Musicians and Tax Trouble

Posted on May 7, 2012 by the firm

Tax liens are something to be avoided, if possible.  Even when the IRS has already started collection proceedings, a tax lien may still be avoided, if you involve the right attorney, and early enough.  Our firm is located in Austin, Texas – a very active center of arts and music.  The economics of the music business, combined with the temperament of artists, can result in tax problems.

USA today recently reported on the tax troubles of Texas resident Rex “Rocker” Brown, bassist for the heavy metal band Pantera, and several other well-known music artists.  It cites five tax liens files by the IRS against Brown, totaling almost half a million dollars.   Glen Campbell is touring and raising money to pay overdue taxes. 

Some people take glee in watching celebrities and their troubles.  That’s not what this article is about.  Musicians are self-employed, and they are entrepreneurs, creators and risk-takers in a very fickle business.  They rely on management firms and accountants to handle the details.

If your property is already under a tax lien, or if you think you may be facing one, the time to contact an experienced attorney is now.  Visit our page (linked above) for more details.

Posted in Taxation |

Facebook, Yahoo and Counterclaims as a Defensive Strategy

Posted on May 5, 2012 by the firm

As detailed here, the legal drama between two internet giants began when Yahoo filed suit against Facebook for patent infringement.  Facebook responded with its own counterclaims.  Yahoo is now asserting in a counter-counterclaim that Facebook acquired the patents for the purpose of retaliation against Yahoo, and added two new claims of patent infringement.

This escalation of claims, counterclaims, and counter-counterclaims can be dizzying, but as Attorney John C.McDuff has said, “Bringing a counterclaim is often a smart tactic in business litigation, because it forces plaintiffs to divide their attention between bringing a claim and defending against one. The tactic often increases the possibility of settlement as the other party seeks to avoid possible charges such as fraud or contract breach.”

Deciding when doing this makes sense, and when it doesn’t, is something that requires experience.  Discuss the particulars of your situation with competent legal counsel.

Posted in Business Litigation |

Southwest Airlines to pay $28,000 for burns from hot chocolate

Posted on April 27, 2012 by the firm

Southwest Airlines will pay a child more than $28,000 for burns he suffered from hot chocolate he spilled during a flight.

Port Arthur resident Indria Rice, acting as next of friend of Jaylon Jackson, filed suit against Southwest on Oct. 11, 2011, in Jefferson County District Court, stating it is the company’s fault her son spilled hot chocolate on himself during a flight.

Court records show that a final judgment was entered in the case, stating that the parties had reached a settlement with Southwest agreeing to pay $28,601.26 into the court’s registry as part of the minor’s settlement proceeds. An additional $1,500 was paid for a guardian ad litem fee.

The lawsuit alleged that on Aug. 20, 2010, Jackson was traveling to Houston on Southwest Airlines Flight 322 when he spilled a cup of hot chocolate on himself, allegedly resulting in a second-degree burn to his chest. A second-degree burn is one that raises a blister.

The lawsuit did not list a single act of the negligence and only asserted that Southwest owed Jackson a “duty, which was breached, causing minor plaintiff Jaylon Jackson injury.”

Beaumont attorney Kent Johns of Johns & Johns represents the plaintiffs.

Dallas attorney Katherine Staton of Jackson Walker represents the airline. Judge Donald Floyd, 172nd District Court, presided over the case. The case is No. E191-165.

Posted in Uncategorized |

Insurance provision limiting lawsuits to 2 years within date of loss should be void, class-action states

Posted on April 26, 2012 by the firm

Limiting a lawsuit to being filed within two years of an insured loss is unrealistic in light of the actions required leading up to filing suit, three Jefferson County residents state in a putative class action lawsuit against their insurance company.

Percy LeBlanc of Neches Avenue in Port Arthur and Douglas and Sandra Hill of Sunbird Lane in Beaumont stated they had insurance with defendant GeoVera Specialty Insurance Co. The plaintiffs made a claim on the policy after Hurricane Ike struck on Sept. 13, 2008, causing damage to their properties, the complaint filed April 4 in Jefferson County District Court states.

