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Mann Law, P.C. Attorneys at Law
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Thoughtful Guidance From Skilled Attorneys
Thoughtful Guidance From Skilled Attorneys

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END OF YEAR DIVORCE PLANNING
Do you have a divorce pending as a lawyer or a party? If your divorce is eligible to be final before the end of the year do not forget to consider the income tax implications of the date of the divorce. Also, remember that courts may not be open the full day or at all on December 31 or that the court may be busy and not be able to get to last-second filings.
The IRS website states,
"The IRS offers these seven facts to help you choose the best filing status for you.
1. Marital Status. Your marital status on the last day of the year is your marital status for the entire year.
2. If You Have a Choice. If more than one filing status fits you, choose the one that allows you to pay the lowest taxes.
3. Single Filing Status. Single filing status generally applies if you are not married, divorced, or legally separated according to state law.
4. Married Filing Jointly. A married couple may file a return together using the Married Filing Jointly status. If your spouse died during 2012, you usually may still file a joint return for that year.
5. Married Filing Separately. If a married couple decides to file their returns separately, each person’s filing status would generally be Married Filing Separately.
6. Head of Household. The Head of Household status generally applies if you are not married and have paid more than half the cost of maintaining a home for yourself and a qualifying person.
7. Qualifying Widow(er) with Dependent Child. This status may apply if your spouse died during 2010 or 2011, you have a dependent child and you meet certain other conditions."


Look at paragraphs one (1) and three (3). Paragraph three (3) is not as simple as it looks as the IRS may require state law to meet certain standards for the term "separated" and it does not mean you just do not live together. You should consult a Certified Public Accountant (CPA) to verify your situation.

If your divorce is final by December 31, will you have a higher or lower tax bracket? If you are not divorced by December 31, how will the refund or tax liability be handled? Who gets the exemptions for any children and will you qualify for head of household as described in paragraph 6? These decisions could mean thousands of dollars difference in your tax liability and should be given consideration.

For an interactive tool to check your tax status click here.

Prepared by Richard A. Mann of Mann Law, P.C. Attorneys at Law, www.rmannlawoffice.com
Follow us on Facebook: https://www.facebook.com/RAMattorneys?ref=hl
Follow us on Twitter: https://twitter.com/RAMattorneys
Follow our blog: http://ramlawoffice.blogspot.com/

This blog does not constitute legal advice nor does it establish an attorney client relationship. This is for general information purposes as in most legal situations the facts and terms of an agreement between the parties can affect the result.

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Indiana Lawyers have been asking me about the forms required by the new e-file rules. For some there are not official rules. I have drafted some and also explained some new requirements of the new rules see http://ramlawoffice.blogspot.com/2016/06/new-indiana-e-file-rules-put-more.html
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Megan Gehring of our office recognized by the Indianapolis Bar Association with the Silver Badge for Pro Bono Service
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YOUR CHILD’S MENTAL HEALTH RECORDS
MAY BE OPEN TO OTHER SIDE IN CUSTODY BATTLE

The Indiana Court of Appeals in Meridian Health Services Corporation v. Thomas Martin Bell just ruled that a provision of Indiana Law that allows a mental health professional to deny the patient access to his or her records does not apply to a parent obtaining those records.
This was a custody and parenting time case where Father was seeking access to the child’s mental health records. The counselor in this case obtained a letter from a medical doctor stating that it was “medically necessary that the records of [the child's] therapy sessions not be released to her parents.” The doctor and counselor took the position that I.C. 16-39-2-4 prevented the release of the records based upon the providers’ opinions.
The counselor failed to appear at a deposition and produce the records as Meridian Health had filed a motion to quash the subpoena 3 days before the deposition. The court had not yet ruled on the motion to quash. After which father filed a motion for rule to show cause and the court held a hearing on all pending motions. The court denied Meridian's motion to quash and for a protective order and father subpoenaed the counselor for deposition again. The counselor again failed to appear at the deposition with the records and Meridian then filed the records with the court and asked the court to hold them under seal pursuant to Indiana Administrative Rule 9(G)(2). The trial court ordered that the attorneys could review the records in camera but subsequently ordered that the counsel could copy the records.
On appeal Meridian argued that 16-39-2-4 supported the refusal to deny the release of records and if not then the release was prevented by HIPPA. The Court of Appeals found under HIPPA there are 3 exceptions to the general rule that health care providers may release records to the parents and that none of the exceptions applied. The court went on to find that 16-39-2-4 only applies to a provider's denial of access to records to the patient and a parent has access to the records unless there is a court order limiting such. The trial court ordered that Meridian pay attorneys’ fees and found that the Father should not have had to file the various legal pleadings to obtain the records as he was allowed those records under Indiana law but that he was not to disclose the information to the child. The court of appeals affirmed the trial court.
It has commonly been believed by many in the mental health community and the legal community that Meridian’s position was correct as far as the release of the records. In advising clients who are parents or providers, counsel should read this case carefully and review the citied material in the case as while the Father was given the records in this case there may be other ways hinted at in the opinion to protect the information if that is your client’s position.
In affirming the award of attorneys' fees the court referenced the trial court’s finding about Meridian filing of the motion to quash shortly before the deposition and then not appearing for the deposition when the court had not granted or ruled upon the motion. The court made clear that the counselor was required to appear and put their objection on the record. You cannot simply choose to ignore the subpoena without court order.
Prepared by Richard A. Mann of Richard A. Mann, P.C. Attorneys at Law, www.rmannlawoffice.com

