The Internal Revenue Service has announced the 2024 cost of living adjustments to various limits. The adjusted amounts generally apply for plan years beginning in 2024. Some of the adjusted amounts, however, apply to calendar year 2024. Please click for a printer-friendly version of the table below.
Beginning November 1st, 2023, employers completing the employment eligibility verification process must now utilize the revised Form I-9, dated 08/01/2023. All prior versions of Form I-9 will no longer be accepted, and use of a prior Form I-9 may subject employers to penalties. The revised form includes the following updates:
U.S. Citizenship and Immigration Services (USCIS) published a Notice of Proposed Rulemaking (“proposed rule”) which would modernize the H-1B specialty occupation worker program, while also reducing misuse and fraud. Specifically, the proposed rule would allow an individual who has a registration submitted on their behalf only one entry into the selection process, even if multiple registrations are submitted on their behalf.
Overall, this proposed rule would:
1. Streamline eligibility requirements:
Revise the criteria and definition for “specialty occupation” positions for H-1B purposes, to reduce confusion and to clarify that a position may allow for a range of academic degrees (so long as these are related to the role). Improve program efficiency:
Codifies that adjudicators generally should defer to a prior determination if the same candidate/employment was previously approved by the agency (so long as no material facts have changed at the time of a new filing).
2. Provide greater benefits and flexibility for employers and workers:
3. Strengthen integrity measures:
The 60-day public comment period for the proposed rule will be accepted through December 22nd, 2023. It is expected that the resulting regulations will be implemented in the coming months.
Please contact your Varnum immigration attorney with any questions.
Congress passed the Corporate Transparency Act (CTA) in January 2021 to provide law enforcement agencies with further tools to combat financial crime and fraud. The CTA requires certain legal entities (each, a “reporting company”) to report, if no exemption is available, specific information about themselves, certain of their individual owners and managers (“beneficial owners”), and certain individuals involved in their formation (“company applicants”) to the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of Treasury.
In certain states, including Florida and Michigan, condominium and homeowner associations are commonplace. Such associations are “reporting companies” under the CTA, and there may not be an exemption for them.
Management firms that assist and manage such associations are also “reporting companies” under the CTA, and unless they qualify for a “large operating company” exemption based on their employee numbers and revenue, there may be no exemption available for these entities.
These associations and other reporting companies formed on or after January 1, 2024 will need to comply with the CTA’s new reporting requirements in 2024, and those companies in existence before January 1, 2024 will have to file an initial report on or before January 1, 2025.
The required disclosures include:
Reporting companies will also be required to file updated reports within 30 days of any change to the reported information and must promptly correct any inaccuracies in their disclosure to avoid penalties.
Community association managers, boards of directors and management firms should prepare now and familiarize themselves with the CTA’s new reporting requirements, as fines of $500 per day can be levied for failure to timely comply with the new reporting requirements. Criminal penalties (including imprisonment) are also available to regulators in certain circumstances, including where a person willfully fails to file the required reports.
Varnum’s Corporate Transparency Act Taskforce of attorneys and other professionals can assist you. Our CTA Taskforce recently published an advisory explaining the CTA reporting requirements, and we are hosting a complimentary webinar on Wednesday, November 8 to address the requirements in further detail.
Please contact your Varnum attorney or any member of Varnum’s CTA Taskforce if you have any questions about how the Corporate Transparency Act may impact you.
The Federal Trade Commission (FTC) recently updated its Guides Concerning Use of Endorsements and Testimonials in Advertising (Guidelines). There has not been an update to the Guidelines since 2009, before TikTok even existed and Facebook was still the hip new kid on the block.
Clearly, a lot has changed since then, and being aware of and understanding the updates to these Guidelines is crucial for companies, influencers, brand ambassadors, and marketing professionals who engage in influencer marketing campaigns. The Guidelines take into account the evolving nature of influencer marketing and provide more specific guidance on how influencers can make clear and conspicuous disclosures to their followers. This summary provides a basic overview of the key changes and important points to consider in the wake of the updated Guidelines.
Anyone who has access to the internet is aware that social media influencer marketing has been a rapidly growing industry over the past decade, and the FTC recognizes the need for adequate transparency concerning this area of marketing to protect consumers from deceptive advertising practices.
The general aim of the updated Guidelines is to ensure consumers can clearly identify when a social media post, blog post, video, or other similar media is sponsored or contains affiliate links. The updated Guidelines seek to develop or make clear guidance concerning specifically: (1) who is considered an endorser; (2) what is considered an “endorsement”; (3) who can be liable for a deceptive endorsement; (4) what is considered “clear and conspicuous” for purposes of disclosure; (5) practices of consumer reviews; and (6) when and how paid or material connections need to be disclosed.