Later, a dispute between the plaintiffs and GeoVera arose and the plaintiffs filed a lawsuit against the defendant. GeoVera, though, has claimed that its insurance policies prohibits its insureds from filing a lawsuit more than two years following a disaster, the complaint states. The plaintiffs claim the provision should be void.

“It is impossible for the cause of action to accrue on the day of the loss, as the contract also requires the insured and the insurer to perform numerous actions before the suit can be filed,” the suit states. “Therefore, the Suit Against Us clause in the GeoVera policy is void because it limits the time to bring the suit to less than two years from the time the cause of action accrues.”

The plaintiffs contend that numerous people throughout Texas are subject to the provisions in the policy. They want to file a class action on behalf of those who have a policy with the provision. The plaintiffs are seeking a declaratory judgment, plus attorneys’ fees, costs and other relief the court deems just.

Gregory F. Cox, Michael R. Ramsey and Katherine D. Ramsey of The Mostyn Law Firm in Beaumont are representing the plaintiffs. The case has been assigned to Judge Bob Wortham, 58th District Court.

Posted in Uncategorized |

Apple “Imports” Processors from Austin factory

Posted on December 24, 2011 by admin

Once again, the City of Austin has shown that it is a major player in the tech world. Apple Inc now receives vital iPad and iPhone components from a factory right here in Austin – further illustrating what countless companies already know, Austin is one of the best places start or transact business.

Texas Tech Businesses

Apple has historically used manufacturers located in Asia as its source for components, but Reuters recently reported that a 1.6 million square foot factory in Austin now makes their A5 processor – which is a critical component in the popular iPad 2 and iPhone 4S.

The massive factory, owned by the Korean company Samsung Electronics, is dedicated to manufacturing the Apple chips, according to a Reuters’ source familiar with the operation. Reaching full production in early December, the $3.6 billion production line now manufactures the A5 processor.

In a statement to Reuters, a Samsung spokesman said the company has added 1,100 jobs to support their new production line. The spokesman added that the remainder of Samsung’s total 2,400 workers in Austin produces NAND flash memory in another nearby factory.

In total, Samsung has invested about $9 billion in their businesses in Texas according to the Austin Chamber of Commerce. However, Samsung is not alone as Austin is a popular destination for both new business start-ups and relocated businesses. Many tech companies are attracted to Austin because of an ample supply of educated tech employees from the University of Texas, as well as cheaper real estate and lower taxes – making Austin one of the hottest places in the nation for job growth.

Posted in Uncategorized |

Austin Listed in Top Five Markets to Watch

Posted on November 28, 2011 by admin

On behalf of John McDuff, Attorney at Law posted in Business Transactions

Austin, Texas came in second on Price Waterhouse Cooper’s annual ranking of markets to watch in 2012. Washington, D.C. finished in first, with San Francisco, New York City and Boston taking the remaining top five spots.

The report found that Austin has a perfect mix of features necessary to address the realities of the 21st century real estate market and business environment. For example, because the city features such diverse career opportunities – in education, government, medical and high-tech fields – it is insulated from the boom-bust cycles that have plagued other cities. Further, the academic environment buoyed by the University of Texas supports emerging tech companies and helps attract energetic young talent.

The rankings also noted that Austin is an eminently livable city with high quality-of-life measures. Specifically, it noted the city’s 24-hour core and abundance of nightlife options – and cited favorably Austin’s pedestrian-friendly layout and apartment-based neighborhoods.

Starting a Business?

The rankings illustrate what Texans have known for years – Austin is a great place to start a new business. However, starting a business is a challenging endeavor, even in a friendly environment. New business owners would do well to enlist the help of an experienced Austin business transactions lawyer.

