|
Minimizing
Ohio Sales/Use Tax
By
Steven A.
Dimengo, JD, CPA, MT
 With
Ohio looking to its sales/use tax to bring in more revenue, now
is a good opportunity to confirm you are taking advantage of available
exemptions from the tax due on otherwise taxable property or services.
Exemptions from tax are available with respect to
a number of transactions, operations or items, including the following:
- property or the benefit of the service being resold;
- property used in manufacturing, processing, assembling, mining,
refining and reclamation;
- property used in the rendition of public utility services;
- packaging materials and equipment;
- food preparation;
- casual sales;
- property used in farming, agriculture, horticulture or floriculture;
- commercial fishing property;
- property used in production of magazines distributed as controlled
circulation publications;
- property used in graphic matter production;
- property used in highway transportation for hire;
- certain medical supplies and equipment;
- property used in egg preparation;
- capitalized research and development equipment;
- equipment used in certain warehouse or distribution centers;
- certain advertising materials used in making retail sales;
- property used to fulfill a warranty, maintenance or service
contract; and
- property used in generating, transmitting, or distributing
electricity for use by others.
Some of the exemptions have conditions associated
with them. If you think any may apply, please call us.
We would be happy to provide further guidance.
Steve Dimengo is a Shareholder and member of the
Taxation & Employee Benefits Section of the Business Law Practice
Group. He can be contacted at sdimengo@bdblaw.com
or 330.258.6460.
Whose Cost
Is It?
By
Joel H.
Mirman, Esq.
 A
recent decision in New York Federal District Court could have
expensive consequences for companies involved in a lawsuit. The
potential costs are related to the production of electronically
stored data when required as part of the discovery process.
In Zubulake v. UBS Warburg, 2003 WL 21087884
(S.D.N.Y. May 13, 2003), the Plaintiff was aware of additional
responsive e-mail, beyond what Defendant originally produced.
She therefore requested that the Defendant search its archival
media for "[a]ll documents concerning any communication by or
between UBS employees concerning Plaintiff." Defendant argued
that this type of electronic search would cause undue burden and
expense and requested that the court shift the cost to the Plaintiff.
In making this request, Defendant cited the decision in Rowe
Entertainment, Inc. v. The William Morris Agency, 205 F.R.D.
421 (S.D.N.Y. 2002).
In its decision in the Zubulake case, the
court modified the factors established in the Rowe case.
To avoid disproportionate cost shifting away from a large defendant,
the court modified the Rowe test by adding two factors
and removing one. The resulting factors are as follows:
- The extent to which the request is specifically tailored
to discover relevant information;
- The availability of such information from other sources;
- The total cost of production compared to the amount in controversy;
- The total cost of production compared to the resources available
to each party;
- The relative ability of each party to control costs and its
incentive to do so;
- The importance of the issue at stake in the litigation; and
- The relative benefits to the parties of obtaining the information.
These factors should not be weighted equally; the
court listed the most important first. Applying these new factors
in the Zubulake case, the court ordered the Defendant to
produce, and to pay for the cost of producing, all responsive
e-mail on its optical disks and active servers. In addition, Plaintiff
was allowed to select five backup tapes for review for relevant
e-mail. The court will perform the appropriate cost-shifting analysis
only after review of the back-up tapes and quantification of the
Defendant’s costs.
On the basis of the decision in the Zubulake
case, we recommend that companies carefully consider how they
store their data. Plan ahead to minimize any production costs
that may arise during the discovery process of a potential lawsuit.
Joel Mirman is a Shareholder and a member of the
Litigation Practice Group. He can be contacted at jmirman@bdblaw.com
or 614.227.4264.
Can I Fulfill
Disclosure Requirements By Mailing A Disk To A Prospective Franchisee?
By
Robert J.
Newbold, Esq.
 Our
franchisor clients face strict guidelines for complying with
the Federal Trade Commission rules on proper disclosure to a
prospective franchisee. Typically, the disclosure process
was done at a personal, face-to-face meeting between the intended
purchaser of a franchise and the company/franchisor. With
the popularity of the Internet, many of our clients are posing
the question of disclosure through the Internet.
The current FTC Franchise Rule does not directly
address advertising or Internet activities. The FTC’s
Notice of Proposed Rulemaking to amend the FTC Franchise Rule
(“Proposed Franchise Rule”), on the other hand, has a forward-thinking
provision addressing Electronic Disclosure Documents.
FTC Advisory Opinion
In an advisory opinion issued in 1997, the FTC
addressed the issue of whether a franchisor could comply with
the FTC Franchise Rule by delivering a disclosure document via
computer diskette. While recognizing that a computer diskette
containing a word processing form of the disclosures could be
as clear, concise and legible as a hard copy and could save
money for the franchisor, the FTC expressed concern about potential
harm to prospective franchisees if they could not review the
disclosures easily and fully. The FTC said a franchisor
could satisfy the Franchise Rule by delivering a computer diskette
only if six conditions were met.
