Ron Hicks Elected to Board of Pennsylvanians for Modern Courts

Meyer, Unkovic & Scott Partner Ron Hicks was recently elected to serve on the board of directors of Pennsylvanians for Modern Courts (PMC).

PMC is a nonprofit organization that serves as a statewide court “watchdog.” According to its website, PMC identifies and speaks out on issues that impact the public’s confidence in Pennsylvania’s courts, and works proactively to reform and modernize the judiciary. PMC serves to eliminate bias in Pennsylvania’s courts in all its forms, so that all Pennsylvanians can come to our courts with confidence that they will be heard by qualified, fair and impartial judges.

Mr. Hicks is a Pennsylvania business and oil and gas rights trial lawyer who handles emergency, complex, and appellate litigation and other business matters for a variety of clients, including LGBT+ business owners.

He is co-chair of the firm’s Litigation & Dispute Resolution Group and chair of the Energy, Utilities and Mineral Rights Group and also serves as the co-chair of the U.S./Canada Litigation Group of Meritas — a global association of select independent law firms.

Pennsylvania Offers Tax Amnesty

Kevin Israel looks at Pennsylvania's tax amnesty program in this Pittsburgh Post-Gazette article, "PA offers tax amnesty program to businesses, individuals".

PA Enacts New Revenue Measures to Fund 2016-17 State Budget

Pennsylvania Governor Tom Wolf has signed legislation raising approximately $1.3 billion in additional tax and other revenues required to balance the Commonwealth's 2016-17 budget, which was enacted earlier this month.

The new measures leave the personal income and state sales tax rates unchanged.

The new provisions include the following:

1. While the sales tax rate remained unchanged, the application of the sales tax was extended to apply to digital downloads effective August 1, 2016. Digital purchases now taxable will include e-books, games, music (including satellite radio subscriptions), photographs, and video (including streaming services such as Amazon and Netflix).

2. While the personal income tax rate has not changed, lottery winnings will now be subject to personal income taxation -- retroactive to January 1, 2016.

3. The new legislation includes a tax amnesty program which will allow taxpayers to pay outstanding taxes without penalty and with a 50% reduction of accrued interest on the unpaid balance. Details on the amnesty program will follow in a separate Client Alert. The legislation requires the Pennsylvania Department of Revenue to publish details on the amnesty program by mid-September, 2016.

4. Effective August 1, 2016, a $1.00 per pack tax increase on cigarettes will result in a total tax of $2.60 per pack.

5. A new tobacco tax on e-cigarettes and other vaping devices (40% of purchase price), smokeless tobacco, and roll-your-own tobacco purchases (55¢ per ounce) begins on October 1, 2016. The tax does not apply to cigars.

6. State casinos will now pay an additional 2% tax on table game revenues, beginning August 1, 2016.

7. Several new tax credits are included in the new legislation that will take effect in 2017. These include credits for investments in rural businesses, an increase to the film production tax credit, a credit for manufacturers that increases payroll over four consecutive quarters, credits for certain brewing operations, and credits for certain mixed-use developments and water front developments.

While personal income tax and sales rates remain unchanged, many individuals will see an increase in the taxes they pay as a result of the broadening of the bases on which these taxes are assessed.

Kevin F. Israel is a Partner in Meyer, Unkovic & Scott's Corporate Law and Tax and Succession Planning  Groups. He can be reached at 412.456.2841 or kfi@muslaw.com.

For more information about the tax measures, please contact Kevin or any of the attorneys in Meyer, Unkovic & Scott's Tax Group.

Kevin Israel’s article, “Is it time for PA businesses to restructure?” recently appeared in the Pittsburgh Post-Gazette. You can access the online version using this link.

PA Capital Stock Tax and Franchise Tax Expired

Effective as of January 1st, Pennsylvania's Capital Stock Tax and the Franchise Tax expired. These taxes were slowly being phased out for the past fifteen years, but, until now, they were extended to help fill budgetary gaps in Harrisburg.

The much-reviled Capital Stock Tax actually predates the Civil War and helped bolster the perception that Pennsylvania is not a business-friendly state. The Capital Stock Tax was assessed on corporations, limited liability companies (including limited liability companies taxed as partnerships for federal tax purposes), joint-stock associations and business trusts. The tax was calculated utilizing a mandated formula based on the entity's balance sheet net equity and its earnings history. The formula often produced a tax liability for the entity even in loss years.

Last year, the Capital Stock Tax brought in over $250,000,000 in revenue for Pennsylvania; therefore, it is important to note that there is a risk that the tax will be reinstated in some capacity, especially in light of Harrisburg's protracted budget battle.