Follow us on Facebook: https://www.facebook.com/RAMattorneys?ref=hl
Follow us on Twitter: https://twitter.com/RAMattorneys
Follow our blog: http://ramlawoffice.blogspot.com/

This blog does not constitute legal advice nor does it establish an attorney client relationship. This is for general information purposes as in most legal situations the facts and terms of an agreement between the parties can affect the result.
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ARE YOU THINKING ABOUT FILING FOR DIVORCE?
IF SO, TIME IS RUNNING OUT BEFORE THE END OF YEAR AND THERE ARE TAX CONSEQUENCES

Under Indiana law there is what is commonly known as a mandatory waiting period after the filing before a divorce can be final. (The legal term is dissolution of marriage but for this article the term divorce is used). Pursuant to I.C. 31-15-2-10, "in an action for a dissolution of marriage ... a final hearing shall be conducted not earlier than sixty (60) days after the filing of the petition."
The last court day of this year is December 29, 2016. During the holidays, courts are addressing emergencies and other matters, so a non-contested divorce may be pushed aside until after the beginning of the year. Therefore, your last reasonable date to file for divorce and this means file with the court is October 21, 2016. Many people think the 60 days starts when you see a lawyer to start your divorce, it does not. October 21, 2016. This assumes you will have an agreed divorce. Otherwise, depending upon the issues and the court involved, it may be too late to file the divorce and have it finalized before the end of the year.
While Indiana law allows bifurcation of the divorce versus the other issues, see IC 31-15-2-14, most courts will not grant a bifurcated divorce without agreement of the parties, and many courts will not grant a bifurcated divorce at all, especially if children are involved. Further, your spouse may not agree as a matter of strategy especially if you are the higher income earner.
Now you might ask, what does it matter?
The IRS website states,
"The IRS offers these seven facts to help you choose the best filing status for you.

1. Marital Status. Your marital status on the last day of the year is your marital status for the entire year.
2. If You Have a Choice. If more than one filing status fits you, choose the one that allows you to pay the lowest taxes.
3. Single Filing Status. Single filing status generally applies if you are not married, divorced, or legally separated according to state law.
4. Married Filing Jointly. A married couple may file a return together using the Married Filing Jointly status. If your spouse died during 2012[6], you usually may still file a joint return for that year. Dates have not been updated on the IRS website.

5. Married Filing Separately. If a married couple decides to file their returns separately, each person’s filing status would generally be Married Filing Separately.
6. Head of Household. The Head of Household status generally applies if you are not married and have paid more than half the cost of maintaining a home for yourself and a qualifying person.
7. Qualifying Widow(er) with Dependent Child. This status may apply if your spouse died during 2010[4] or 2011[5], you have a dependent child and you meet certain other conditions." Dates have not been updated on the IRS website.

