Pennsylvania Sales Tax Now Applies to Support, Maintenance and Updates of Canned Computer Software
Written by Joanne Murray
The Pennsylvania legislature recently enacted changes to the state sales tax code that affect computer software providers and their customers. These changes went into effect on August 1, 2016.
Under the Pennsylvania Tax Reform Code of 1971, a tax is imposed on the sale of “tangible personal property”, which is defined generally as “corporeal personal property” along with a non-exclusive list of various types of property. In 2010, the Pennsylvania Supreme Court held that the term “tangible personal property" includes canned computer software and that the licensing of such software is subject to the tax. In so holding, the Court rejected the argument made by the taxpayer (Philadelphia-based law firm Dechert LLP) that canned computer software consists of intangible intellectual property rights that are not subject to the tax. The Court noted, however, that fees paid by Dechert for software maintenance and support services did not represent the payment for the transfer of tangible personal property and were likely not taxable (though for whatever reason Dechert did not make the distinction and so it was not part of the Court’s holding).
The Pennsylvania General Assembly apparently disagreed with the Court’s categorization of maintenance and support. While the amendment in question was ostensibly intended to just capture digital downloads of property already subject to the tax (e.g., games, apps, video streaming, canned software, etc.), the language adopted by the legislature arguably broadens the scope of the tax. The definition of “tangible personal property” was modified to include video, books, apps, music, games, canned software, and other items “whether electronically or digitally delivered, streamed or accessed, whether purchased singly, by subscription or in any other manner, including maintenance, updates and support”. The highlighted language contradicts the Supreme Court’s commentary in Dechert that software maintenance and support, as services, are not subject to the tax. Nevertheless, the General Assembly has spoken and prudent software vendors should collect sales tax not only on the price of the canned software package itself, but also on digitally or electronically delivered maintenance, update and support services, at least until the interpretation of this provision is clarified by the Department or through the courts.
The Pennsylvania Department of Revenue has published a summary of this and other changes that are part of the recent amendment to the Pennsylvania tax code: http://www.revenue.pa.gov/GeneralTaxInformation/TaxLawPoliciesBulletinsNotices/Documents/State%20Tax%20Summary/2016_tax_summary.pdf
Marrying again? Is a prenuptial agreement right for you?
Written by Jessica A. Pritchard
The decision to remarry is not made lightly. Marrying a second time is oftentimes very different from a first marriage. Parties involved in a second marriage are likely to have assets and children from a prior relationship. Recalling the time, money and emotional energy spent during a divorce, friends and advisors might mention a prenuptial agreement. A well-drafted prenuptial agreement can protect these hard-earned valuables.
Is a prenuptial agreement right for you? It is if you want to avoid the aggravation and expense of litigating your future. Protect yourself.
A prenuptial agreement is a contract between persons who plan to marry. The agreement addresses how property is to be divided or the terms of support/alimony in the event of a divorce or the death of one of the parties. Executing an agreement before being married in order to address what will occur in the event of divorce is not romantic, but it is smart.
What can be expected? What needs to be done?
Once it is decided that a prenuptial agreement is appropriate, the first step is to contact an attorney well in advance of a wedding date. Presenting a prenuptial agreement to one’s fiancée on the eve of a wedding adds unnecessary pressure to an already stressful time.
Anticipate providing your attorney documentation of current assets, liabilities and sources of income. To ensure that an agreement's validity cannot be challenged at later date, the parties must disclose their current financial status. Prepare an outline of assets and liabilities and bring recent tax returns to your meeting to help make the process easier.
Partner
215-230-7500, ext. 150
gmontemuro@ammlaw.com
CONTACT CARDPractice Groups:
Bar Admissions:
- Pennsylvania, New Jersey, U.S. District Court for the Eastern District of Pennsylvania
Education:
- Villanova University School of Law, J.D., 2015
- Saint Joseph’s University, B.A. 2012
Rights of Dissenters under the Pa. Business Corporation Law
Written by Bill MacMinn
Reprinted with permission from the August 19, 2016 issue of The Legal Intelligencer. (c) 2016 ALM Media Properties. Further duplication without permission is prohibited.
