws will determine the distribution of your estate, which may be as forgiving as Killmonger in Black Panther movie (which is to say, not at all!)
How would Boseman’s death without a Will play out in New Jersey? Boseman is survived by his wife, two living parents and no children. If Boseman resided in New Jersey at his death, under New Jersey law, his spouse would be entitled to only the first 25% of his intestate estate (but not less than $50,000 nor more than $200,000), plus 3/4 of the remaining estate. Further, under New Jersey law, Boseman’s parents would be entitled to the final ¼ of the estate. Assuming the probate estate is actually valued at $939,000, Boseman’s spouse would be entitled to $200,000 plus ¾ of $739,000, which is $554,250 (totaling $754,250). His parents would receive the remaining $184,750. This accounting does not take into consideration court fees, legal fees, or other charges that would decrease the value of the probate estate.
Could Boseman have desired this result or the comparable result under California’s intestacy laws, where he resided? Possibly. However, we will never know his intent and that lack of knowledge leaves his grieving family vulnerable to probate challenges from relatives, friends, or others who may be involved. You do not need a movie star’s net worth to make an end-of-life plan; it is worthwhile regardless of the dollar value of your assets.