Look at paragraphs one (1) and three (3). Paragraph three (3) is not as simple as it looks as the IRS may require state law to meet certain standards for the term "separated" and it does not mean you just do not live together. You should consult a Certified Public Accountant (CPA) to verify your situation.
If your divorce is final by December 31 (this year December 29), will you be in a higher or lower tax bracket? If you are not divorced by December 31 (this year December 29), how will the refund or tax liability be handled? Who gets the exemptions for any children and will you qualify for head of household as described in paragraph 6? These decisions could mean thousands of dollars difference in your tax liability and should be given consideration. The IRS has not published the schedules for 2016; however, to obtain an idea of the affect upon you check out the interactive tool offered by the IRS for 2015.
Prepared by Richard A. Mann of Richard A. Mann, P.C. Attorneys at Law, www.rmannlawoffice.com
Follow us on Facebook: https://www.facebook.com/RAMattorneys?ref=hl
Follow us on Twitter: https://twitter.com/RAMattorneys
Follow our blog: http://ramlawoffice.blogspot.com/
This blog does not constitute legal advice nor does it establish an attorney client relationship. This is for general information purposes as in most legal situations the facts and terms of an agreement between the parties can affect the result.
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Indiana Supreme Court Issues Ruling on Grandparent Visitation
In its recent case In Re the Visitation of L-A.D.W., the Indiana Supreme Court overturned the Court of Appeals reversal as to the amount of grandparent visitation granted, and in doing so upheld the trial court's order including 24 total overnights a year and weekly evening visits. In this case both the Court of Appeals and Supreme Court upheld the trial court's order that grandparent visitation should be granted and the analysis focused on the amount of time awarded. The court agreed with the Court of Appeals that no set standard for "occasional, temporary visitation" has previously been determined, but found that the trial court did not abuse its discretion in the instant case regarding the amount of grandparent visitation ordered. The Court of Appeals had cited a case in which less visitation was ordered than the instant case and was found to be an abuse of discretion. However, the Supreme Court made clear that the amount of visitation which is appropriate will vary case by case and must be determined by the specific facts of each case, giving substantial deference to the trial court in determining the amount. The court emphasized that each case will have different facts so a strict standard for the amount of visitation would not be appropriate. Furthermore, while the Parenting Time Guidelines cannot be the basis for the amount of visitation, it is not an abuse of discretion merely because an order resembles the guideline schedule. The court gives substantial deference to the trial court and its determination of a grandparent visitation award that does not substantially infringe on the parent's right to determine their child's upbringing.
In Indiana a grandparent may seek visitation in three instances: 1) the child's parent is deceased, 2) the marriage of the child's parents has been dissolved in Indiana, or 3) the child was born out of wedlock (except that paternity must be established for paternal grandparents to be granted visitation). A parent has a constitutional right to control their child's upbringing; therefore, while a court may grant grandparent visitation if it is in the child's best interests, the court begins with the presumption that a fit parent's decision is in the child's best interests. The court must enter findings which address the presumption that a fit parent acts in the child's best interests, the special weight given to a fit parent's decision to limit or deny such visitation, whether such visitation is in the child's best interests, and whether such visitation has been denied by the parent or merely limited. Parents or grandparents with a grandparent visitation matter should consult with a family law attorney about the legal issues and specific facts of their case.
Prepared by Megan L. Gehring of Richard A. Mann, P.C. Attorneys at Law, www.rmannlawoffice.com
Follow us on Facebook: https://www.facebook.com/RAMattorneys?ref=hl
Follow us on Twitter: https://twitter.com/RAMattorneys
Follow our blog: http://ramlawoffice.blogspot.com/
This blog does not constitute legal advice nor does it establish an attorney client relationship. This is for general information purposes as in most legal situations the facts and terms of an agreement between the parties can affect the result.
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EMPLOYEE OR INDEPENDENT CONTRACTOR
(Or will you pay twice or more)

Many businesses are trying to avoid having employees due to the many regulations, penalties, governmental mandates and what they perceive as costly taxes and insurance. Is this a trap you are setting for yourself? Say you run a small law firm and you have a part time secretary, paralegal or assistant. (If not a law firm insert your business i.e. roofer, electrician, butcher, baker, or candle-stick maker) What if that person also works elsewhere? Is that person an employee or independent contractor? You should first look to the IRS for guidance. When doing so you will find it is not a simple search. The IRS has 4 categories 1) independent contractor, 2) employee (they call a common law employee), 3) statutory employee, and 4) a statutory nonemployee.

1. Independent contractor. (click on links to access reference material) People such as doctors, dentists, veterinarians, lawyers, accountants, contractors, subcontractors, public stenographers, or auctioneers who are in an independent trade, business, or profession in which they offer their services to the general public are generally independent contractors. However, whether these people are independent contractors or employees depends on the facts in each case. The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. The earnings of a person who is working as an independent contractor are subject to Self-Employment Tax.
2. Employee (common law employee). Under common-law rules, anyone who performs services for you is your employee if you can control what will be done and how it will be done. The following 3 factors are also considered Behavioral Control, Financial Control and Relationship of the Parties. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed. Say you have a secretary, roofer, part-time baker etc. who you control their hours of work, where they work, and how they perform the job. This person is an employee.
3. Statutory employee. If workers are independent contractors under the common law rules, such workers may nevertheless be treated as employees by statute (statutory employees) for certain employment tax purposes if they fall within any one of the following four categories and meet the three conditions described under Social Security and Medicare taxes:
i. A driver who distributes beverages (other than milk) or meat, vegetable, fruit, or bakery products; or who picks up and delivers laundry or dry cleaning, if the driver is your agent or is paid on commission.
ii. A full-time life insurance sales agent whose principal business activity is selling life insurance or annuity contracts, or both, primarily for one life insurance company.
iii. An individual who works at home on materials or goods that you supply and that must be returned to you or to a person you name, if you also furnish specifications for the work to be done.
iv. A full-time traveling or city salesperson who works on your behalf and turns in orders to you from wholesalers, retailers, contractors, or operators of hotels, restaurants, or other similar establishments. The goods sold must be merchandise for resale or supplies for use in the buyer’s business operation. The work performed for you must be the salesperson's principal business activity.