The rights of shareholders to dissent to corporate actions are set forth in PA C.S.A. §1571 et seq., the Pennsylvania Business Corporation Law. Dissenters who comply with the formalities of the statute have the right to demand payment for the fair value of their stock interest at the time of the corporate action giving rise to the right to dissent – provided the corporate goes through with that action. Since a shareholder in a publicly traded company can simply sell his shares if he disagrees with a proposed corporate action, dissenters’ rights do not apply to such corporations.
What triggers dissenters’ rights?
The corporate actions giving rise to dissenter’s rights are specified in the BCL and generally involve fundamental changes to the entity, such as a merger or a change in voting rights. When the corporation proposes to undertake such a change, a specific procedure must be followed by the dissenting shareholder.
Dissenters need not necessarily assert their dissenters’ rights to all of their shares. They must, however, assert those rights as to “all the shares of the same class or series beneficially owned by any one person.” Beneficial owners of shares should have the written consent of the record holder of the shares. 15 PA C.S.A. §1573.
Dissenters must file their dissent with the corporation prior to the vote on the proposed corporate action. The dissent must be in writing and must include a demand for payment of the “fair value for his shares” if the corporation adopts the proposed action. Merely abstaining or voting against the change is not sufficient to invoke dissenters’ rights. Once invoked, to preserve dissenters’ rights, the shareholder cannot change the beneficial ownership of the shares while the vote is pending, nor can he vote in favor of the proposed action.
Antheil Maslow & MacMinn is very pleased to announce that a new Associate, Gabriel Montemuro, is joining our Litigation and Real Estate and Land Use practice groups. Gabe’s practice focuses on litigation, including commercial litigation, personal injury, estate and employment law. He represents clients regarding business disputes such as contract and employment issues, real estate litigation and fraud claims. Gabe also works with clients to provide assistance with land use and zoning issues such as land development approvals, variances, special exceptions and conditional use approvals. He represents parties in real estate purchases and sales, including agreements of sale, where he guides clients through the process to complete all obligations, responsibilities and contingencies to the agreement and provides oversight during the closing process.
Firm Partners Tom Donnelly and Jessica Pritchard attended Heritage Conservancy's Farm to Table Event at Manoff Market Gardens in New Hope on Saturday, August 6, 2016. Antheil Maslow & MacMinn was proud to be a sponsor of this event. Guests enjoyed a gourmet meal using farm-fresh and locally sourced ingredients. Manoff Market Gardens is an active farm that is situated on a 35 plus acre Heritage Conservancy owned and preserved property. This event highlights the importance of protecting our region's farmland.
You are invited to join us:
When: Sunday, September 11th: 12:30 – 3:00.
What: Antheil Maslow & MacMinn's Annual Client Appreciation BBQ.
Where: AMM's Doylestown Office, 131 West State St. Doylestown.
We hope you’ll join us for some great food and refreshments and enjoy a fun afternoon in the heart of Doylestown! This event includes a BBQ lunch and a front row seat to the Doylestown Arts Festival and Bike Race.
All of our clients and friends are welcome.
Your Client’s Email Account and the Attorney Client Privilege
Written by Thomas P. Donnelly
Reprinted with permission from the June 24, 2016 issue of The Legal Intelligencer. (c) 2016 ALM Media Properties. Further duplication without permission is prohibited.
The digital age and pervasive use of email communication gives rise to an entirely new and complex set of issues pertaining to the application of the attorney client privilege and the potential claim for waiver of that privilege. Many commentators have addressed the use of commercial email servers and the implications of the terms and conditions applicable to such email accounts citing the potential that emails transmitted through such accounts may not be secure or protected. The commercial provider’s right to use, retain or review the information communicated may impact on the privilege. Even more complex are the issues that arise when email communications pass between a lawyer and a client utilizing an email account provided to the employee by the employee’s employer, or using an employer provided computer. While the law on an employer’s right to review information passing through its computer systems is continuing to develop, the application of that law to potentially attorney client privileged communications is in its infancy. Research regarding the application of attorney client privilege to email communications exchanged through an employer’s email server reveals no case directly on point where the advice of counsel is sought regarding matters involving the employer.
