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If I Have a Nonprofit, But Not the 501(c)(3) Yet, at What Point Can I Start Taking Donations?

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Bryan Fears Hi Bryan,

Once a nonprofit has the incorporated paperwork for the state (CA) and are working on the 501(c)(3) forms, at what point may they start taking donations and what information needs to be on the receipts for donors (private or corporate) to receive a tax deduction?

 Shannon Santamaria

 

Fearless with Attorney Bryan Fears

The best practice is to wait until you have your letter of nonprofit status from the IRS before you start accepting donations. The reason for that is if you accept donations before your status is official, you cannot tell donors that their contributions are tax-deductible. If you are granted tax-exempt status later on, the donations will be retroactively tax-deductible, but if 501(c)(3) status is never received, your donors may suffer adverse consequences.

If you have to start raising funds before you are incorporated and officially designated a nonprofit by the IRS, you might want to consider a fiscal sponsor that can receive contributions for you. A fiscal sponsor is simply another nonprofit that is willing to handle your donations for you.

Attorney Bryan Fears answers your legal questions for free on our Facebook page every Wednesday at 2 p.m. PT.

 

Disclaimer: Communications between you and LegalZoom are protected by our Privacy Policy but not by the attorney-client privilege or as work product. LegalZoom provides access to independent attorneys and self-help services at your specific direction. We are not a law firm or a substitute for an attorney or law firm. We cannot provide any kind of advice, explanation, opinion, or recommendation about possible legal rights, remedies, defenses, options, selection of forms or strategies. Your access to the website is subject to our Terms of Use.

Written by Bryan Fears

June 23rd, 2014 at 11:36 am

Posted in Legal News

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If I File for Bankruptcy, Can They Take My SSI (Supplemental Security Income)?

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Joe EscalanteMr. Escalante,

I can’t pay any more of my credit card bills and need to file bankruptcy. I need help. They can’t take away my SSI, can they? My SSI is direct deposited in my bank.

Thank you, Sir.

Stormy Storms

 

Barely Legal Radio w/ Joe Escalante

They can’t attach that income to pay credit card debts under federal law. However, don’t let the income sit in your bank account for too long. I believe the federal law passed in 2011 requires the banks to protect this income for 2 months or something like that, but if it sits in there for too long, someone could perhaps get to it.

Only a few things like child support, spousal support, and some federal taxes can be taken out of SSI payments.

Good luck, Stormy Storms.

Attorney Joe Escalante answers your legal questions for free on our Facebook page every Tuesday and Friday at 10 a.m. PT.

 

Disclaimer: Communications between you and LegalZoom are protected by our Privacy Policy but not by the attorney-client privilege or as work product. LegalZoom provides access to independent attorneys and self-help services at your specific direction. We are not a law firm or a substitute for an attorney or law firm. We cannot provide any kind of advice, explanation, opinion, or recommendation about possible legal rights, remedies, defenses, options, selection of forms or strategies. Your access to the website is subject to our Terms of Use.

Written by Joe Escalante

June 23rd, 2014 at 10:11 am

Can I Take a Picture of Something in a Store/Business and Use It on My Website?

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Joe EscalanteHi Joe,

Walking into a business, can I just take a picture of something and use it on my website or do I need to speak to the owner first? (I know the deal with faces.)

Thanks.

Max Walter

 

Barely Legal Radio w/ Joe Escalante

Yes and no. They might have a posted policy preventing that. Is the policy enforceable in court? Maybe, maybe not. It depends on many other factors. In general, without any posted policy or warning, the store is open to the public and you, so you could use the picture for certain things.

What would be their damages is the question. It’s all stuff visible to any member of the public at all times that the store is open, so what difference does it make if you show it to them?

However, if you took a picture of copyrighted things and exploited them in a way that harmed the copyright’s value, you could be liable for infringement. Like if you took a picture of original art and charged people to look at those pictures on your site, that’s infringement.

Attorney Joe Escalante answers your legal questions for free on our Facebook page every Tuesday and Friday at 10 a.m. PT.