The FTC takes non-compliance with these guidelines seriously and can impose significant fines and penalties on brands, marketers, and influencers who fail to make proper disclosures. Significantly, the updated Guidelines make it clear that influencers who fail to make proper disclosures may be personally liable to consumers who are misled by their endorsements. Furthermore, brands and marketers may also be held responsible for ensuring that influencers with whom they have paid relationships adhere to these guidelines.
Bear in mind, the Guidelines themselves are not the law, but they serve as a vital guide to avoid breaking it. Overall, the updated Guidelines on influencer disclosures emphasize transparency and consumer protection. To stay compliant and maintain consumer trust, it is imperative that all parties involved in influencer marketing familiarize themselves with these Guidelines and ensure that disclosures are clear, conspicuous, and consistently made in every relevant post or video. Furthermore, as this marketing industry continues to develop and evolve, it will be increasingly important to monitor ongoing developments and changes in the FTC guidelines to stay current with best practices.
If you would like assistance re-examining your advertising materials and practices or to discuss best practices in implementing a complete compliance program and/or policies for endorsements, reviews, or influencers, do not hesitate to get in touch with a Varnum attorney.
Employer interest in providing assistance with student loans and educational benefits is on the rise. Until now, the benefits have been limited and the rules burdensome, but recent changes may make these options worthwhile to more employers, especially those in competitive markets and who are seeking to attract or retain employees with larger student debt or aspirations for additional education.
After the CARES Act and SECURE 2.0, employers have two options for assisting employees with student loan payments: educational assistance programs and student loan payment matches in retirement plans. Through an educational assistance program, employers can contribute up to $5,250 of student loans per employee without the benefit being subject to income tax. Several requirements must be met to obtain the tax benefits, including:
Employee benefit service providers are increasingly offering payment, verification, and notice services with respect to student loan assistance programs, which can help employers administer these benefits. Outsourcing these services reduces the administrative burden on employers, and can also help employers avoid seeing sensitive personal information they would not otherwise receive.
Educational assistance programs can not only provide student loan repayment, but can also directly pay for certain education expenses for employees seeking further education or training. Regardless of the use, the same $5,250 limit applies and so do the requirements to receive the tax benefits (except only certain types of education expenses, rather than certain student loans, can be paid). Having flexibility to provide tax-favored educational opportunity or student loan repayment can help employers attract and retain employees and provide a more competitive compensation package.
A recent change to qualified plan rules may also be of interest to employers looking to help employees with student loans. Beginning in plan years starting on or after January 1, 2024, employers with defined contribution retirement plans (such as 401(k) or 403(b) plans) can choose to count certain student loan payments as contributions for purposes of matching contributions or elective deferrals for safe harbor plans. Even though no contribution in the amount of the student loan payment is made to the plan, the student loan payment is treated as a contribution, allowing a matching contribution to be made. Employers are permitted to rely on self-certification about the amount of student loans paid by the employee. The definition of student loan is also generous – but not all encompassing – even including some student loans of an employee’s spouse and dependents. Many questions are still outstanding about administrative and legal requirements.
Employers who choose to make this optional feature available should coordinate with their administrator to ensure consistent and compliant application as well as with legal counsel to assist with some of the more technical aspects. If an employer wants to implement the change, it is important that the plan documents be properly and timely amended.
Employer-provided student loan repayment and educational training benefits can be a boon to businesses of almost any size and sector. If you are interested in learning more, please contact a member of Varnum’s employee benefits team.
To give law enforcement additional tools to fight financial crime and fraud, Congress passed the Corporate Transparency Act (CTA). The CTA requires certain legal entities (each, a “reporting company”) to report, if no exemption is available, specific information about themselves, certain of their individual owners and managers (“beneficial owners”), and certain individuals involved in their formation (“company applicants”) to the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of Treasury.
As the first of three rulemakings required by the CTA, FinCEN issued the Beneficial Ownership Information Reporting Requirements final rule (BOI Rule) on September 30, 2022. More recently, FinCEN released a Small Entity Compliance Guide and a list of Frequently Asked Questions, both of which FinCEN has continued to update. FinCEN intends to issue additional materials and guidance.
The BOI Rule imposes new and significant reporting burdens on affected companies. As a business owner or manager, you may need to prepare now.
An entity is classified as a “reporting company” if it is any of the following and does not qualify for a specific exemption:
Whether trusts and partnerships qualify as “reporting companies” depend on statutes, regulations and procedures of the state or tribe under whose laws they were formed.
A reporting company is exempt only if it falls into one of twenty-three prescribed exemptions, including SEC reporting companies, insurance companies, financial institutions, broker-dealers, investment companies and advisers, and other publicly registered entities.