An experienced attorney can help with all aspects of business formation, from choosing what form to take – partnership, LLC or even S corporation – to franchise agreements, real estate negotiations and asset purchases. Attorneys can also help with tax compliance and contract disputes.

These issues are too complicated, and too important, for most businesses to handle on their own. Starting a business certainly requires some risk-taking, but owners shouldn’t gamble on their futures by trying to do their business transactions by themselves.

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Banks Vow to Lend More to Small Businesses

Posted on October 21, 2011 by admin

On behalf of John McDuff, Attorney at Law posted in Business Transactions

There have been many explanations given as to why the American economy is mired in a prolonged recession. One of the factors often cited as contributing to the length of the economic situation is that banks have tightened lending restrictions and are less willing to lend money to small businesses. Several large banks, many with ties to the Austin area, are vowing to address this factor.

Karen Mills, head of the Small Business Administration, announced in late September that 13 banks have agreed to increase amounts lent to small business over the next three years by $20 billion. This is welcomed news for small businesses that are looking to expand operations or hire more workers and entrepreneurs looking to start new businesses in Texas.

“We know that many small businesses, particularly in traditional underserved communities still face challenges in accessing the capital they need,” stated Mills. “[The commitment to lend] will provide billions of capital to help small businesses all across the country grow and create jobs.”

The 13 banks vowing to increase lending, some of which have locations in the Austin area, include: Wells Fargo, Bank of America, JP Morgan Chase, Citigroup, KeyBank, TD Bank, US Bank, PNC Bank, Regions Bank, M&T Bank, SunTrust Bank, Citizens Financial Group and Huntington Bank.

Small business owners, especially entrepreneurs trying to start a new business venture, should contact an attorney to discuss the business startup process. The process of starting a new business can be complex, and an attorney experienced in helping small business owners can help you start your business on the right foot.

Source: Banks Offer $20B in Help to Small Business

Posted in Uncategorized | Tagged , |

Temple-Inland Purchased Despite $1 Billion Lawsuit Pending Against It

Posted on September 30, 2011 by admin

On behalf of John McDuff, Attorney at Law posted in Business Litigation

Austin-based Temple-Inland Inc. has agreed to be purchased by International Paper Co. for $4.3 billion. The sale of $32 per share follows a rejected offer in June of $30.60 per share by International Paper. Some believed a recent lawsuit regarding Temple-Inlands role in the 2009 failure of Guaranty Bank would have scared away International Paper, but, evidently, it did not.

Pending Lawsuit

The lawsuit recently filed by the liquidation trustee for GFGI Liquidation Trust against Temple-Inland in the Northern District of Texas alleges more than $1 billion in damages. The suit accuses Temple-Inland, which owned Guaranty Bank from the 1980s until 2007, of intentionally burdening Guaranty Bank with risky securities and further injuring the bank by illegally extracting hundreds of millions in dividends, and then spinning off Guaranty Bank as its own corporation destined for certain failure.

The lawsuit further alleges that directors of Guaranty Financial Group breached their fiduciary duties when they repeatedly approved the dividend payments to Temple-Inland, even though Guaranty Bank needed the capital.

Fiduciary Duties Owed by Directors

One of the fiduciary duties allegedly violated by GFG directors was the duty of loyalty. Under Texas law, corporate directors owe a duty of loyalty to the corporation to act in the corporation’s best interest. This duty of loyalty commands a director to act in good faith and to not allow their personal interests to come before the interests of the corporation. A director is considered “interested,” and thus potential violating their duty of loyalty, when they do any of the following:

  • They make a personal profit from a transaction directly with the corporation or steal a corporate opportunity
  • They buy or sell assets of the corporation
  • They transact business in their director capacity with another corporation in which they are also a director or are significantly financially involved with
  • They transact corporate business in their official director capacity with a family member

Filing a suit against corporations for fraud can be a complex and difficult process, with claims against officers and directors adding even additional pleading hurdles. It is best to know the law and consult with a knowledgeable attorney before attempting a lawsuit against a corporate entity.

