REMINDER TO EMPLOYERS: REPORT NEW HIRES TO STATE

Here is a reminder to all Pennsylvania employers from the state Department of Labor and Industries about your obligation to report the hiring of new employees:

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 along with Pennsylvania's Act 58 of 1997 requires all employers to report certain information on their newly-hired employees to a designated state agency. As an employer, you are a key partner in ensuring financial stability for many children and families across the Commonwealth.

New Hire Reporting is designed to increase child support collections from non-custodial parents and parents who change jobs frequently, thus securing a better life for children. As an employer, your role of reporting newly-hired employees is critical to the success of the program. By reporting your newly-hired employees within 20 days of hire, you aid the Commonwealth of Pennsylvania in speeding up the child support income withholding order process, locating non-custodial parents to expedite collection of child support and in many cases, establishing paternity.

The New Hire program has experienced not only significant increases in child support collections from non-custodial parents but also savings in unemployment compensation, workers' compensation and public assistance programs through fraud detection. As a result, Pennsylvania is committed to this endeavor and expects continued diligence from the employer community to aid in this endeavor. For more information on this law, please visit the Pennsylvania State Law.

If you are a custodial or non-custodial parent needing information on Pennsylvania legislation and programs, please follow the link here to the PA Child Support Program website within the Pennsylvania Department of Human Services.

There are multiple ways to report your new hires to the Pennsylvania New Hire Reporting Program. The preferred method is through timely and secure electronic reporting.

Electronic Reporting:

Please use one of the two secure electronic methods listed below for reporting new hires to the Program.

Through the Pennsylvania CareerLink^® website, www.pacareerlink.state.pa.us.

Scroll down the page to the “Report New Hires” box (or press the “Online Services” link at the top menu navigation bar to go directly to the box) and press the link “Report New Hires Now,” to proceed to the Program homepage.

Through Secure File Transfer Protocol (SFTP) to the Pennsylvania Department of Labor & Industry server at https://dliftp.state.pa.us.

If interested in using SFTP, please notify the Pennsylvania New Hire Reporting Program by submitting an email to the Program at RA-LI-CWDS-NewHireSF@pa.gov, subject line: “SFTP Credentials – PA”.

Data File Format:

Data files must adhere to the layout specification for each respective file type listed at the Pennsylvania CareerLink^® website’s New Hire Reporting Program Information page. At that page, press “Examples and Instructions” under the “Choosing the Best Method for Reporting New Hires as a PA CareerLink^®-Registered Employer” section of the page, to view the data file specifications.

For more information on timely and secure new hire reporting, please visit www.pacareerlink.state.pa.us, or call the Pennsylvania New Hire Reporting Program at 1.888.724.4737 or 800-932-0211.

Do Your 2015 Federal Taxes for Free

Passing this along from our friends at the IRS -

Do Your Federal Taxes for Free

You can prepare and electronically file your federal taxes for free using IRS Free File. It is fast, safe and easy to use. IRS Free File does the hard work for you with either brand-name tax software or online fillable forms.

Here are six facts that you should know about Free File.

1. Free Options for All. If you make $62,000 or less – as do 70 percent of Americans – you can choose easy-to-use software to do your taxes and e-file for free. If you make more than $62,000 can use FreeFile Fillable Forms, the electronic version of IRS paper forms. Either way, it’s free.

2. Free File Does the Hard Work. IRS Free File is a partnership between the IRS and tax software manufacturers that make their products available for free. You don’t need to be a tax expert. The software will help find tax breaks you may be able to claim but might overlook, such as the EarnedIncome Tax Credit. The software asks the questions; you provide the answers. It will choose the right tax forms and do the math for you. Free File can also help with the healthcare law tax provisions.

3. Free File on IRS.gov. Access IRS Free File on IRS.gov/freefile to avoid any charges for preparing or e-filing your federal tax return. Once you choose a Free File company, you’ll go to their website to prepare, print and e-file your federal tax return.

4. All Forms and Schedules are Free. Whether you file Form 1040 EZ, Form 1040A or Form 1040, all are free. If you have a mortgage interest deduction, children in college or made money in the stock market, the Free File software will complete the forms and schedules you need.

5. Free Extensions. If you can’t make the April 18 deadline (April 19 if you live in Maine or Massachusetts), you can use Free File to request an automatic six-month extension. Making the request is easy and free through IRS Free File. Just look for “free extensions for anyone” in the company offers. Remember, this is a six-month extension of time to file your tax return, not to pay your tax. If you think you owe, make an estimated payment with your extension request. Tax software will help you make this payment, or you can view other paymentoptions at IRS.gov.