Exemptions of particular interest to privately held companies include:
Additionally, there is a three-pronged exemption for tax-exempt entities. Specifically, the following types of tax-exempt entities are exempt from the CTA’s reporting requirements:
The first prong encompasses all IRC 501(c) organizations, including most charities, schools and other educational institutions, churches and other religious organizations, private foundations, social welfare organizations, labor organizations, trade associations, chambers of commerce, and social clubs. Notably, this prong applies without regard to whether the qualifying organization has filed an application for recognition of tax-exempt status pursuant to IRC 508(a).
Keep in mind, however, that other types of tax-exempt entities exist but fall outside the exemption from the CTA’s reporting requirements. For example, homeowner associations, including condominium associations, covered by IRC 528 are not exempt from these requirements.
Note that if a reporting company is relying on an exemption and subsequently loses that exemption, it must file a report to stay compliant within 30 days of the loss of the exemption. However, if a qualifying tax-exempt entity loses its IRC 501(c) status, the organization has a 180-day grace period during which it will continue to be deemed an IRC 501(c) organization solely for purposes of the exemption.
Importantly, there is no separate exemption for holding companies – FinCEN expressly declined to provide for one. For example, if a large operating company is owned by an entity that does not qualify for a prescribed exemption and is a reporting company, the parent (or holding company) will need to file BOI Reports even though its subsidiary (the large operating company) does not.
FinCEN also clarified that a parent company may not file a single BOI Report on behalf of its group of companies – each reporting company that is not exempt must file its own report. Therefore, it is imperative to assess each legal entity within an affiliated group for CTA purposes.
A nonexempt reporting company must submit to FinCEN a report (a “BOI Report”) containing specific information about itself and each of its beneficial owners and certain company applicants:
Reporting companies created or registered to do business in the United States prior to January 1, 2024 are exempt from the requirement to provide disclosure with respect to company applicants.
A “beneficial owner” is any individual who, directly or indirectly, (1) owns or controls at least 25 percent of the ownership interests of the reporting company or (2) exercises substantial control over the reporting company.
An individual’s ownership interest in the reporting company will be determined by examining ownership of equity, stock or voting rights; capital or profits interests; convertible instruments (as converted); options or privileges (as exercised); and any other instrument, contract, arrangement, understanding, relationship or mechanism used to establish ownership. Reporting companies will need to “look through” ownership interests held by intermediary companies to identify the individuals who beneficially own such interests. Special rules apply to interests held by trusts.
An individual may exercise substantial control over the reporting company if such person is:
Any individual holding the position or exercising the authority of a president, chief financial officer, general counsel, chief executive officer or chief operating officer is a “senior officer.” On the other hand, whether an individual serving on the board of directors (or equivalent body) exercises substantial control over the reporting company is a question that must be analyzed under the above criteria on a director-by-director basis.
Among other areas of concern, it may be challenging for a reporting company to identify the individuals with substantial influence over important decisions of the reporting company. Importantly, “substantial control” is determined independently from the “ownership interests” determination. FinCEN expressly contemplates a situation where a reporting company is structured such that multiple individuals (e.g., LLC members) exercise “essentially equal authority” over important decisions, in which case each such individual likely has substantial influence even though no single individual directs or determines them.
There is no limit to the number of beneficial owners of each reporting company that may be subject to reporting requirements under the BOI Rule.
A “company applicant” is:
In no event will a reporting company have more than two company applicants.
Yes, and this aspect of the BOI Rule will require active monitoring of relevant information. Reporting companies will be required to report any change in the information required to be reported within 30 days after the date on which the change becomes effective. Changes that may require an updated BOI Report include:
Companies that fail to submit timely updates may be subject to criminal and civil penalties. Liability extends to senior officers, as well as those who willfully cause a company not to file a required BOI Report or to report incomplete or false information to FinCEN.
FinCEN has clarified that a mere change to the “type” of ownership interest held by a beneficial owner (e.g., conversion of preferred stock to common stock) will not require an updated BOI Report because the type of ownership interest is not information that is required to be reported.
BOI Reports must be completed and submitted to FinCEN via online portal that remains under development, referred to as the Beneficial Ownership Secure System (BOSS). FinCEN has reported that information collected and stored on BOSS will not be publicly available or subject to public information requests and will be securely maintained.
Reporting companies may submit information to BOSS directly or via third-party service provider.
When a filing is made, the reporting company must certify that its report is true, correct, and complete. FinCEN has noted its expectation that reporting companies will “verify” the information they receive from their beneficial owners and company applicants before reporting it to FinCEN.
Persons who fail to meet these new reporting requirements or who engage in unauthorized disclosure of reported information may be subject to civil or criminal penalties:
If a person voluntarily submits a report correcting inaccurate information within 90 days of the deadline for the original report, the person may benefit from a safe harbor from penalty. However, the willful failure to report complete or updated beneficial ownership information to FinCEN, or the willful provision of or attempt to provide false or fraudulent beneficial ownership information, is not protected by the safe harbor. Note that senior officers of an entity that fails to file a required BOI report may be held accountable.
