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CA Tells Franchisees to Withhold 7% from Franchisor Royalties
On the heels of the New York State Department of Taxation and Finance's recent move to require annual information returns from franchisors to help the state catch New York franchisees who underreport sales taxes, the California Franchise Tax Board (the “FTB”) recently told California franchisees to begin withholding 7% of all lease and royalty payments to out-of-state franchisors (“Nonresident Franchisors”) that exceed $1,500 per calendar year. In a Sept. 24, 2009 memorandum, the FTB explained franchisee withholding responsibilities and directed California franchisees to begin paying withheld amounts to the state if their Nonresident Franchisor is not qualified to do business in California.
The FTB's directive is straightforward, but there is more than meets the eye. California's apparent goal is to induce all Nonresident Franchisors to qualify to do business in California and begin filing state income tax returns. Nonresident Franchisors, forced to choose between qualifying to do business in California or accepting a 7% withholding of fees by their California franchisees, are scrambling to figure out which option leaves them better off. Not surprisingly, franchise organizations, like the International Franchise Association, are openly questioning the FTB's authority to impose the unorthodox withholding requirement.
Why So Many Great Lawyers Stink at Business Development and What Law Firms Are Doing About It
Why is it that those who are best skilled at advocating for others are ill-equipped at advocating for their own skills and what to do about it?
Bankruptcy Sales: Finding a Diamond In the Rough
There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.
The DOJ's Corporate Enforcement Policy: One Year Later
The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.
A Lawyer's System for Active Reading
Active reading comprises many daily tasks lawyers engage in, including highlighting, annotating, note taking, comparing and searching texts. It demands more than flipping or turning pages.
Risks of “Baseball Arbitration” in Resolving Real Estate Disputes
“Baseball arbitration” refers to the process used in Major League Baseball in which if an eligible player's representative and the club ownership cannot reach a compensation agreement through negotiation, each party enters a final submission and during a formal hearing each side — player and management — presents its case and then the designated panel of arbitrators chooses one of the salary bids with no other result being allowed. This method has become increasingly popular even beyond the sport of baseball.