 

Disclaimer: Communications between you and LegalZoom are protected by our Privacy Policy but not by the attorney-client privilege or as work product. LegalZoom provides access to independent attorneys and self-help services at your specific direction. We are not a law firm or a substitute for an attorney or law firm. We cannot provide any kind of advice, explanation, opinion, or recommendation about possible legal rights, remedies, defenses, options, selection of forms or strategies. Your access to the website is subject to our Terms of Use.

Written by Joe Escalante

June 23rd, 2014 at 10:05 am

Crowdfunding the Future

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Shutterstock/Dirk Ercken<br />

Shutterstock/Dirk Ercken


It’s Innovation Month here at LegalZoom and we’re exploring a range of themes around the concept of innovation.

When it comes to finding money to launch a great product or idea, gone are the days of begging for money from traditional sources. While banks, friends and family still provide support to many fledgling businesses, some individuals and small organizations are harnessing crowdfunding to make their dreams a reality.

You’ve probably heard of Kickstarter or Indiegogo or RocketHub. These sites allow innovators to start a campaign for their idea and ask for funding from anyone out there who might be interested. In exchange, the contributor may get a limited-release gift, a credit in the production or even the first generation version of the product. The “Veronica Mars” movie started as a listing on Kickstarter, and just this month LeVar Burton raised $1 million in one day to bring back the hit TV series “Reading Rainbow.”

This exchange of money for access is called rewards-style crowdfunding. According to a 2013 report, the global “we” has raised $2.7 billion for more than a million passion projects. It’s clear that the people are out there and they’re willing to put their money where their, uh, keyboard is.

A second type of mass fund collection system is called equity crowdfunding. More than two years ago, President Obama signed into law the JOBS Act (short for Jumpstart Our Business Startups), which allows anyone to become an official investor in “emerging growth” companies. Equity crowdfunding takes the best part of a platform like Kickstarter—the broad reach and individual contributions—and combines it with a stake in the businesses. Contributors are no longer just fans of the idea; they are now more deeply invested in the product’s success—and potential profits.

The JOBS Act is currently under review by the U.S. Securities and Exchange Commission but is widely expected to pass later this year. Once approved, it would allow companies to sell up to $50 million in shares and list up to 1,000 shareholders.

With the ease of collecting seed capital in this way come certain challenges that some analysts fear might be cumbersome for extremely small organizations. Part of the JOBS Act calls for the release of financial reporting and documents, including early stage business plans and equity compensation plans. However, as one analyst mused, putting up your business for equity crowdfunding could validate key parts of the business and its measures of success on a broader scale.

Equity crowdfunding eases some of the restrictions around raising capital as it is currently done and could be a boom for smaller start-ups without access to large networks of investors or venture capital firms. In an industry hell-bent on disrupting other industries, it’s almost as if Silicon Valley has found a way to disrupt its own way of doing business.

Are you working on a great idea and want to make sure you cover your bases on the legal side? Celebrate Innovation with us and save 10% on select intellectual property protection services.

Written by Bilal Kaiser

June 20th, 2014 at 8:32 am

Wearable Tech That Makes Sense

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Shutterstock/Hattanas Kumchai

Shutterstock/Hattanas Kumchai

Have you ever looked in your closet and wished you had an electronic Twitter Dress? Me neither. But it does exist—a black chiffon evening gown that lights up with animations and Tweets. CuteCircuit fashion house launched its wearable technology in 2004 and has been leading the way in combining haute couture, smart textiles and micro-electronics ever since.

An article in Metropolis says, “According to Futuresource Consulting, the wearable tech industry reached $8 billion in sales last year and is expected to more than double that figure by 2017. Since 2009, the U.S. Patent and Trademark Office have seen a steady rise in design and utility patent applications.”

So maybe your first piece of wearable tech won’t be a Twitter Dress, but there are other new inventions that are just as intriguing. Many of us have seen new technology that you can wear like smart watches or Google Glass, but there are other new inventions that are just as intriguing.

