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UPCOMING EVENTS
September 12-16, 2008
Martin B. Ellis will present "Community Banking in the 21st Century - Whither Thou Goest - and Why?" at the Pennsylvania Association of Community Bankers' 131st Annual Convention at Charleston Place in Charleston, South Carolina.
October 21, 2008
The firm's annual Human Resources Seminar will be held at the West Shore Country Club in Camp Hill, Pennsylvania. The program will feature presentations by firm attorneys, as well as expert consultants from Conrad Siegel Actuaries and Bright Tree Consulting Group, LLC. Primary topics will include employment law case and regulatory developments; the Genetic Information Nondiscrimination Act and new Family and Medical Leave Act regulations; state and federal wage and hour law hazards; employee practices liability and minimizing exposure to claims; immigration law I-9 system transformation, e-verification and impact on employers; H-1B professional visa system strategies; tax-favored health plan design, operation and compliance; highlights of recent retirement and welfare plan benefits cases and significant regulations; and putting together the elements for effective teams in the workplace. For more information or to make a reservation, contact Joanna Koch at 717-848-5134.
RECENT EVENTS
Reg Evans was named chairperson of the Banking Committee of the Pennsylvania Bar Association Business Law Section at its annual meeting in June.
Keith Clark presented "The Impact of Change on Financial Service Organizations" before the 2008 Pennsylvania Association of Community Bankers Spring Directors' Conference at the Hershey Hotel in Hershey, Pennsylvania on June 5.
On June 6, Keith Clark moderated a regulators' panel comprising representatives from the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the Federal Reserve, the FDIC and the Pennsylvania Department of Banking at the 2008 Pennsylvania Association of Community Bankers Spring Directors' Conference at the Hershey Hotel.
For the Annual Meeting of Members, First Monetary Mutual Limited, at the Fairmont Southampton in Bermuda on June 10, Keith Clark presented "The Impact of Change on Current Risk Management Issues."
On August 15, Ashley M. Galloway presented "Immigration Law Issues for the Small Firm Practitioner" at the Pennsylvania Bar Institute's seminar, Law Practice Management and Development Institute: Strategic Solutions for Solo to Mid-Size Firms.
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Offices
Camp Hill
3425 Simpson Ferry Road Camp Hill, PA 17011 Telephone: 717.763.1121 Facsimile: 717.763.7419
Towson
40 W. Chesapeake Avenue Towson, MD 21204 Telephone: 410.825.5223 Facsimile: 410.825.5426
York
1 East Market Street York, PA 17401 Telephone: 717.848.5134 Facsimile: 717.848.5125
Email
mail@shumakerwilliams.com
Website
www.shumakerwilliams.com
Editor
David J. Ledermann
Editorial Staff
Michele Connor
Publishing/Layout
Jeffrey A. Lee
We believe that providing our clients with timely information on developments in the law will enable them to make effective business decisions. We have dedicated ourselves to providing our clients with current information. This newsletter serves as one vehicle of promptly reporting to our clients. It is provided at no cost and outside of any professional relationship with a person, entity or file. The information contained in this newsletter is merely the opinions and thoughts of the authors and does not, in any way, constitute legal or professional advice.
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 Final Deadline For Section 409A Amendments Fast Approaching By David J. Ledermann
Employment contracts, bonus plans, deferred compensation plans, long-term incentive plans, director deferred fee agreements, change in control agreements, supplemental executive retirement plans, severance plans, consulting agreements, split-dollar life insurance, stock option plans and other arrangements under which an employee or other service provider is deemed to have a deferral of taxable income, should be promptly reviewed for compliance with Internal Revenue Code Section 409A. This advice pertains even if the arrangement was previously reviewed and amended for compliance prior to issuance of the final Treasury Regulations under Section 409A on April 10, 2007. Previous amendments, while appropriately adopted to satisfy the "good faith" compliance requirements under then existing IRS guidance may not contain provisions necessitated by the final regulations. Affected arrangements must be amended by December 31, 2008.
With limited exceptions (e.g., qualified retirement plans), Section 409A covers arrangements that provide for the deferral of compensation. In general, deferral involves delaying the receipt of payment until a tax reporting period later than the one in which compensation was earned. Virtually any type of compensation arrangement, including one embodied in an ordinary employment contract, may be subject to the stringent requirements and potentially punitive sanctions of Section 409A. If the arrangement fails to comply, the compensation will be presently includible in income (whether or not it has been paid) and will be subject to an additional excise tax of 20 percent, plus interest on the amount involved from the date the arrangement first failed to comply with the statute. Complete Article
 The "Collision" Between Banking and Bankruptcy Law:
Check Kiting and the Preference Problem
By Martin B. Ellis
In the world of modern banking, most banks give customers same-day or next-day availability for both local and non-local check deposits. The vast majority of these "provisional" credits are finalized by the ultimate collection of the checks which gave rise to them. The ability to write checks against such provisional credits gives a shrewd bank depositor free use of someone else's money. Viewed most charitably, this would be deemed aggressive cash management. However, it also gives a dishonest customer the opportunity to write checks against non-existent deposits. When done systematically and fraudulently, prosecutors call this criminal check kiting. The potential losses that a bank may suffer from a check kiter can soar, literally from hundreds of thousands to millions of dollars, in short order. A very bad situation indeed.
To make matters worse, in common check kiting scenarios, what often follows discovery of the check kite is the check kiter's voluntary or involuntary bankruptcy, which leads inevitably to the discovery by the debtor's trustee in bankruptcy that the involved banks have made themselves partially or fully whole through application of good funds deposits to the respective accounts of the debtor. This situation gives rise to the "collision" between banking and bankruptcy law.
 Real Estate in an IRA -
A Potential Transfer Tax Trap
By Steven J. Koehler
Holding real property in an Individual Retirement Account has always presented issues and challenges for account owners of IRAs. The Internal Revenue Code provisions establishing and governing IRAs contain at least two hurdles to IRA real property ownership. First, an individual can make only cash contributions to an IRA - real property cannot be contributed to the account. Second, the "Prohibited Transaction" rules under the Code (Section 4975(c)) effectively prohibit a great number of transactions where IRA funds are used to invest in or acquire real property. In general, these rules prohibit an IRA investment in real property that is owned - or beneficially owned - by the owner of the IRA. That being said, with sound advice and careful navigation of the federal tax code, it is possible to hold real property in an Individual Retirement Account. The challenges don't end with the federal tax laws, however - as made clear by a recent ruling by the Pennsylvania Department of Revenue.
On May 2, 2008, The Office of Chief Counsel of the Pennsylvania Department of Revenue issued a Letter Ruling concluding that Pennsylvania Realty Transfer Tax was to be imposed in connection with the recordation of a deed merely evidencing a change in the custodian of an IRA that held real property. Pennsylvania Realty Transfer Tax is a tax imposed on the value of real property transferred, payable upon the presentation of the deed for recording. The tax is imposed generally at the rate of 2% (4% in Pittsburgh and Philadelphia) of the actual consideration or price of the property represented in the deed. When the deed has no consideration stated or the transaction is not at arm's-length - as was the case in the IRA custodian substitution - the tax is imposed on the property's actual monetary worth computed through use of assessed value adjusted to market value.
Complete Article
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