Publications — Page 3 of 50 — Lindabury, McCormick, Estabrook & Cooper, P.C. Firm News & Events

Transfer Tax Exemptions for 2025

Published on: January 17, 2025 | by Anne Marie Robbins

On October 22, 2024, the IRS issued Revenue Procedure 2024-40 setting forth the inflation adjusted transfer tax exemptions for 2025. The Basic Exclusion Amount (BEA) will be $13,990,000. The increase means that in 2025, an individual may make gifts during life or at death totaling $13,990,000 without incurring gift or estate tax; a married couple will be able to transfer $27,980,000 of assets free of transfer taxes. The Generation-Skipping Transfer (GST) Exemption under section 2631 of the Code will also increase to $13,990,000.

The annual gift tax exclusion provided by Code section 2503 will increase in 2025 to $19,000 per donee (or $38,000 if spouses elect gift-splitting).

The gift tax annual exclusion for gifts to non-citizen spouses as set forth in Code sections 2503 and 2523(i)(2) will increase to $190,000.

Corporate Transparency Act Enjoined Again

Published on: December 29, 2024 | by Kelsey Gorman

On December 26, 2024, the U.S. Fifth Circuit Court of Appeals vacated its own order staying the nationwide preliminary injunction of the enforcement of the Corporate Transparency Act (“CTA”) and its reporting deadlines. As it gets closer to the initial deadline of January 1, 2025, the Court has been going back and forth on the status of reporting requirements while pending litigation considers the constitutionality of the CTA.

On December 3, 2024 the Fifth Circuit issued a nationwide preliminary injunction, enjoining the enforcement of the CTA and staying its reporting deadline. However, on December 23, 2024, the Court granted a stay of that injunction, reinstating the reporting obligations and original deadlines. As a result, reporting companies were then put back in a position to file their beneficial ownership information (“BOI”) reports by January 1, 2025. FinCEN, the agency in charge of enforcing the CTA and collecting BOI reports, granted an extension allowing reporting companies to file their BOI reports by January 13, 2025.

However, on December 26, 2024, the Court vacated its December 23, 2024 order and enjoined (again) the enforcement of the CTA and its reporting requirements while it considers substantive arguments over the constitutionality of the CTA. This means that reporting companies do not need to file BOI reports by January 1, 2025 or by the extended deadline of January 13, 2025. As is evident by the three conflicting orders within the past few weeks, things can change at any moment. But, for now, it remains optional for reporting companies file BOI reports.

Social Media in the Hiring Process: Pitfalls and Protections

Published on: December 20, 2024 | by Lisa Gingeleskie

Employers commonly utilize social media to gather information about prospective employees as part of the hiring process. Although social media can be very useful for this purpose, the law on what is permissible use by an employer is underdeveloped. While we wait for the law to catch up to technology, it is imperative that employers are advised as to the existence of certain legal pitfalls when using social media in the hiring process, as well as those practices they can implement to help avoid future liability.

Targeted Advertising

Federal, state and local anti-discrimination laws prohibit discrimination in hiring based on a prospective employee’s protected class. Employers can unwittingly run afoul of these laws, however, when they use social media to recruit or research prospective employees. For example, more and more employers are using targeted advertising to recruit employees. This form of advertising allows employers to use social media platforms, like Facebook, to select a targeted audience based on a range of factors, including age, race and interest. Using the extensive data it collects from its members, social media sites are then able to specifically isolate the employer’s advertisement so that it is shown only to those recipients that fall within the employer’s chosen audience.

To Be Exempt or Not Exempt; That is the Question

Published on: December 20, 2024 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

When hiring, many employers do not give proper consideration to whether newly hired employees should be classified as “exempt” employees who by law are not entitled to overtime pay for hours worked in excess of 40 hours in any workweek, or “nonexempt” employees who are entitled to overtime pay. A failure to properly apply the legal criteria for employee classification can be a costly oversight for employers.

The federal Fair Labor Standards Act (FLSA) mandates that employees be paid on an hourly basis of at least the federal minimum wage, currently $7.25. States and municipalities are free to enact higher minimum wage rates. New Jersey recently passed legislation that will progressively increase the current $8.85 per hour minimum wage to $15.00.

The FLSA further mandates that employees be paid at an overtime rate of not less than 1.5 times the employee’s regular rate for each hour of work time in excess of 40 hours in any one workweek, unless the employee qualifies for one of the exemptions from these overtime requirements set forth in the statute. So how does an employer determine the proper classification of an employee as either nonexempt or exempt? Unfortunately, there are no bright-line rules an employer can rely upon in making these determinations, and the employee’s job responsibilities and the employer’s control over the employee largely dictate the proper classification under the FLSA.

“Smaldino v. Commissioner”: An Estate Planning Cautionary Tale

Published on: December 18, 2024 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

A recent Tax Court case, Smaldino v. Commissioner, T.C. Memo. 2021-127 (Nov. 10, 2021), emphasizes the need to ensure that the phases of transactions are completed properly, and certain formalities are observed in order for an estate planning strategy to be successful. It is important to be careful even (and perhaps especially) in the case of emergency planning (i.e., planning because of health scares or impending tax law changes).