Light Therapy Glasses

For people who live in colder climates, fall and winter can be particularly difficult. Not just because of snow and ice, but shorter days and less light make some people moody and tired. Seasonal affective disorder or SAD is often treated with light therapy where patients sit in front of a light box, according to the Mayo Clinic. Drexel University announced that a student has created a prototype for light therapy glasses that would shine the light directly into the eyes. Patients would be able to walk around during treatments and not be required to sit.

Smart Fabric Belly Band

Also at Drexel University, researchers are working on maternity wear. Using computerized knitting software, a belly band garment was designed using a special yarn and RFID technology that can monitor uterine contractions and fetal heart rates. The belly band “could be used to monitor high-risk pregnancies, women near their due dates or as a quick, noninvasive procedure during a routine check-up[.]”

First Sign Smart Hair Clip

Picked by Wearable Technologies as its Gadget of the Month for May 2014 is a personal security system. First Sign did research and found that impacts to the head happen more often in violent crimes. They created a smart hair clip, so that more people would be helped. “The clip contains a gyroscope and an accelerometer,that detect physical assault like slapping, punching, or aggressive movements the second it happens. Immediately, the microphone in the clip starts recording, and the First Sign mobile app uses Bluetooth to access your smartphone’s GPS, camera and microphone to begin gathering of evidence.”

Sesame Ring Smart Transit Pass

Boston commuters can now ride the MBTA, the local subway and bus system, a little easier. They can look stylish wearing a Sesame Ring and not miss their train while looking for their CharlieCard or ticket. Boston Magazine reports that MIT students came up with the idea and now the company Ring Theory has shipped out the first batch of rings to customers. The rings are made on a 3D printer and are custom made to the buyer’s specifications. Each ring has the CharlieCard’s RFID chip inside and can be used the same way.

If you look on Instagram, you can see people showing off their unique rings. Wearable technology can even make commuting fun!

 

Written by Lisa C. Johnson, Esq.

June 12th, 2014 at 12:36 pm

Posted in Legal News,Technology

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Shoemakers Stumble with Questionable Product Claims

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Shutterstock/V.Kuntsman<br />

Shutterstock/V.Kuntsman


“The benefits of running barefoot have long been supported by scientific research.”

“Get in shape without setting foot in a gym.”

“Training without shoes allows you to run faster and farther with fewer injuries.”

Do any of the above statements sound familiar? They should, because huge footwear manufacturers spent millions promoting their special shoe as an amazing product that would magically provide the above benefits/meet the above claims. Unfortunately for them, the Federal Trade Commission disagrees.

As recently as last month, a class action lawsuit against shoemaker Vibram USA, creator of FiveFingers running shoes, was settled to the tune of $3.75 million. You may have come across this odd looking line of shoes sometime in the last few years; it features glove-like coverings for toes and, at the time of launch, promised a healthy and improved running experience. Some seventy million Americans purchased a pair in hopes of fewer injuries, stronger muscles and better posture—and not just from Vibram, but from competing shoe companies marketing their own version of a more “natural” running shoe. Vibram settled the lawsuit and will provide refunds to anyone who had previously purchased a pair of the minimalist shoes.

Vibram USA isn’t the only company to face the FTC over products benefits that may or may not have been true. In 2013, Skechers had to pay out a $40 million settlement for false claims around its Shape-Up shoe line. Turned out one couldn’t really get in shape solely by putting on a new pair of shoes. While Skechers still sells the shoe line on its website, it has added the following statement in the description: “Decreases in weight or body fat and increases in muscle strength or toning have not been clinically shown.”

The footwear companies’ missteps (sorry, couldn’t resist) sheds light on truth in advertising and misleading consumers with false claims. It has been known to happen at corporations across industries, but is there a lesson here for small business owners as well? We think so. It’s crucial to be honest with your customers—both existing and potential—about what your product can and can’t do. You may not expect the FTC or FDA to question your advertising as a small business, but as your reach and profits increase, so does the scrutiny.