You should consider whether 3 (i) above includes a person who does your typing or research at home or elsewhere? Does it include a candle-stick maker who works from their garage for you or a baker who works from their kitchen for you

Withhold Social Security and Medicare taxes from the wages of statutory employees if all three of the following conditions apply:
• The service contract states or implies that substantially all the services are to be performed personally by them.
• They do not have a substantial investment in the equipment and property used to perform the services (other than an investment in transportation facilities).
• The services are performed on a continuing basis for the same payer.

?
4. Statutory nonemployee. There are three categories of statutory nonemployees: direct sellers, licensed real estate agents and certain companion sitters. Direct sellers and licensed real estate agents are treated as self-employed for all Federal tax purposes, including income and employment taxes, if:
• Substantially all payments for their services as direct sellers or real estate agents are directly related to sales or other output, rather than to the number of hours worked; and
• Their services are performed under a written contract providing that they will not be treated as employees for Federal tax purposes.

Now you may ask: Why should I care? You might think "my employee/independent contractor will not turn me in as they are not paying taxes anyway and we are in a friendly relationship." Have you heard of whistle blower statutes? One of the biggest causes of IRS audits is from disgruntled associates, employees, and ex-spouses. The IRS Whistleblower –Informant Award program offers rewards of 15-30% of the amount collected. The first award in 2011 was four and one half million dollars ($4,500,000.00) to an anonymous accountant. What if you have been paying the person “under the table”? Unless you are not reporting income you receive, then you are claiming income but not deducting the valid tax deductions for earning that income. If you are not reporting the income then you are incurring additional liabilities including possible criminal penalties. What happens if the person gets injured and files for worker’s compensation and/or social security disability and you have not reported them as an employee? For social security disability, the person must have paid in for a certain period of time. If they were not paying the taxes and it was determined you should have been paying the taxes, then you are subject to tax penalties. Can you then be sued for the benefits they would have received? You can be liable for all the unpaid taxes, even if you are not the owner of the company. See Who Can Be Responsible for the TFRP. These taxes may not even be dischargeable in bankruptcy and may be withheld from your income, wages, and tax refunds in the future.

Next, if the person files a worker’s compensation claim and is determined to be an employee for who you have not carried worker’s compensation insurance, what can happen? Pursuant to I.C. 22-3-4-13(f), “In an action before the board against an employer who at the time of the injury to or occupational disease of an employee had failed to comply with IC 22-3-5-1, IC 22-3-7-34(b), or IC 22-3-7-34(c), the board may award to the employee or the dependents of a deceased employee:
(1) compensation not to exceed double the compensation provided by this article;
(2) medical expenses; and
(3) reasonable attorney fees in addition to the compensation and medical expenses.”

So this means if your secretary gets in a car accident when delivering mail to the local post office and you do not have worker’s compensation insurance her health insurance (if she has it) may not cover her as she is working (see our previous blog on worker’s compensation), and you can be held liable for the entire medical expenses, attorney fees and up to double what the worker’s compensation awards would be.

Now you have a disgruntled employee who may have to file bankruptcy to discharge medical bills, has no income and does not qualify for social security disability. Do you think this person may sue you under Title 22 above? Do you think this person will turn you in to the IRS?

In my practice I regularly encounter people who think they are saving money by claiming everyone who works for them are independent contractors and as such do not pay withholding taxes, worker’s compensation insurance, and sometimes do not issue 1099’s. I have not even addressed the state tax penalties, overtime laws, or the additional IRS penalties for failure to file returns or pay taxes, interest on the taxes/penalties, implications of hiring a contractor who does not cover their employees for worker’s compensation and the interest on all of these. Suffice it to say, not treating an employee as an employee is a dangerous practice. It is even more dangerous if you pay them under the table and do not report income. You should consult a Certified Public Accountant or your business attorney to see what advice they will give you. You may not like the advice but in the long run you may be able to sleep at night without the worries of the possible repercussions.

This is third of a series we will be doing on the issues of sole proprietorships, partnerships and other small business and issues with not complying or handling insurance, tax and other issues that can be found on our blog.

Prepared by Richard A. Mann of Richard A. Mann, P.C. Attorneys at Law, www.rmannlawoffice.com
Follow us on Facebook: https://www.facebook.com/RAMattorneys?ref=hl
Follow us on Twitter: https://twitter.com/RAMattorneys
Follow our blog: http://ramlawoffice.blogspot.com/
This blog does not constitute legal advice nor does it establish an attorney client relationship. This is for general information purposes as in most legal situations the facts and terms of an agreement between the parties can affect the result.
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