If you’re unemployed or looking to re-educate and change careers, you can identify training opportunities for green jobs by county or region.

If you have a business, the No Worker Left Behind program will assist you in moving into green industries — by providing consulting and employee training resources to facilitate the development of employee skills and expertise for green jobs within your company. Here’s a resource page containing links to several local and regional green initiatives. There’s a mailing list to receive information about green jobs in Michigan here.

Paul Ditlevson, director of Legacy Estate Programs at Ashland University in Ohio, stated in a recent press release that 80 percent of small business owners have no substantive succession plans in place, yet more than two-thirds of them expect to leave their businesses within the next 10 years.

According to attorney Michael J. Hamblin in Michigan Lawyer Business Blog:

Many business owners think that succession planning is concerned only with naming a successor. But, there are a number of other issues that are addressed in a comprehensive succession plan. A good plan should address such issues as how the business owner plans to reduce his or her role, how the business owner communicates his or her departure to employees, and what will happen to the employees’ benefits.

Estate planning options for business owners include:

• selling or gifting the business to family members while still taking retirement income
• automatic buyouts of the departing shareholder’s interest, by the remaining shareholder(s), under a buy-sell agreement
• employee stock ownership plans (ESOPs), which allow the owner to depart day-to-day activities of the business, but keep control until retirement or death
• arranging business assets to personally own intellectual property so that the business will pay a stream of licensing or royalty income to heirs or successors after the owner’s departure

The important message here: your will isn’t sufficient. Work with your accountant, financial services professional, and estate planning attorney to provide for the continuity and survival of your business.

The IRS raised the interest rate on taxes past due to 6% for balances existing or beginning in the third quarter of 2008. That’s an interest rate increase of a full point (and reflects the fact that as more taxpayers join the self-employment sector, the government’s collection rate goes down as its collection costs go up).

It’s always tempting for a small business owner or self-employed business person to ‘take a loan’ from the ‘Bank of the IRS’ by deferring estimated tax payments or tax withholding — but it’s never a good idea, and it may constitute fraud or a criminal act. In addition to penalties and the monthly accrual of interest, the IRS has the absolute power to apply liens and levies and seize property and bank accounts.

According to today’s Wall Street Journal, the Securities and Exchange Commission (SEC) plans to move US accounting practices away from GAAP (Generally Accepted Accounting Principles).

Used widely in the US, GAAP is not an international standard. Firms outside of the US in over 100 countries use standards from the London-based IASB (International Accounting Standards Board) for their accounting, and compliance with IASB accounting rules is required for companies in the European Union.

The cost of moving US public companies to international accounting will undoubtedly be large. SEC Commissioner Troy Paredes said that the benefits of having public companies follow one set of accounting rules rather than multiple variations around the globe will be huge.

Corporate earnings as reported under international accounting standards will undoubtedly be different — some companies’ earnings will be higher, others will be lower. Tax consequences will particularly hit companies using LIFO (Last In, First Out) inventory accounting methods. LIFO accounting does not exist under international accounting standards. LIFO accounting is frequently used as a strategy by US companies to shield profits against taxation when inventory costs rise with inflation.

The change will involve a coordinated educational effort — existing accountants will need to be brought up to speed and be fluent with both systems. Students planning to enter financial services will need to be educated in both systems until the switchover is complete. Outside of international taxation programs, US colleges and universities do not currently teach international accounting standards.

The proposed SEC plan calls for large US companies to adopt the international standard in 2014, with small companies required to make the transition by 2016.

Kenneth Goldmann, the SEC practice director at independent accounting firm JH Cohn in Roseland, NJ, commented that the widespread global adoption of international accounting standards is gaining momentum: “I think we are going to have to change because the world is getting smaller and flatter.”

The SEC is currently seeking public comments on the proposed changes. Comments need to be submitted within the 60-day comment period.

According to Finjan’s May 2008 Malicious Page of the Month (free registration required), the vulnerable health data was accessible via compromised login information for healthcare systems using Citrix remote access software. Social Security Numbers (TINs – “tax ID numbers” for individuals) were accessible via a compromised IRS employee login.

In early May, Finjan reported on a different server being controlled by hackers that contained a 1.4GB cache of stolen data. Compromised data involved 571 log files from the US, 621 from Germany (DE), 322 from France (FR), 308 from India (IN), 232 from Great Britain (GB), 150 from Spain (ES), 86 from Canada (CA), 58 from Italy (IT), 46 from the Netherlands (NL), and 1,037 from Turkey (TR) and resulted in the company notifying 40 major international financial institutions and law enforcement agencies located in the US, Europe and India.