Litigants seeking discovery of attorney client communications through an employer sponsored email account cite the principles developed in cases of inadvertent disclosure and the requirements for invoking the attorney client privilege. Pennsylvania law permits the invocation of the privilege if the communication relates to a fact of which the attorney was informed by his client, without the presence of strangers, for the purpose of securing either an opinion of law, legal services or assistance in a legal matter. Nationwide Mutual Ins. Co. v. Fleming, 924 A.2d 1259 (Pa.Super. 2007). In Carbis Walker, LLPv. Hill Barth and King, LLP, 930 A.2d 573 (Pa.Super.2007), the Superior Court adopted the five factor test to determine whether inadvertent disclosure amounted to a waiver of the attorney client privilege; (1) the reasonableness of the precautions taken to prevent inadvertent disclosure in view of the extent of the document production; (2) the number of inadvertent disclosures;(3) the extent of the disclosure;(4) the delay and measures taken to rectify the disclosure; and (5) whether the overriding interests of justice would or would not be served by relieving the party of its errors.
When your Divorce Decree is issued, there is still work to do!
Written by Elizabeth J. Fineman
Few experiences in life are as emotionally challenging as divorce. It is not surprising that clients may focus on the issuance of the Divorce Decree as the end of a very painful chapter in their lives. After all, as of the signing of the Divorce Decree, the parties are divorced, and the work is over. Unfortunately, in most cases, there is still important work to be accomplished even after the judge signs the Divorce Decree. Family law clients will have an easier time accepting this reality if they know in advance that the Divorce Decree is not the last step in their case.
There are many important matters that may remain outstanding when a Divorce Decree is issued, and some of the key factors are discussed here. Most divorce clients resolve the division of their assets by entering into a settlement agreement, or a judge issues an order resolving all claims related to the marriage. Those assets are then typically divided after the Divorce Decree is issued. Bank accounts are divided and closed. If there are retirement accounts to be transferred, there are very specific and time consuming rules to follow to transfer the retirement assets from one spouse or ex-spouse to the other. The retirement assets can take many months to divide which is understandably frustrating for clients. Mortgages on real estate may have to be refinanced and deeds transferred. While these procedures can be time consuming and frustrating to complete, clearly, they are critical to the future financial well-being of the parties involved, so perseverance and patience will pay off in the long run.
After those issues relating to marital property, claims and assets are resolved, there are still some items that we suggest clients accomplish after the Divorce Decree to ensure that they have all the legal documentation completed to address their needs post-divorce. A spouse may want to retake her maiden name. Also, we suggest that Wills and Powers of Attorney be updated so that the ex-spouse is no longer included in the Will or has Power of Attorney. Beneficiary designations should be updated for life insurance policies, retirement accounts and other assets as well. These are merely some of the items that may have to be accomplished post-Divorce Decree.
In order to have realistic expectations of the divorce process, it is important to understand from the start that everything is not finished when the judge signs the Divorce Decree. There is usually more work to be accomplished before the case is completed.
Jessica Pritchard will be honored by the YWCA Bucks County as a 2016 "Women Who Make a Difference" Awardee at the organization's 25th Annual Awards Celebration on May 12th. Ms. Pritchard is being recognized for her many personal, professional and volunteer activities which improve the lives of others and make Bucks County a great place to live.
Ms. Pritchard is an active member of several professional and charitable organizations. She previously served as the assistant solicitor for the Bucks County Department of Mental Health and Developmental Programs and as a member of the Bucks County Mental Health and Developmental Programs Advisory Board. As the mother of a child with special needs, Ms. Pritchard has an interest in the local human services community. She is also a former member of the Board of Directors at the Lenape Valley Foundation.
As a member of the Board of Directors of the Bucks County Bar Association, Ms. Pritchard serves as Secretary of the Association as well as chair of the Family Law Section. Ms. Pritchard provides pro bono family law services to disadvantaged members of the local community.
Ms. Pritchard represents military veterans free of charge through the Pennsylvania Bar Association's Lawyers Saluting veterans Program, which is coordinated through the Pro Bono Office and military Veterans' Affairs Committee. She serves as a member of the Board of Directors of the Duskin Stephens Foundation, which benefits the families of fallen veterans of Special Operations Forces.