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Austin Business Owners Should Take Steps to Prevent Business Fraud

Posted on September 27, 2011 by admin

On behalf of John McDuff, Attorney at Law posted in Business Transactions

While sophisticated financial scams involving amorphous cyber-attack groups have stolen the headlines for the past decade, Austin small business owners should be aware that the most likely source of business fraud and losses is actually employees. A recent article from Smart Business citing the Association of Certified Fraud Examiners reports that four out of five internal fraud cases occur in small businesses.

Employee fraud and theft is one of the fastest growing crimes in the U.S., according to the FBI. In fact, the U.S. Chamber of Commerce estimates that 75 percent of all employees steal at least one time, and half of those will steal again. Moreover, in the United States 20 percent of every dollar earned is lost to employee fraud and theft, according to estimates by the American Society of Employees.

Business Owners Must Look For Signs of Fraud in Employees

In a press release from the Association of Certified Fraud Examiners, the ACFE profiled the persons most likely to commit fraud in a small business. Even if a small business owner does not suspect fraud, he or she should be on the lookout for these signs:

  • Employees who are most likely to commit fraud include accountants, sales persons, managers, customer service representatives, employees in operations or buyers
  • Employees who commit fraud are more likely to be in their thirties or early forties
  • Employees who commit fraud might have an unusually lavish lifestyle or difficulties meeting financial obligations
  • Employees who commit fraud generally do not have previous fraud convictions or financial crimes charges

Steps to Prevent Fraud: Oversight, Control of Bank Accounts, Random Audits

Smart Business advises Texas small business owners to take proactive steps to prevent fraud. Small business owners should complete criminal background checks on potential employees as a condition of a job offer. Even though most fraud is committed by people without criminal records, this step is still helpful to prevent hiring a repeat fraudster.

The business owner should not turn over complete control of the books to one employee and should have internal checks and balances in place so that coworkers can easily report suspicious activity, too. Finally, business owners should hire a financial auditor or CPA to conduct random, unscheduled audits at least once a quarter.

Posted in Uncategorized | Tagged , , |

Local Startup Secures Funding for Technology Designed to Help Retailers

Posted on September 16, 2011 by admin

On behalf of John McDuff, Attorney at Law posted in Business Transactions

Austin-based startup NewComLink – which was founded in 2008 by Suneet Paul and Jim White, formerly of Dell Financial Services – recently announced that it has secured $10 million in venture capital financing. This funding will help the company introduce technology designed to change the way businesses handle consumer credit – namely by giving shoppers more credit options as they are in the check-out line.

“Retailers lose tens of billions of dollars each year because they tell customers ‘no,’ instead of offering them other options,” Paul told The Statesman. “We want to make sure that no customer walks away without some form of purchase.”

Like several other technology companies in Austin, such as Freescale Semiconductor and Tivoli, NewComLink received part of its funding from Austin Ventures. NewComLink also received capital from StarVest Partners.

Funding Options for Startup Businesses

Any entrepreneur can attest to the fact that starting a business doesn’t come cheap. In many cases, the funding for a startups come from business owners themselves – who dip into their own savings, use credit cards or get home equity loans to make their business dreams come true. In other cases, these entrepreneurs get funding from their friends and families, bank loans, business grants or from people known as angels – that is, individuals with a high-net worth who believe in what the business owner is trying to accomplish.

In other cases, entrepreneurs are able to obtain venture capital for their startup businesses – although companies first starting out are generally unable to get this type of funding. In order to be considered for venture capital, business owners must provide potential investors with a business plan that includes information on the potential customers and earnings of the venture.

When entrepreneurs are able to secure venture capital for their startups, they must be careful about the terms of the agreement – which may require that they pay a percentage of their profits. In order to ensure the best terms in an agreement, an entrepreneur should consult a qualified business attorney – who can advise the business owners of the law and negotiate the best terms in a venture capital arrangement.

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