For example, according to FinCEN, providing false or fraudulent beneficial ownership information could include providing false identifying information about an individual identified in a BOI report, such as by providing a copy of a fraudulent identifying document.
Additionally, if an individual who qualifies as a beneficial owner or a company applicant refuses to provide required information, or if such an individual provides false information to a company knowing that information is meant to be reported to FinCEN, that person may be held accountable.
Get organized – make sure you have your company’s current capitalization table, governing documents, and equity and debt documents. You will need to account for contractual rights of control and ownership, in addition to outstanding ownership interests.
Make a plan – if your company is subject to the reporting requirements, you will need to consider how to collect the required information from direct and any indirect owners and others. You will also need to continuously monitor for changes that may trigger reporting requirements. Companies with complex beneficial ownership structures may want to designate a CTA compliance officer.
Reach out to Varnum – contact your Varnum attorney or any member of Varnum’s CTA Taskforce to learn more and for assistance with:
By engaging Varnum, you will also receive updates on any rule changes or newly issued guidance, as well as other developments that may affect the timing and scope of CTA reporting requirements.
Companies may also consult FinCEN’s BOI website at www.fincen.gov/boi for additional information, including its Small Entity Compliance Guide and list of Frequently Asked Questions.
Please contact your Varnum attorney or any member of Varnum’s CTA Taskforce if you have any questions about how the Corporate Transparency Act may impact you or your business.
Originally published on October 4, 2023. Revised on December 13, 2023.
When considering a divorce, most people dread the thought of paying support to an ex-spouse in the wake of a dissolved marriage. Conversely, a spouse may dread the thought of not receiving enough support from their former economic partner. The truth is that spousal support is raised as an issue in nearly every case. Some cases warrant a comprehensive analysis of the issue while in others, the issue can be dismissed rather quickly. In all cases, it’s critical to have a skilled attorney assist you with navigating the various pitfalls.
In its simplest form, alimony can be explained as a balance between what a spouse needs versus what the opposing spouse is able to pay. To assist with finding this equilibrium, most practitioners consider a software program that is designed to produce guidelines. The guidelines act as a tool to begin the discussion, which is then further refined after considering the eleven factors derived from caselaw:
It’s important to understand that while the courts are bound by considering the factors above, the parties are free to negotiate without using judicial resources. One of the more influential variables in the negotiation phase is the amount of property awarded to the parties. It is well established that a property award can shift the framework of a monthly obligation and duration of payments. However, one party should not be required to dissipate a property award to support themselves.
While the concept of support may sound dreadful, it can be a useful tool to amicably untangle you from your spouse. Let the Family Law Team at Varnum assist you with a tailored strategy that best suits your circumstances.
On August 29, 2023, the Biden administration’s U.S. Environmental Protection Agency (EPA) and Army Corps of Engineers unveiled a final rule poised to reshape environmental regulations. This rule, in alignment with the Supreme Court’s May verdict in Sackett v. EPA, redefines “waters of the United States” under the Clean Water Act (CWA), affecting wetlands nationwide. Under this ruling, agencies face more stringent criteria when determining jurisdiction over wetlands. (Please see Varnum’s May 31, 2023 Advisory).
To conform with the Court’s Sackett decision, the EPA amended its definition of “adjacent” to apply to only adjacent wetlands “having a continuous surface connection” with a “waters of the United States.” Worth noting, the EPA also struck keywords from its prior “adjacent” definition like “bordering, contiguous, or neighboring” wetlands—further demonstrating that only wetlands having a continuous surface connection with a “waters of the United States” are under federal jurisdiction.
Some commentators have suggested that the new rule falls short of Sackett’s requirements. The new “adjacent” definition does not speak to a wetland’s geographic proximity to a “waters of the United States” (WOTUS). As a result, any wetland with a “continuous surface connection” to a WOTUS could be governed by the CWA, even if the “adjacent” wetland was miles away with some hydrologic surface connection. This does not appear to be Sackett’s intention.
Additionally, the amended rule no longer uses the prior “significant nexus” test—which analyzed whether wetlands “significantly affect the chemical, physical, and biological integrity” of a covered water—when considering if a body of water is regulated by the CWA.
This rule sets the stage for a contentious debate between environmental advocacy groups and states advocating for stringent regulation, and business interests and states favoring industry-friendly policies. However, given the EPA’s need to conform its rule with the Sackett decision, the agency has explained that the new WOTUS rule will not go through the typical federal Administrative Procedures Act’s procedures (like notice and public comment).
For more information about the EPA’s new WOTUS rule, or wetland regulation contact a member of Varnum’s Environmental Law Practice Team.
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