Tax Legislation & How It Could Affect Businesses in Maryland

In our April newsletter, we caught up all the latest updates on tax legislation that’s stirring debate across Maryland. This month, all eyes are on HB1515, a bill proposing some major changes to the state’s sales and use tax. Let’s dive in and unravel what’s brewing!

So what’s in the Pot? HB1515: Sales and Use Tax – Rate Reduction and Services
HB1515 isn’t just your average tax bill; it’s a hot pot of proposals aiming to shake up Maryland’s tax landscape. Here’s a quick rundown of what’s on the menu:Purposeful Alterations: The bill suggests altering the definitions of “taxable price” and “taxable service” to cover various new services. This means that services like accounting, legal, real estate, pet grooming, funerals and more could be fair game for taxation. Additionally, it aims to tweak the rate of the sales and use tax, along with adjusting the percentage of gross receipts from vending machine sales and dyed diesel fuel subject to tax. Oh, and let’s not forget about the rate of tax applied to charges linked with sales of alcoholic beverages. Phew, that’s a mouthful!Not Everyone’s Cup of Tea

 Proponents’ Pour: Sponsor David Moon (D-20) argues that HB1515 is more than just a tax tweak – it’s a “modernization of the economy”! The bill proposes lowering the state sales tax rate from 6% à 5% but also opens previously untaxed services to said taxation. Supporters claim that while this may result in a net loss of $1 billion in sales tax revenue, it could rake in a whopping $4 billion from taxing services, leaving us with a sweet $3 billion surplus. Some say it’s the much needed fix our tax system needs especially given current budget shortfalls.

 Opponents’ Brew: On the flip side, opponents are brewing up a storm. Del. Bob Long (R-06) had some fiery words in disapproval, claiming it’s just another way to empty his pockets, even in the afterlife (given the bill introduces the potential for funeral taxes)! The Maryland Republican Party didn’t hold back either, labeling it as an “everything tax” and predicting it to be the largest single tax increase in the state’s history. Indicating the bill’s controversial nature, Senate President Ferguson (D-46) also stood firm, claiming the bill won’t make it past the Senate gates.

So Sip or Spill? The Debate Continues

While proponents and opponents go head-to-head, the Maryland Chamber of Commerce is making its stance clear: they’re not raising a toast to HB1515. They argue that while lowering the state sales tax rate sounds delightful, expanding it to a wider range of services could leave a bitter taste in everyone’s mouths. From mom-and-pop shops to emerging companies, everyone could feel the pinch. They fear it could lead to an exodus of businesses and burden low-income Marylanders.

 

Compass Law is here to help your business navigate changes like this – even if this specific bill does not pass, there may be others like it, and we are here to help your business through it!
Posted in Law

Legislation Updates: Potential Impacts to Your Business Operations in 2024

As we dive into 2024, the legislative landscape surrounding employment and business in the Mid-Atlantic region is undergoing significant changes, with a plethora of bills introduced in both the Maryland General Assembly and the Delaware Legislature. With over 2,700 bills proposed in Maryland alone and hundreds in Delaware, the business community is poised for potential shifts that could affect operations and workforce management.
Maryland Bills:
Navigating the intricacies of these legislative changes can be daunting for businesses, but proactive measures can help mitigate risks and ensure compliance. Seeking guidance from legal experts at Compass Law, can provide invaluable support in understanding the implications of these legislative developments. We can help implement strategies to adapt to the evolving regulatory environment.Don’t wait until it’s too late—contact us now to schedule a consultation with Compass Law and safeguard your business against potential legal challenges.

Posted in Law

Is Estate Planning Missing from Your Vacation Preparations?