Does the monitoring of cross-border communications by the United States government under the Patriot Act and the Wiretapping Act and the lack of US constitutional protection in foreign countries violate an attorney’s duty to keep client matters confidential?

Does outsourcing act as a waiver of the attorney-client privilege or otherwise permanently affect a client’s legal rights?

One law firm is concerned that the answer is ‘yes’ — and has sued the Bush administration for declaratory judgment and asked the District of Columbia and Maryland bars for ethics opinions on the matter. According to Newman McIntosh & Hennessey, US government interception of attorney-client communications is highly probable because the National Security Agency (NSA) is free to spy on foreign companies. The Newman firm filed the complaint and ethics opinion requests seeking guidance on whether outsourcing of legal services compromises constitutional rights — and wants the court to order law firms to disclose their use of outsourcing and foreign legal support to clients, and to order the US government to establish protocols to shield attorney-client information from US government surveillance.

The complaint and legal inquiry arose out of a solicitation to the Newman firm by Acumen Legal Services (India) Pvt., Ltd./Acumen Solutions, LLC (TX) to provide the law firm with outsourced litigation support. Hennessey, a named partner for the firm, is concerned that information from his personal injury and medical malpractice practice could fall into the hands of competitors who employ outsourced services, through the electronic discovery process. According to Hennessey:

It’s not paranoia. It’s just fact . . . . [N]ow that we’re outsourcing services, we have given no consideration to the ongoing practice of the government harvesting information out there.

Hennessey openly wonders whether explicit client consent should be required before any data is sent abroad.

Legal outsourcing has grown dramatically in the last decade as bandwidth has improved to easily handle large amounts of imaged data, facilitating remote document scanning and low-cost document review, primarily in India.

Here’s why this is a particularly interesting story to watch: A. large law firms are now relying heavily on the practice of outsourcing their legal document imaging and legal document review work to maintain their profit margins. B. The regulation of attorneys is almost entirely a matter of state law. I’m not aware of any federal controls over the attorney-client relationship or attorney-client privilege (except with regard to the recent encroachment on attorney-client communications in the representation of enemy combatants in connection with Guantanamo and Bush administration military tribunals).

The case has been assigned to District Judge Colleen Kollar-Kotelly (chief judge of the Foreign Intelligence Surveillance Court – although this is apparently not a FISA issue).

Tip of the hat to the Blog of Legal Times for breaking this story.

• 40% cash rebate across the board on qualifying Michigan expeditures, with a minimum required spending threshold of $50,000.
• Michigan will add an extra 2% if the qualifying project is filmed in one of the  103 Core Communities in Michigan.
• Project labor and crew makeup: 40%-42% Michigan residents, 30% Michigan non-residents
• The law includes a workforce development tax credit for hiring and training current Michigan-based crew to acquire new professional skills or attain a higher professional level.
• The law includes a low interest loan program and an infrastructure tax credit program.
• The only salary cap will be a maximum of $2 million salary per employee.
• There is no sunset on the incentives law.

Here are links to the texts of the new law:

Michigan Public Acts 74 75 76 77 78 79 80 81 82 83 84 85 86 87 of 2008

Proposals are included in the bill package to give tax breaks for the development of entertainment industry infrastructure in Michigan, and for Michigan-based job training related to film and video production. Assistance is to be made available to companies making movies, documentaries, TV series and specials, and for an assortment of new media ventures, including video game, Internet and interactive programming. The emphasis is on supporting feature and creative production: producers of live sporting events, game and award shows, and adult entertainment would not be eligible.

The proposed law is part of a sustained effort to welcome film and entertainment businesses and startup activity to the state. A law which took effect in January 2007 gives film and production companies a break on the Michigan state sales tax. Rep. Bill Huizenga (R-Zeeland) initially sponsored that legislation. According to a Screen Magazine article commenting on the legislation and reporting on an interview with Huizenga, these bills “were crafted after seeing what other states, like Louisiana, Illinois and New York, had done to provide incentives.”