In the Smaldino case, rushed planning caused a tax deficiency that may have been avoided with a team of advisors working together to ensure that Mr. and Mrs. Smaldino’s plan was properly implemented.

Mr. and Mrs. Smaldino were married in 2006. Mr. Smaldino had six children from a prior marriage and 10 grandchildren. Mr. Smaldino was a CPA turned real estate investor, with a real estate portfolio worth approximately $80 million. Mrs. Smaldino held a master’s degree in economics and had worked in her husband’s business for many years.

What Employers Need to Know About Employee Privacy

Published on: December 18, 2024 | by Lisa Gingeleskie

In an age where anyone can look up almost anyone or anything online, the term “privacy” can be difficult to define. The meaning of the word becomes even more challenging when viewing privacy in the context of the workplace. Many employers struggle with not only identifying what is private protectable information, but also how to safeguard that information while also protecting the company’s own business interests. A rise in remote or hybrid work situations has added another layer of complexity to this challenge. Given the increased costs of litigation, it is critical that employers understand their obligations under the law and how to strike a legally compliant balance between these competing interests.

Employee Records

Neither federal nor New Jersey law specifically regulates an employer’s maintenance and handling of employee personnel records, although there are certain statutes that contain ancillary record-keeping provisions. For example, New Jersey’s Paid Sick Leave Law requires that employers maintain records of hours accrued, used, and carried over by employees for a five year period. Also, employee medical records are afforded separate and greater legal protections pursuant to various federal and state laws.

Crisis Management: Safeguards to Protect Against Financial Elder Fraud

Published on: December 18, 2024 | by Elizabeth Engert Manzo

In an era where digital transactions are becoming increasingly prevalent, the mechanisms by which financial institutions inform customers of potential fraudulent activities are under scrutiny. Recently proposed revisions seek not only to bolster security measures but also to ensure that customers are promptly and clearly notified, thus minimizing the risk of financial loss.

Possible Changes to Bank’s Notice of Suspected Fraud Under Review

On the first day of the 2024 New Jersey legislative session, Assembly Bill No. 1832 was introduced and referred to committee. If approved as enacted, A1832 would require financial institutions to release financial records to adult protective services if there is suspected fraud of a vulnerable adult or senior customer. It would also permit adult protective services to release these records to law enforcement, where necessary.

Avoiding Misclassification of New Jersey Workers

Published on: December 17, 2024 | by Joshua L. Weiner

When determining whether to classify a worker as an employee or an independent contractor, employers in New Jersey must follow the “ABC” test. Under this test, an individual receiving remuneration in return for rendering services is presumed to be an employee unless the employer can meet its burden of proving all three of the following elements:

The individual has been and will continue to be free from control or direction over the performance of work performed, both under contract of service and in fact.
The work is either outside the usual course of the business for which such service is performed, or the work is performed outside of all the places of business of the enterprise for which such service is performed.

The Crucial Role Parenting Coordinators Play in Helping Former Spouses Co-Parent Effectively

Published on: December 17, 2024 | by Nicole A. Kobis

For spouses who have made the decision to divorce, the emotional toll placed on them and their children can be quite challenging. One of the most consequential matters that must be decided will be how both parents address raising their children once they have separated. Common parenting issues include visitation and custody arrangements, differing parenting styles, discipline, education and the introduction of new parental relationships. Navigating these issues either during the divorce process or in the months and years after can be daunting and not easily remedied. These issues often require careful management and, in some cases, professional support, to ensure that the best interests of the children are prioritized.

For individuals who find it impossible to resolve disputes regarding their children amongst themselves, or for those who cannot effectively co-parent and work together to ensure their children’s best interests are met, the appointment of a parenting coordinator may prove to be a helpful tool.

Parenting coordinators are neutral third parties, typically attorneys, appointed by the court to assist parents in implementing agreed upon or court-ordered parenting plans and navigate issues that arise in the day to day life of raising a child. The appointment of a parenting coordinator can prove to be especially important in high conflict scenarios when the disdain toward a former spouse may cloud each party’s ability to do what is best for their children.

Wrongful Discharge Suit Against Walmart for Failure to Hire Recreational Cannabis User Goes Up in Smoke

Published on: December 16, 2024 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

In a case of first impression, a split judicial panel of the Third Circuit Court of Appeals concluded that New Jersey job seekers do not have the right to sue employers who rescind job offers to applicants testing positive for cannabis, despite state legislation that bars employers from doing just that.

Background

The case was brought under New Jersey’s 2021 Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act (CREAMMA) that legalized recreational marijuana use. In pertinent part, CREAMMA expressly prohibits employers from refusing to hire applicants because of their use or non-use of marijuana. Less than a year after CREAMMA’s passage, Erik Zanetich was offered a job at Walmart, subject to passing a drug test. Walmart’s policy mandated that applicants were ineligible for employment if they tested positive for drugs. When Zanetich tested positive for cannabis, his job offer was rescinded. Zanetich filed a class action suit, arguing that Walmart’s retraction of his job offer was in violation of the protections accorded to marijuana users under CREAMMA.