As the arrival of Spring slowly approaches, numerous families are busy finalizing their vacation plans. Amidst the excitement of planning the perfect getaway, there’s often one crucial aspect missing from the typical “To Do” list – estate planning. When traveling with your family, it’s essential to have your affairs in order in case of unforeseen events. Whether facing the unfortunate circumstances of death or disability, having a comprehensive estate plan ensures that your heirs have the necessary information to carry out your wishes. Without such a plan, you might find yourself (and family) subject to State law and, potentially, reliant on a judge who knows nothing about your unique situation.
   The foundational documents in an effective estate plan are:
  • Last Will and Testament
  • Financial Power of Attorney
  • Advance Medical Directive.

Despite the perception that creating an estate plan is a daunting task, the experienced attorneys at Compass Law Partners are here to guide you through the process. Our expertise ensures that your estate plan is not only completed, but also done in a timely manner.

As you gear up for your family vacation, take the time to consider the broader picture of your financial and medical well-being. A well-crafted estate plan is not just a legal formality but a crucial tool that safeguards your interests and ensures your loved ones are equipped to handle any unexpected twists that life may throw your way. Our dedicated team at Compass Law Partners are ready to assist you in this process, making sure your estate plan is not overlooked in the excitement of planning your dream vacation.

Click Here to complete your Advance Medical Directive!

New Year, New Goals: Advance Medical Directive

Compass Law has an easy check off your New Years’ Resolutions List:
Advance Medical Directives

January 1st rolls around and a new year’s resolution seems like a great idea. New Year, New You, right? But what happens when the winter drones on in March and you just want to nestle back into the couch with some cookies and cocoa. New You isn’t so exciting anymore…
But what if you could set a new year’s resolution that is an attainable goal from the beginning!?
The Resolution: Complete Your Advance Medical Directive.

Compass Law now has an EASY way to help you check this new year’s resolution box!

But first, what is it?
An Advance Medical Directive (AMD) is a legal document that allows you to designate a Medical Agent to make medical decisions for you in the event you are unable to make decisions for yourself. An AMD also allows you to express some medical treatment and end of life care preferences in the event you become unable to make or communicate those decisions yourself. This document is an important part of healthcare planning and is vital to have in place in preparation for situations where a person is incapacitated due to illness, injury, or cognitive decline.

Who is my Medical Agent?
Your Medical Agent, sometimes referred to as Healthcare Proxy, is the Primary Person(s) or Alternative Person(s) you designate to handle your medical decisions if you are unable to yourself. The alternative person(s) you designate steps into the role if your primary agent is unable or unwilling to act. A second alternative is preferred, but optional. It is important that you communicate your desires to your Medical Agent and Alternative Person(s).

How it works
Click the link below to fill out the Advance Medical Directive Form. This secure form will then be sent to our team at Compass Law via DocuSign. Once our team conducts a brief conflict check, an invoice will be sent and a consultation scheduled with our team of estate planning attorneys.

Our AMD service is billed as a flat rate!
Click here to get started!

Get Your Annual Business Physical Now to Ensure Good Corporate Health

Just like your personal health, your business requires regular checkups to ensure it’s operating in optimal condition and facing minimal risks.

Consider the following essential questions:

  • Have you held the required annual corporate meeting or prepared an annual resolution?
  • Have you updated your Employee Handbook?
    • Certain provisions can mitigate business liability.
  • Do you have an operating or stockholder agreement?
    • Has it been reviewed/updated for recent changes in law?
  • Does your business use Employee Agreements?
    • When were they last reviewed?
    • There have been federal/state law changes concerning non-competes & other restrictive covenants.
  • When was the last time your client contracts were reviewed?

Schedule your annual business physical today by reaching out to your local business law attorney, Rob Garagiola at RGaragiola@Compass-Law.com.

 

Ensure the Longevity of Your Business –Read More

Estate Planning: The Brady Bunch Edition

(To the tune of the Brady Bunch theme song)
Here’s the story, of two single parents
Who were bringing up their children separately
‘Til the one day when they met each other
And they formed a blended family

We all know the story of the Brady Bunch. What you didn’t see on the show, that happened behind the scenes, was how Carol and Mike planned for their blended family. Allow us to take some artistic license to explain to you how we think it went.