6. Use IRS E-file. Remember, the fastest way to get your refund is to combine e-file with directdeposit. If you owe taxes, you can e-file now and set up an automatic payment on any day until the due date. To view your payment options visit IRS.gov/payments.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your TaxpayerBill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

IRS YouTube Videos:

• Welcome to Free File - English

Tis the Season - Charitable Giving

"Freedom from Want", Norman Rockwell (1943)

Thanksgiving and Christmas both put people in the frame of mind for giving - for giving thanks for what they may be blessed to have, and giving to others who might not be as blessed this year.   And while generally those feelings are not tax-driven, certain gifts can be deductible, if you color within the lines drawn by the IRS and the tax code. In that spirit, I am passing along this week's IRS Tax Tips, with advice on charitable giving.  May it inspire you to give generously to those in need, now and throughout the year.

IRS Tax Tips for Deducting Gifts to Charity

The holiday season often prompts people to give money or property to charity. If you plan to give and want to claim a tax deduction, there are a few tips you should know before you give. For instance, you must itemize your deductions. Here are six more tips that you should keep in mind:

1. Give to qualified charities. You can only deduct gifts you give to a qualified charity. Use the IRS Select Check tool to see if the group you give to is qualified. You can deduct gifts to churches, synagogues, temples, mosques and government agencies. This is true even if Select Check does not list them in its database.

2. Keep a record of all cash gifts.  Gifts of money include those made in cash or by check, electronic funds transfer, credit card and payroll deduction. You must have a bank record or a written statement from the charity to deduct any gift of money on your tax return. This is true regardless of the amount of the gift. The statement must show the name of the charity and the date and amount of the contribution. Bank records include canceled checks, or bank, credit union and credit card statements. If you give by payroll deductions, you should retain a pay stub, a Form W-2 wage statement or other document from your employer. It must show the total amount withheld for charity, along with the pledge card showing the name of the charity.

3. Household goods must be in good condition.  Household items include furniture, furnishings, electronics, appliances and linens. These items must be in at least good-used condition to claim on your taxes. A deduction claimed of over $500 does not have to meet this standard if you include a qualified appraisal of the item with your tax return.

4. Additional records required.  You must get an acknowledgment from a charity for each deductible donation (either money or property) of $250 or more. Additional rules apply to the statement for gifts of that amount. This statement is in addition to the records required for deducting cash gifts. However, one statement with all of the required information may meet both requirements.

5. Year-end gifts.  Deduct contributions in the year you make them. If you charge your gift to a credit card before the end of the year it will count for 2015. This is true even if you don’t pay the credit card bill until 2016. Also, a check will count for 2015 as long as you mail it in 2015.

6. Special rules.  Special rules apply if you give a car, boat or airplane to charity. If you claim a deduction of more than $500 for a noncash contribution, you will need to file another form with your tax return. Use Form 8283, Noncash Charitable Contributions to report these gifts. For more on these rules, visit IRS.gov.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

Additional IRS Resources:

• Tax Topic 506, Charitable Contributions
• Publication 526, Charitable Contributions.
• Publication 561, Determining the Value of Donated Property
• Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes

Tis the season to file taxes!

Now that you've had time to digest your holly jolly holiday, you should be receiving your W-2 and 1099 statements from the IRS showing your income for 2014.  Time to start thinking about doing your tax returns.  There will be a new wrinkle this year as you need to report whether you have health insurance coverage or not; and if not, whether you you qualify for an exemption, or instead may have to pay a penalty; and then there will be a complex calculation of the penalty based on your particular circumstances.  Rather than trying to explain all of that in all its permutations, I am going to suggest, for you folks who still don't do your taxes online or with software, that you make this the year to E-file with the IRS.  And here is the IRS to explain the many reasons why this makes sense.

Top Five Reasons to E-file

Are you still using the old school method of doing your taxes? Do you still mail paper forms to the IRS? If so, make this the year you switch to a much faster and safer way of filing your taxes. Join the nearly 126 million taxpayers who used IRS e-file to file their taxes last year. Here are the top five reasons why you should file electronically too:

1. Accurate and easy.  IRS e-file is the best way to file an accurate tax return. The tax software that you use to e-file helps avoid mistakes by doing the math for you. It guides you every step of the way as you do your taxes. IRS e-file can also help with the new health care law tax provisions. The bottom line is that e-file is much easier than doing your taxes by hand and mailing paper tax forms. 