Multiple states, multiple taxes, multiple tax returns
So, this year’s first tax topic: road warriors. What do self-employed consultants with clients in multiple states, baseball players, and blues musicians have in common? They all personally earn taxable income in multiple jurisdictions, potentially subjecting them to STATE income taxes in addition to federal taxes, in each of the multiple states that they perform services. (Subcontractors to other companies are not generally subject to the same problem — even if they travel, they are providing services directly to their general contractor — not to the general contractor’s clients — and it is the general contractor who will be on the hook for the complex tax issues that can arise.)

50 potential questions, 50 potential answers
How does a service provider know where and when his or her business activities will result in state income tax liability? This is a very complex question: there are potentially 50-plus answers — one for each taxing authority which the service provider visits. For example: say a computer consultant located in Michigan (or any other state) provides programming services to support custom implementations of the ADAMS® engineering simulation software application. The consultant has multiple ADAMS® clients and frequently travels to multiple states to provide them with custom programming services on an as-needed basis. Does the programmer owe state income taxes in each state where services are provided? Typically, the answer is yes — but a qualified yes. The answer is likely to be different for each state: each of the 50 states has its own jurisdiction and its own income tax laws. Some states do not tax income at all; other states have exemptions up to a certain amount of income earned by non-residents. Still others have tax treaties with various states, allowing the individual earner to simply pay the tax earned in another state, on the income tax return for his or her home state. Many states give none of these breaks to service providers, and expect them to file an income tax return for any amount of income earned in their state. (Here’ an example: Colorado requires anyone earning money in the state to pay income tax and file a tax return, regardless of the amount.)

Cities may also tax self-employment income
The same complexity applies with respect to earning income in cities and other municipalities: large cities frequently have income taxes to pay for the city services which are consumed not only by residents, but also by the large number of workers who do not live in the city but commute into the city to earn income. For example, the city of Detroit imposes a local income tax on income earned within the city limits. Further, many cities have tax rates that discriminate between residents and non-residents, with non-residents paying a higher rate. (Typically this is achieved by taxing everyone at the same rate, but giving a tax refund to full-time city residents.)

Answering the local state and city income tax question can involve further issues on how the applicable state income tax or city income tax jurisdiction determines how its tax is applied. Many of these taxing agencies look to the ‘tax home,’ or ‘residency,’ of the individual. Some define “part-time resident” and “permanent resident.” (An example of a famous recent case: Derek Jeter of the New York Yankees was sued by the state of New York for state income taxes on his multi-million dollar income. Jeter said that his permanent residence was in Florida (no income tax) and New York said that from 2001 to 2003, his permanent residence was in Manhattan, subjecting him to income tax in the state. Jeter apparently recently settled the case with the state under terms of non-disclosure; see the New York Times article on Jeter and taxing athletes in every place they play a game(!)…here.)

Where can I find information on state income taxes for all 50 states?
Unfortunately, nobody has made this easy for you. While there are several subscription publications on the state income tax issue directed at lawyers, accountants, and other tax professionals, there is no widely accessible comprehensive web-based collection of state income tax statutes. For many small business owners, the answer is going to involve working closely with your accountant, and investigating each state’s website for income tax information.

States and cities are stepping up efforts to tax consultants, athletes and entertainers
The recent economic decline, coupled with tough cuts in payments from the federal government to the states, has forced states to become tough on income tax evasion. States increasingly are on the lookout for well-publicized income activity, scouring the Internet for information on taxable activities such as schedules of performances for touring musicians, and news releases and announcements by service providers from other states of new contracts or projects with high-profile clients. With the Internal Revenue Service’s new emphasis on auditing the self-employed, individual service providers are squarely in the cross-hairs of tax agents. Mistakes in this area are common and frequent, and circumstances are dire: the consultant, athlete or musician not only can be forced to pay the unpaid back taxes, but also penalties and interest, which often exceed 100% of the tax owed. The moral of this story: if you’re providing services outside of your home state, you really need backup from a good accountant.

Just add “or, unmaking” to the end of that — and you have an adept aphorism for the Michigan Legislature’s services tax fandango.

Approximately five hours after the unpopular 6% sales tax on services went into effect at 12:01 on December 1, the Michigan Legislature reached a “twelfth hour” deal to repeal the tax, replacing the missing budget revenue with a 22% increase in the business tax. The repeal legislation includes legal immunity for affected businesses which failed to collect the tax for the brief period of time that the law was actually in effect.

Too bad thousands of Michigan businesses were required to spend time and money preparing for this Adventure in Bad Governance.