FADE IN: The scene starts with Carol meeting with her estate planning attorney, Mr. Wills, in his office furnished with mahogany furniture and decorated with orange and black large pill shape wallpaper.

Carol explains to Mr. Wills that she and Mike would like to get married but want to make sure their separate children are protected. Mr. Wills then explains that he can help her by preparing a prenuptial agreement. He also explains that Carol and Mike should consider keeping their finances separated and should execute an estate plan after their wedding. Concerned, Carol says that she loves Mike and doesn’t want to start their marriage off with arguments about finances. Mr. Wills explains that by putting a plan in place now, arguments can be avoided since important decisions are being made at a time when Carol and Mike are happy and rational, not when they are angry and irrational. Carol looks at the camera and says, “You’re right, Mr. Wills. My number one priority is protecting my daughters, and I am going to Mike tonight about the need for a prenuptial agreement and an estate plan.”

 

CUT TO: The kitchen in Mike’s house at 11222 Dilling Street, Studio City, CA
As Alice prepares dinner, Carol, looking concerned, tells Mike that she has something important to tell him. Mike then tells Carol that he has something important to tell her. They decide that they will say it at the same time. Both Mike and Carol then say together, “We need a prenup!”

CLOSE UP OF ALICE: Alice responds with, “Anyone offering a trip to Europe for the right answer?”

Carol says to Mike, “I just want to make sure my daughters are taken care of and I know we can work something out that we both agree to.” Mike agrees and holds Carol’s hand, “maybe we should keep our finances separate. We can create a joint account for family expenses, but we will maintain our assets separately.” Carol responds by saying, “That’s exactly what Mr. Wills told me! And we can then create an estate plan where we leave our own assets to our kids.” Mike cuts in, “I want to take care of you first, so I am going to have a trust created that will name you as the primary beneficiary with my sons as contingent beneficiaries.”

In the end, Carol and Mike created a loving environment for their blended family by discussing the difficult topics up front. Addressing your estate planning concerns prior to marriage with an experienced estate planning attorney expresses how much you love your spouse and respect that he/she has children of his/her own.

If you need an estate planning lawyer the attorneys at Compass Law Partners can help you in starting your blended family off right!

Maryland 529 Plan

Any parent or family member of a child probably knows that 529 plans can be powerful tax-advantaged tools for saving for educational expenses, especially those incurred in college. However, they can achieve some potentially helpful estate planning goals as well.

  1. Special rules allow for gifting into 529s up to five times the annual gift exclusion amount (this year, the yearly maximum is $17,000/person), so they can be particularly useful for people wanting to make larger gifts to loved ones who may have current or future educational expenses.
  2. Since owners of accounts can change beneficiaries among certain extended family members, they can develop pools of funds available for future generations of college students as well.
  3. Finally, as of 2024, new rules allow for up to $30,000 per beneficiary to be rolled over into Roth IRA for accounts that have been open for more than 15 years. Though we’re all waiting to see exactly how the new laws are applied, this adds flexibility for beneficiaries down the road.

Questions about how these accounts can help you achieve multiple goals for your family at once? Reach out to Compass Law and we’ll be happy to help.

 

https://mailchi.mp/compassadvocacy/compass-law-navigator-july-2023-9086552

Time To Revisit Employee Handbooks, Policies, & Agreements

There has recently been a slew of changes and new trends in Maryland employment law that require all businesses to revisit their employee handbooks, policies, and agreements. Below, we discuss recent labor law developments and how Compass Advocacy’s employment attorneys can help. 