2. Convenient options.  You can buy commercial tax software to e-file or ask your tax preparer to e-file your tax return. You can also e-file through IRS Free File, the free tax preparation and e-file program available only on IRS.gov. You may qualify to have your taxes filed through the IRS Volunteer Income Tax Assistance or Tax Counseling for the Elderly programs. In general, VITA offers free tax preparation and e-file if you earned $53,000 or less. TCE offers help primarily to people who are age 60 or older.

3. Safe and secure.  IRS e-file meets strict security guidelines. It uses secure encryption technology to protect your tax return. The IRS has safely and securely processed more than 1.3 billion e-filed tax returns from individuals since the program began.

4. Faster refunds.  In most cases you get your refund faster when you e-file. That’s because there is nothing to mail and your return is virtually free of mistakes. The fastest way to get your refund is to combine e-file with direct deposit into your bank account. The IRS issues most refunds in less than 21 days.

5. Payment flexibility.  If you owe taxes, you can e-file early and set up an automatic payment on any day until the April 15 due date. You can pay electronically from your bank account. You can also pay by check, money order, debit or credit card. Visit IRS.gov/payments for more information.
If you found this Tax Tip helpful, please share it through your social media platforms. A great way to get tax information is to use IRS Social Media. You can also subscribe to IRS Tax Tips or any of our e-news subscriptions.

IRS YouTube Videos:

• Welcome to Free File – English

Estate Planning: Having the Conversation

When I was first practicing law in the 1980's, the term "estate planning" conjured up visions of lawyers in expensive suits and large offices sitting down with the DuPonts and the Pews and figuring out ways to keep their fortunes intact through the next ten generations.  Estate planning meant avoiding taxes through intricate schemes and legal gymnastics that most of the people I knew didn't need.  Today, the federal estate tax only applies to estates over $5,340,000 [as of 2014].  Only the wealthiest 2% of the population needs to be concerned with planning for federal taxes.  But I have lived more life since then, I have seen loved ones become ill and pass away, and I have gone to their homes and sorted through their things, and discovered more about what estate planning really means.  It is about planning, about organizing, about confronting your own mortality, and most of all about having "the Conversation". 

People shy away from thinking and talking about the various events of life that can change their day to day routine so quickly:  about accidents, illness and disease, aging and death.  They are events that we cannot control, but they are events that we can plan for.  Having the conversation starts with talking to yourself:  what is your contingency plan if you are hospitalized, if you have a lingering illness, if you cannot make your wishes known to your doctors and loved ones.  Who do you want to make those decisions when you can’t?  The law in its infinite wisdom provides the method for all of the people who do not plan for these events.  If you cannot take care of yourself, the law permits a guardian to be appointed, in a process involving lawyers, a judge, hearings, time and expense.  If you have not made your wishes known through a living will, then the law provides the same process:  lawyers, a judge, hearings, perhaps Congressional hearings and political battles as well (remember Terri Schiavo?), all to determine what you might have decided if you had been competent to decide the issue of your own life and death, and if you had taken the time to let your loved ones know your wishes.  A little thoughtful planning, a discussion with your family a little expense, and you can provide for these situations, you can decide the issues that only you should really decide, you can document them, and then you have done all you can.  You have bought a relatively inexpensive form of insurance for the situation.  But most important, you have had the conversation, first with yourself, and then with your loved ones.  You have made a plan.

Estate planning today means having a durable financial power of attorney that designates one or more trusted loved ones to take charge of your financial affairs when you are unable to do so.  It means having a living will - also called a medical directive - that expresses what you would want done if you are in an end-stage medical condition, and selecting the person or people who you want making those decisions when you can't.  It means having a will that provides for your loved ones and appoints the person you want to handle your affairs.  It means considering making gifts while you can enjoy the giving; checking to make sure your insurance beneficiary designations are up to date; putting your records together in one safe place, writing notes to explain your affairs, list your various passwords, and even attending to your genealogy, and putting the names of the people on the back of the old family pictures.  It means telling your loved ones that you love them, writing them letters to be opened when you are gone, and showing them how much you love them by the thoughtful way in which you have prepared for that day.  By having the conversation, first with yourself, and then with your loved ones, and then putting an estate plan in place, you do not ward off the events of life, but you have done everything in your power to prepare for them.  So start today, in the morning over coffee or tea, and have the conversation.

©2014  Douglas P. Humes

Doug Humes has been a practicing attorney in Pennsylvania since 1980.  He has experience in real estate, community, corporate and small business law, and estate planning.  In 2003, he opened his private general practice at the Millridge Manor House in Bryn Mawr, Pennsylvania.  Doug is also a Pennsylvania notary public and offers that service as an accommodation to clients and Millridge residents.  You can contact him at 610-525-7150, or via email at humeslaw@verizon.net).