First,
the prospective franchisee had to have the option
to decline receiving the disclosure document via a computer
diskette.
Second,
the franchisor had to disclose the computer system
and word processing format used to create the electronic version.
Third,
if he determines later within a reasonable time
that he cannot readily review the disclosures, then the prospective
franchisee must be able to obtain a hard-copy version.
Fourth,
the face of the computer diskette should identify
the franchisor and the issuance date of the disclosure document.
Fifth,
the face of the diskette should identify the subject
matter of the diskette, together with a notice taken from the
cover page “INFORMATION FOR PROSPECTIVE FRANCHISEES REQUIRED
BY THE FEDERAL TRADE COMMISSION.”
Sixth,
each diskette should state its chronological number
and the total number of diskettes.
FTC Internet Notice
On May 6, 1998, the FTC published a request for
public comments in the Federal Register entitled “Interpretation
of Rules and Guides for Electronic Media” (“FTC Internet Notice”).
The FTC proposed to issue a policy statement regarding the applicability
of the rules and guides to new forms of electronic media, such
as e-mail, CD-ROMs and the Internet.
The proposed policy statement would clarify (1)
that rules and guides that apply to representations generally
without reference to, or limitation on, the medium used to disseminate
them apply equally to electronic media representations, and
(2) that rules and guides that specify how or where representations
are disseminated are broad enough to apply to electronic media
representations.
Proposed Franchise Rule
The proposed Franchise Rule provisions build on
and expand the advisory opinion. Proposed Section 436.7
sets forth instructions that will enable franchisors to comply
with the disclosure obligations of the FTC Franchise Rule electronically.
According to the FTC, the proposed FTC Rule provision has:
two new, modest requirements: (1) that franchisors
using electronic media provide prospective franchisees with
a paper summary document containing an expanded cover page,
table of contents, and acknowledgment of receipt, and (2) that
franchisors retain a specimen hard copy of each materially different
version of their disclosures.
Proposed Section 436.7(a) requires the franchisor
to obtain the prospective franchisee’s express consent to accept
the disclosures in an electronic format and that prospective
franchisees always have the right to obtain a paper disclosure
document from a franchise seller up until the time of sale.
The FTC says it is concerned that fraudulent operations will
gravitate toward electronic media as a new way to avoid pre-sale
disclosure. The FTC says it expects the franchisor to
disclose in advance the medium used to furnish its disclosures
(such as computer disks, CD-ROM, E-mail or Internet) and any
specific applications (e.g., Windows 95 or DOS or a particular
Internet browser) necessary to view the disclosures. Because
the FTC is concerned about fraud, franchisors must allow traditional
paper copies to remain available as an option up until the time
of sale. The FTC wants the prospective franchisee to be
able to easily read a disclosure document.
To ensure that prospective franchisees know they
can get a paper copy, Section 436.3(g) of the proposed FTC Rule
requires franchisors using electronic disclosure to add a statement
to their cover page alerting prospective franchises receiving
an electronic version that they have a right to obtain a paper
copy:
You may have elected to receive an electronic
version of your disclosure document. If so, you may wish
to print or download the disclosure document for future reference.
You have the right to receive a paper copy of the disclosure
document up until the time of sale. To obtain a paper
copy, contact [name] at [address] and [telephone number].
Deviating from the FTC’s advisory opinion, Section
436.7(b) of the proposed FTC Rule requires a franchisor to provide
a paper summary document containing only three items: (1) the
cover page, (2) the table of contents, and (3) two copies of
the Item 23 receipt, with instructions to acknowledge receipt
through a signature. The FTC believes this will serve
two anti-fraud purposes: (1) advance notice of the information
being disclosed, and (2) proof of receipt. The FTC further
believes the paper summary document would alert prospective
franchisees to the fact that they should receive disclosures
and will have 14 days to review them. The paper summary document
would also give the franchisor’s Internet address and information
on how to get a paper copy.
Robert J. Newbold is a Shareholder and member
the Franchise Section of the Business Law Practice Groups.
He can be contacted at rnewbold@bdblaw.com
or 330.491.5258.
 Congratulations
to Thomas
A. Hess, Esq. of Buckingham ColumbusSM,
who has been appointed by Governor Bob Taft, to serve a second
three year term to the Board of Examiners of Nursing Home Administrators.
His term will expire in May 2006.
Save the Date for these Upcoming Presentations:
On July 16, 2003,
Mark D. Frasure and
Christopher S. Humphrey (Buckingham CantonSM)
will be speaking on “Medical Records Documentation” at
“Grand Rounds” at Akron General Medical Center in Akron, Ohio.
Please contact William Gardner for additional information at 330-384-6643.
On July 14, 2003,
Phylip J. Divine (Buckingham AkronSM)
will give a presentation on “Estate Planning” sponsored
by the Golden Buckeyes at the Middlebranch Grace Brethren Church.
Please contact the church office at 330.499.6691 for additional
information.