  • Paid Family Medical Leave is coming to Maryland: The state is expected to announce employer/employee contribution rates to the system this October and contributions will be required 1-year later with benefits set to begin on January 1, 2026.
  • The Pregnant Workers Fairness Act: A federal law, this act took effect less than 2 months ago and requires certain businesses to provide “reasonable accommodations” to a worker’s known limitations related to pregnancy, childbirth, or related medical conditions.
  • Federal and State Governments are Moving to Ban Non-Competes: The Federal Trade Commission has proposed regulations curtailing non-competes and the National Labor Relations Board published a memo taking the position that non-compete agreements violate federal law in certain circumstances. In addition, many states, including Maryland and DC, have taken recent actions limiting non-compete agreements.

With these and other changes in employment law, and to limit potential liability, now is the time to revise your policies. Compass Law Partners’ Rob Garagiola (RGaragiola@Compass-Law.com) specializes in employment law and can help you navigate these policy changes and update your employee handbooks and agreements. Contact our employment and labor lawyers today. 

http://mailchi.mp/compassadvocacy/compass-law-navigator-august-2023-9085056

To Bequeath or Not to Bequeath: That is the question when it comes to vacation homes

For those who are lucky enough to own a vacation home, deciding what to do with that home after your death is often a quandary.  Do you leave it to your children, equally? Do you force its sale? Or do you leave it to a trust for the benefit of your descendants?

We, at Compass Law Partners, frequently have to advise on these issues so I will break down a few of the options, one at a time.


 

Leave Vacation Home Equally to your Children

This option, in my experience, is frequently where problems can arise.  After the inheritance, the children will expect equal contribution to the expense of the home but will frequently not utilize the home equally.  Perhaps one child lives in California and another is in Maryland.  If the vacation home is in Delaware, it is likely the child in Maryland will utilize the home much more. This could lead to resentment by the child in California who may still be expected to cover his/her share of the expenses.

A frequent attempt to settle this dispute is by having the Maryland child buy out the California child’s interest.  However, unless your Maryland child has the funding to do so, this is frequently not an option.  Instead, the only option may be to sell the property, which could then lead to resentment by the child in Maryland.  This potential to create resentment between/among your children is frequently why we typically recommend against this option.


 

Force the Sale of your Vacation Home

This is frequently the easiest option but may not be very popular with your children.  To avoid the potential for resentment between/among your children, requiring the sale of the vacation home after your death may be your best option, especially if the home is the most substantial part of your estate. Once the home is sold, the net proceeds from the sale can be divided equally among your children and, if desired, your child can use those proceeds to buy a vacation home of his/her own.

We frequently recommend this option for those clients who do not have other assets of significant value.


 

Leave the Vacation Home to a Trust for your Descendants

For clients who have significant assets other than their vacation home, we typically recommend the use of an irrevocable trust created after your death to hold the vacation home.  The home would held and maintained by a Trustee of your choosing (frequently an independent Trustee) and you would provide additional seed money to the trust to cover expenses for a period of years.  That way, your children and/or grandchildren are able to utilize the vacation home but do not have to contribute to its expenses for a period of time.

At the expiration of that period of time (or when the money runs out), the Trustee can decide whether to sell the property or to request money from the beneficiaries to maintain the property.  This option frequently creates the least amount of friction among children so clients, if they can provide additional funding to the trust, will frequently choose this option.  For clients with the ability fund a trust, we frequently recommend this option for their vacation home.

If you have a vacation home and are not sure how to leave it to your children, the attorneys at Compass Law Partners are here to help you.

 

Read More Here!

New Parent and Legal Documents: What You Need to Know

With Mother’s Day celebrations wrapping up and Father’s Day plans in the making, Compass Law has compiled a new parent checklist to assist new parents and remind current parents of the many forms you will want to have secured when your family expands.
Being a parent is tough – so let us help make it easier!
  • Will
    • Guardianship Document
  • Living Will (for those moms-to-be)
  • Trust
  • Advanced Medical Directive
  • Beneficiary change form
  • Changes to your IRA, 401k, life insurance
  • Life Insurance policy
  • Health insurance card
  • W4

 

Read More Here!

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