MURDER? SUICIDE? BUYER BEWARE!

There is a murder/suicide in a home.  The home is later put up for sale.  Must the seller disclose to potential buyers that the tragedy took place in the home? 

To answer that question, some background is in order.  In the beginning, there was caveat emptor – Buyer Beware!  While the saying is written in Latin, it apparently did not come down from Roman law – but made its first appearance in about 1534 in English law, a case on horse trading, when Fitzherbert set down in his Boke of Husbandrie: "If he be tame and have ben rydden upon, then caveat emptor."  

The seller owns the merchandise or property being sold.  He knows all of its secrets.  If you are considering buying it, then you need to do your homework, ask questions, protect yourself in the legal document.  If the seller represents that something is true, then put this promise into a binding legal agreement.  If you want to find out about the property, create a period of time, a “due diligence” period, when you are granted access to the property, ask for records, talk to neighbors, have your inspector out there inspecting things.  Because once you have bought property, then you own it, warts and all.  The roof leaks?  The basement is wet?  Termite damage?  Once you have bought the property, you have bought those issues as well.  (With some exceptions – if the Seller has lied, or hidden items from you, that can change the result). 

This was a good workable rule for feudal and early American society. 

But as government has become more protective of its citizenry, it has passed more and more consumer protection laws such as implied warranty and disclosure laws that seek to level the playing field a bit.  In 1996, the Pennsylvania legislature followed the majority of states in adopting a seller disclosure law for real estate.  The law requires the disclosure of certain specific items, with a required form, and also reaches further to cover “material defects”, which are defined as:

“A problem with the property or any portion of it that would have a significant adverse impact on the value of the residential real property or that involves an unreasonable risk to people on the land.”

The law, even in its infinite wisdom, cannot conceive of every which way that human interaction can produce chaotic results.  And so we have trial courts to sort it all out in the first place, and then appellate courts, to decide what cases fall within and without of the broad lines that the legislature uses to sketch out the laws. 

So in 2014, what happens if there is a murder/suicide in a home?  Must that be disclosed to potential buyers?  

The Pennsylvania Supreme Court just addressed that subject.  A husband had killed his wife and then himself in the home, and the crime was well publicized.  Buyer No. 1 bought the house from the Estate, put in several thousand dollars of renovations, and then put the property up for sale.  When you sell a property, you need to fill out and give a Seller Disclosure form.  Buyer No. 1 asked the realtor, and an attorney, did this murder have to be disclosed?  Both did their homework, and found that there was no law in Pennsylvania on the subject.  The Seller did not disclose the murder.  Buyer No. 2, an out of state buyer, bought the property.  When she found out about the murder from her new neighbors, she sued the seller and the real estate agents. 

Disclosure of murder is not specifically covered by the Seller Disclosure law.  But it could conceivably be covered by the catchall provision if a court found that a murder was a “ … problem with the property or any portion of it that would have a significant adverse impact on the value of the residential real property …” 

In a thoughtful opinion, the court explored this issue and the larger issue - whether “psychological stigmas” are material defects in a property.  If a murder had to be disclosed, then the court asked “How would one treat other violent crimes such as rape, assault, home invasion, or child abuse? What if the killings were elsewhere, but the sadistic serial killer lived there? What if satanic rituals were performed in the house?” 

Requiring a seller to find out and disclose the entire realm of events that occurred in, or were associated with, the property, and that some people might find objectionable, would be too great a task for sellers.  The court concluded that “(t)he occurrence of a tragic event inside a house does not affect the quality of the real estate, which is what seller disclosure duties are intended to address.”  The unanimous court held that “… purely psychological stigmas are not material defects of property that sellers must disclose to buyers.”  

So now you know.  Buyer Beware! 

[To read the court’s full opinion, go here: http://www.pacourts.us/assets/opinions/Supreme/out/J-87-2013mo%20-%201018811082429662.pdf?cb=1 .]

For Sale by Owner (FSBO): Is this for you?

Combine a down economy and a slow real estate market, and some people who are ready to sell their home start thinking about saving money by doing it by themselves.  There are situations where that may be effective; and then there are situations where you may simply be wasting your time and simply delaying the inevitable call to a realtor.  What situations lend themselves to a "for sale by owner" (or FSBO) approach? 