The expiration of the Capital Stock Tax is important because it now means that the limited partnership may no longer be the entity of choice for real estate projects in Pennsylvania. Instead, the limited liability company would be the preferred entity as it insulates investors from liability, does not require a formal management structure, provides the benefits of pass-through taxation and, unlike the limited partnership, it does not require the creation of two separate entities: the actual limited partnership and its corporate general partner. Utilizing a limited liability company instead of a limited partnership for future real estate projects will help lessen an investor's administrative burden over the life span of a real estate project.

For more information about this announcement and other corporate law matters, contact Josh Hoffman, Kevin Israel, or any other Meyer, Unkovic & Scott attorney with whom you have worked.

Subsurface Oil and Gas Rights: Oral Argument to PA Supreme Court

Ronald Hicks, Jr., recently presented an oral argument to the Pennsylvania Supreme Court in the case of Herder Spring Hunting Club v. Keller. This case discusses the question of whether recorded subsurface oil and gas rights can be divested through subsequent tax sales in the name of the unimproved surface estate owner. You can use this link to view his argument beginning at 1:53 on the PCNTV recording.

New Pennsylvania Construction Directory Addresses Subcontractor Liens

James Mall’s article “New Pennsylvania Construction Directory Addresses Subcontractor Liens” recently appeared in the Pittsburgh Post-Gazette. You can access the online version here.

Amendments To Pennsylvania Mechanics' Lien Law

James R. Mall

On October 14, 2014, Governor Corbett signed into law a bill amending the Pennsylvania Mechanics' Lien Law which is designed to provide additional protections to commercial and residential property owners when general contractors fail to pay their subcontractors.

The new law will create a centralized construction notice registry in Pennsylvania known as the State Construction Notices Directory ("Directory"). The Directory will be an internet-based database providing extensive details of each registered construction project. The Directory is to be maintained by the Pennsylvania Department of General Services and provides that the DGS is to have this website operational by December 31, 2016. An owner would then have the option of registering a project by filing a "Notice of Commencement" on the Directory website and posting a copy at the site of the project prior to the start of physical construction. This Notice must be filed before any labor, work or materials are furnished on the project. Further, this Notice gives any subcontractor who wishes to be protected against non-payment by a general contractor, the opportunity to let the property owner know that he or she is performing work on the project. This subcontractor accomplishes this by filing a "Notice of Furnishing" with the Directory within 45 days after first supplying labor or materials at the project site. This enables the property owner to ensure all subcontractors are paid before the owner makes final payment to the general contractor. The Act provides a form for completing the Notice of Furnishing and provides that the subcontractor must comply with the statutory notice requirements or lose its lien rights. Once a party files a Notice with the Directory, it will receive future notices of any subsequent filings on that particular project.

The new law places a duty on the subcontractor to vigilantly monitor notices of commencement and file timely notices of furnishing before starting work to avoid forfeiting lien claim rights. The law makes it unlawful for a general contractor to require a subcontractor to refrain from filing a Notice of Furnishing as a condition to entering into a contract to furnish labor or materials on a particular project. Criminal sanctions are also provided for under the statute, as well as providing subcontractors the right to file a civil suit to recover actual damages, plus costs and attorneys' fees, against anyone dissuading a subcontractor from not filing a Notice of Furnishing in order to secure work on a project. Lien rights are also preserved should this unlawful activity occur by a general contractor.

The Notice Requirements of the Act only apply to projects commenced on or after the operational date of the Directory which is currently set at December 31, 2016. While the Notice Requirements will significantly impact current lien filing procedures, its purpose is to provide owners with the identity of the universe of subcontractors working on a project. It is designed to enable a general contractor to make sure that all subcontractors have been paid in full before making final payment on the project, as well as protecting property owners from having to pay subcontractors twice for the same work.

Questions concerning the new statute can be directed to James R. Mall at jrm@muslaw.com or 412-456-2832.

This material is for informational purposes only. It is not and should not be solely relied on as legal advice in dealing with any specific situation.

Same-Sex Marriage Update

On May 20, 2014, a federal Judge for the Middle District of Pennsylvania issued an opinion effectively lifting the state's ban on same sex marriage. The plaintiffs in Whitewood v. Wolf challenged the constitutionality of Pennsylvania's marriage laws, claiming these laws denied them Due Process and Equal Protection rights guaranteed by the Constitution. In describing PA's marriage laws and previous laws that discriminated against people based on their gender or race, Judge John E. Jones, III stated in his opinion that, "[w]e are a better people than what these laws represent, and it is time to discard them into the ash heap of history." This ruling is in line with a series of similar decisions that have occurred in the wake of the Supreme Court's United States v. Windsor decision. Windsor struck down Section 3 of the Federal Defense of Marriage Act ("DOMA"), which defined marriage as the union of one man and one woman for federal law purposes.