On August 26, 2003,
Gerald B. Chattman,
David L. Drechsler,
Natalie F. Grubb,
Douglas Paul,
John P. Slagter (Buckingham ClevelandSM),
and
David J. Hrina (Buckingham AkronSM)
will be presenting at the “Homeland Security Great Lakes Region
Conference 2003.” Please visit
www.scaa-spill.org or contact Mark Shay at
marcs@scaa-spill.org for additional information.
Steven A. Dimengo (Buckingham AkronSM)
will be a presenter at the following:
August 19, 2003, Lorman Educational Services
Continuing Education Services Seminar in Beachwood, Ohio.
His topic will be “Sales and Use Tax for Manufacturers.”
Please contact Lorman Educational Services for additional
information at www.lorman.com
or 888.678.5565.
October 20-21, 2003, The Ohio Society of
Certified Public Accountants 2003 Federal Tax Planning Symposium
– “Ohio Sales/Use Tax: Recent Trends, Development and
Planning Opportunities.” Please contact The Ohio Society
of CPA’s at
www.ohioscpa.com for additional
information.
October 29, 2003, the University of Akron
Tax Conference - “Ohio Sales/Use Tax: Recent Trends,
Development and Planning Opportunities.”
November 18, 2003, Lorman Educational Services
Continuing Education Services Seminar in Cleveland, Ohio.
His topic will be “Tax Issues Facing Small Businesses.”
Please contact Lorman Educational Services for additional
information at www.lorman.com
or 888.678.5565.
On September 25, 2003,
Phylip J. Divine (Buckingham AkronSM)
will be a presenter at the National Business Institute sponsored
“Adoption Law in Ohio.” Please contact the National Business
Institute for additional information at
www.nbi-sems.com or 800.930.6182.
Out
and About – Recent Presentations:
Business Practice Group
Candace Campbell Jackson (Buckingham ClevelandSM)
gave a presentation at the Cleveland Bar Association Seminar
titled “Representing Nonprofits” in Cleveland, Ohio.
Employment
Law Practice Group
Gerald B. Chattman (Buckingham ClevelandSM)
spoke on "The Provider Perspective on Managing Risks"
at the Consortium Against Adult Abuse sponsored by the Western
Reserve Area Agency On Aging in Cleveland, Ohio.
Health Law Practice Group
Donald
A. Antrim (Buckingham ColumbusSM)
presented “Malpractice Crisis and the Tort Reform:
As it affects the delivery of Eyecare Services” at a seminar
sponsored by Columbus Ophthalmology Associates and Anadem Publishing
on Hot Topics in Eyecare.
Litigation Practice Group
William
B. Leahy (Buckingham ClevelandSM)
was a presenter at the United States District Court, Northern
District of Ohio course for mediators.
Real Estate & Construction Law Practice Group
Robert
A. Hager,
John P. Slagter (Buckingham ClevelandSM),
and
David W. Woodburn (Buckingham AkronSM)
were presenters at the Buckingham Annual Real Estate &
Construction Law Seminar held in Akron, Ohio. Their topics
were “Fairness in Contracting Act: ‘Level the Playing
Field,’” “Legal Strategies for Real Property Tax,” and “Case
Law Update.”
Robert A. Hager (Buckingham ClevelandSM)
presented “Litigation of Liens” at the Ohio State
Bar Association sponsored seminar titled “Real Estate Litigation”
in Cleveland, Ohio.
Donald B. Leach, Jr. (Buckingham ColumbusSM)
presented “Liens and Encumbrances Affecting Real Estate” on
behalf of the Ohio State Bar Association Continuing Legal Education
Institute in Columbus, Ohio. He also spoke on “The How’s
and Why’s of Paperwork” at the Ohio’s Mechanics’ Lien Law
Seminar sponsored by The Builders Exchange of Central Ohio.
Craig B. Paynter (Buckingham ColumbusSM)
gave a presentation titled “Litigation of Liens” at
the Ohio State Bar Association in Columbus, Ohio.
John P. Slagter (Buckingham ClevelandSM)
spoke at Boundary Law in Ohio, sponsored by the National Business
Institute. His topics were “Water Boundaries, Ethics,
and Handling Right-of-Way Problems.”
Trusts & Estates Practice Group
Jeffrey
A. Halm (Buckingham CantonSM)
presented at the North Canton Medical Clinic Foundation on
“Risk Management and Asset Protection Planning.”
If you are interested in obtaining information on upcoming seminars
or would be interested in having speakers from Buckingham, Doolittle
& Burroughs, LLP make a presentation to your organization,
please contact: Lorna Henderson, Senior Marketing Coordinator
lhenderson@bdblaw.com
or 800.686.2825 ext. 473.
At BDB we are always improving our processes so that we operate
efficiently and effectively. Please let us know how you like our
new broadcast format. E-mail: bdb@bdblaw.com
Phone: 330.258.6473 Fax: 330.252.5473.
Thank you.
|