A good full service realtor can provide you with a range of services.  They can come in and evaluate your home, give helpful suggestions on why a complete cleaning and a new coat of white paint may increase your value, give suggestions on cleaning, repairing and reducing clutter to make the home more attractive for sale.  When your home is ready for sale, they suggest an initial listing price and then list the home with the multiple listing service, and so your home is then "on the market" to the real estate community and their clients.  A realtor will provide additional marketing - brochures, open houses, working their contacts - to get traffic through your home.  They will provide you with the various forms that you need to fill out - the seller's disclosure, lead paint disclosure, and forms of agreements of sale and inspection addenda.  They will negotiate with the prospective buyer's agent.  They may pre-qualify prospective buyers so that they only bring qualified candidates to view your home.  When an agreement of sale is signed, they will put the buyer in touch with a title insurance company and a mortgage lender.  They will troubleshoot any inspection, title and mortgage issues.  They will help arrange for a settlement and help guide you through settlement.  And they only get paid at the end - at the successful closing - where the seller's agent and the buyer's agent will split what is typically a 6% commission.  If you sell your home for $400,000, then the commission that typically is paid in full from the seller's share of the proceeds, is $24,000.  The realtors in theory all work for the Seller, and so it is the Seller that bears the full responsibility to pay the commission. 

When you are embarking on a FSBO, you need to anticipate and provide for these types of tasks and services.  If you have a ready willing and able buyer lined up - if your child or grandchild wants to buy your house, or Cousin Sophie's boy, or the friend of a next door neighbor, and if you have agreed on a price, then you really don't need the marketing services that the realtor provides.  You simply need someone to help you through the various stops that get you from a handshake through an agreement, and then closing.  You can get those services for far less than the full 6% commission would cost you.  A lawyer will provide the documents and advice that you need at hourly rates.  The title company is a wonderful resource - once they are involved, they take care of the title search, and gather all the documentation needed to clear title for closing.  They typically draft the deed as well, and will run the closing and prepare the settlement sheet that allocates the various costs and expenses.  The mortgage lender does all of the document preparation for the transaction, and will in some cases send a representative to the closing to explain the various documents.  If you remember from closings that you have attended, the buyer must go through the stack of documents and sign them all; the seller simply sits there and waits for the money to change hands.  If you have good professionals involved, then the realtor's primary contribution to the transaction is the preparation and marketing.  Once an agreement is signed, the other professionals carry it to closing.  The buyer pays for title insurance.  The buyer pays for the mortgage and the loan documents.  In a sale transaction, once the fish is in the boat, the seller only needs to pay his or her attorney for the transaction costs.  You don't need the full services that a realtor can provide, at the full commission.

If you do not have a ready, willing and able buyer, then you need marketing.  You may try word of mouth or distributing home made brochures in your neighborhood, putting ads in newspapers, holding your own open houses, but a FSBO will not be as likely to attract traffic as a realtor's listing.  You are not in the multiple listing service used by all realtors.  The realtors will not bring their clients to your home - you are not offering to pay them and so it is not in their interests to steer their clients in your direction.  You may have the most wonderful house in the world at a bargain price, but you need to make that fact known to as many people as possible - and it is difficult to do without a realtor.  In a red-hot market or neighborhood, you may find that word of mouth will sell your house.  While it is nice to have the information on your listing in the hands of hundreds of realtors and thousands of prospective buyers, you really only need one buyer, and when you have the luxury of a seller's market, you may be able to find a buyer without a massive marketing campaign. 

The most recent entry into this field is of course online marketing and selling.  There are now online services that will assist a seller in marketing their property, and reaching the online audience in addition to whatever audience you reach with your own marketing efforts.  Time will tell whether these online services will completely replace the network of realtors as we know it today.  The realtors had a monopoly of sorts on the multiple listing service - it was their creation - to make listings available to the whole community of realtors.  But as with so many other areas of life, the internet can bypass the middleman and make the information directly available to the consumer who is looking for the information - complete with photos, or video tours, background information on taxes and insurance and the neighborhood and schools.   

As more and more people get used to buying online, more and more middlemen are cut out of the process.  We may gain in efficiency and cost, but we continue to lose the personal contact that came with having people from the community, such as the local banker and realtor, involved in the process.  That's the tradeoff that you face when you go FSBO:  you may save money under the right circumstances, but you do not have the realtor to call with questions and concerns.  But of course other professionals are available.  Including your friendly neighborhood attorney!

©2014  Douglas P. Humes

Doug Humes has been a practicing attorney in Pennsylvania since 1980.  He has experience in real estate, community, corporate and small business law, and estate planning.  In 2003, he opened his private general practice at the Millridge Manor House in Bryn Mawr, Pennsylvania.  Doug is also a Pennsylvania notary public and offers that service as an accommodation to clients and Millridge residents.  You can contact him at Suite 210,  Tel: 610-525-7150, or via email at humeslaw@verizon.net).