What impact does this decision have on employers? While there are no federal laws that protect employees against discrimination for their sexual orientation, twenty-one states do have such laws. Pennsylvania currently does not protect workers from discrimination based on sexual orientation on the state level. However, 34 municipalities in the state have passed laws protecting employees from this type of discrimination. In addition, employers may face sex discrimination claims under Title VII of the Civil Rights Act of 1964 ("Title VII") if they treat employees with same sex spouses in a disparate manner. The Equal Employment Opportunity Commission ("EEOC") enforces the ban against discrimination based on sex through Title VII, the Equal Pay Act of 1963, and the Civil Rights Act of 1991. While these laws do not cover sex discrimination based on sexual orientation, they do cover sex discrimination based on sex stereotyping. Recent rulings by the EEOC have determined that an employee can file a claim for sex discrimination based on sexual orientation because it is a form of sex stereotyping. In addition, President Obama signed an executive order prohibiting federal contractors from discriminating against employees based on sexual orientation. For employers, this presents a number of issues. Employers who discriminate against employees in the workplace who have same sex spouses could find themselves facing claims under Title VII or, depending where the employment is located, a state law or a local ordinance. Furthermore, employers could face claims of sex discrimination if they provide certain employee benefits to opposite sex spouses while excluding same sex spouses.
 
Employers who sponsor a qualified retirement plan will want to ensure that the plan treats same sex spouses in the same manner that opposite sex spouses are treated. After Windsor, survivor benefits offered to opposite sex spouses will now have to be offered to same sex spouses. Likewise after the Whitewood decision, if a same sex marriage ends in a divorce in Pennsylvania, a Qualified Domestic Release Order ("QDRO") issued for a same sex spouse will need to be treated as if issued for an opposite sex spouse.
 
Employers that sponsor welfare plans will have to consider offering spousal coverage to same sex spouses if their plan currently covers opposite sex spouses. Under the Employee Retirement Income Security Act ("ERISA") and under the Affordable Care Act ("ACA"), welfare plans are not required to offer spousal coverage. However, if the plan does offer spousal coverage but limits the coverage only to opposite sex spouses, the sponsoring employer may face a sex discrimination claim. Similarly, if an employer is required to contribute to a multiemployer welfare plan as part of a collective bargaining agreement, the employer could face the same risk of a sex discrimination claim if that plan offers spousal coverage only to opposite sex spouses.

For more information about the lift of the state's ban on same sex marriage and other employment law matters, please contact Joseph A. Vater, Jr. or Stephen A. Chesney.

Municipal Liens Cannot Be Created by Contract

The article “Municipal Liens Cannot Be Created by Contract, Pa. Court Rules” by Frank Kosir Jr. recently appeared in The Legal Intelligencer. You can access the online version using this link.

Nine Attorneys Named Super Lawyers

Meyer, Unkovic & Scott recently had nine attorneys named as Super Lawyers 2014. Congratulations Thomas Berret, Patricia Dodge, Andrea Geraghty, Ronald Hicks, Jr., Richard Kotarba, James Mall, Kevin McKeegan, Russell Ober, Jr. and David Oberdick.

You can see the full release here, "9 Attorneys Named Super Lawyers".

*About Super Lawyers®

Super Lawyers®, a Thompson Reuters business, is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high degree of peer recognition and professional achievement.  The annual selections are made using a patented multiphase process that includes a statewide survey of lawyers, an independent research evaluation of candidates and peer reviews by practice area.  The result is a credible, comprehensive and diverse listing of exceptional attorneys.

Please click here to learn more about Super Lawyers® ratings.

Don't Fall For Records Scams

More Pennsylvania businesses are falling victim to a scam that preys on the desire of business owners to make sure their companies’ paperwork complies with the law. This Post-Gazette article by Jay Mangold, Jr., "Don't Fall for Records Scams", addresses how to identify and verify the legitimacy of questionable requests.

Delaware Decision May Affect Pennsylvania Shareholders

Amanda Gerstnecker recently had an article appear in the Pittsburgh Post-Gazette. It looks at how a Delaware decision may affect shareholders of Pennsylvania corporations. Use this link for the full article.

Life Planning for Same-Sex Couples Living in PA

Life planning for Pennsylvania same sex couples is like solving a jigsaw puzzle. The more you know how the pieces fit, the quicker you see the complete picture. Let us walk you through the important issues you need to be aware of regarding:

Estate Planning   |   Real Estate Title   |   Legal Pitfalls

Presented By:  Ronald L. Hicks, Jr., June F. Swanson, and Michele P. Conti

Date: Wednesday, May 21

Time: 5:00 - 7:00 PM

Location: SPIN Bartini & Ultra Lounge


Address: 5774 Ellsworth Avenue, Pittsburgh, PA 15232

RSVP: By May 16 to rsvp@muslaw.com

Seating is limited. If you have any questions, please call 412.456.2800.

Please click here to view full invitation.

Employees Working From Home

Beth Slagle’s recently wrote an article that appeared in Western Pennsylvania Healthcare News. You can view it at "Employees Working from Home Increase Employers’ Liability".