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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.
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.
Use of Deferred Prosecution Agreements In White Collar Investigations
This article discusses the practical and policy reasons for the use of DPAs and NPAs in white-collar criminal investigations, and considers the NDAA's new reporting provision and its relationship with other efforts to enhance transparency in DOJ decision-making.
How AI Has Affected PR
When we consider how the use of AI affects legal PR and communications, we have to look at it as an industrywide global phenomenon. A recent online conference provided an overview of the latest AI trends in public relations, and specifically, the impact of AI on communications. Here are some of the key points and takeaways from several of the speakers, who provided current best practices, tips, concerns and case studies.
New York's Latest Cybersecurity Commitment
On Aug. 9, 2023, Gov. Kathy Hochul introduced New York's inaugural comprehensive cybersecurity strategy. In sum, the plan aims to update government networks, bolster county-level digital defenses, and regulate critical infrastructure.