Take a second look next time you read a product claim or company tagline you like; does it seem like it’s saying something without saying much at all? That’s probably intentional as the marketing copy has been written with a legal eye. And for any business owner looking to grow, it’s a vital skill to pick up.

Written by Bilal Kaiser

June 11th, 2014 at 2:46 pm

Posted in Lawsuits,Legal News

Tagged with

Lien on Me

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Shutterstock/Junial Enterprises

Shutterstock/Junial Enterprises

Unlike the feel good ‘80s dance classic by Club Nouveau with a similar sounding name, a lien is not a good thing. Especially when a fun gambling trip can turn into a lien on your home.

While it may sound far-fetched, gambling casinos putting liens on homes to collect debts is a common practice according to an article in The Day. Interviewed for that article was Raymond Foll, a Connecticut attorney who does debt collection for casinos. Attorney Foll noted, “It’s not just casino debt collection, it’s any debt collection.”

Because people from surrounding New England states travel to Connecticut to gamble, the issue is felt in many states. WPRI.com did an investigation and found that Foxwoods Resort Casino put liens on Rhode Island homes thirty times. Markers are a form of credit that casinos offer to patrons. When that debt is not paid, casinos can use liens to recover their money. According to the same investigation, an attorney who would only speak anonymously, said that while Foxwoods often uses property liens, collections agencies are used by Mohegan Sun.

The Providence Journal reported that state legislation was recently filed to prevent casinos from putting liens on Rhode Island property. Not to be outdone, it was also reported that legislation was filed that would allow the state’s own casino, Twin River Casino to offer up to “$75,000.00 in interest-free, unsecured credit.”

Moving further north, Massachusetts is now dealing with casino gambling as well. Both earlier mentioned Connecticut casinos are seeking licenses to operate in the Bay State. The Boston Globe reports that the state’s Attorney General, Martha Coakley is very concerned with the practice of property liens being used to satisfy gambling debts.

“Protecting against predatory lending and overly aggressive debt collection in the gaming industry is critical, because the odds are stacked against the patron being able to earn back the value of the loan,” wrote Coakley, who is also a candidate for governor. “This practice by the gaming industry in which customers’ homes are put at risk should not be allowed.”
As awareness of this practice spreads with the increasing number of casinos, this issue is surely something that we will see more of across the country.

Written by Lisa C. Johnson, Esq.

June 11th, 2014 at 9:05 am

Posted in Legal News

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Working From Home: Under Threat?

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Shutterstock/Angela Aladro mella

Shutterstock/Angela Aladro mella

A little over a year ago, tech giant Yahoo! made headlines when CEO Marissa Mayer did away with the company’s generous work-from-home policy.

Now, another large company is getting attention for a similar issue: Ford Motor Company. A lawsuit against the car manufacturer on behalf of Jane Harris alleges that Ms. Harris was fired from her job after she asked to work from home. Ms. Harris suffers from irritable bowel syndrome and requested telecommuting options for four days a week. Ford says the employee was let go due to being unavailable for in-person collaboration.

The case was initially dismissed, but the Sixth Court of Appeals has given it another chance. Perhaps most interesting about this case is the disability element. The lawsuit falls under the Americans with Disabilities Act (ADA), which provides legal protections to those with disabilities, and could set a precedent not just for future ADA cases but for any company reviewing telecommuting policies. Ford stated Ms. Harris’s presence at the office was a requirement of her job, but the plaintiff argued that her main duties—answering emails and phone calls—could just as easily be done remotely. The way we define work—both in an office and at home—could be changing.

According to The Guardian, there are approximately 6 million telecommuters in the U.S.. And with our ever-increasing reliance on technology, it only makes sense that this number could grow. An office building is no longer a requirement to get work done; responding to emails, participating in conference calls and collaborating on projects can all be done from wherever an employee is based.

With companies like American Express, Accenture, and Healthnet offering employees the option to work remotely, it’s safe to assume lots of eyes will be on the Ford/Harris case. In the 1960s, the saying was that “As GM goes, so does the nation,” a nod to the automaker’s power. In this instance, the player might have changed but the case could very much determine where the nation goes when it comes to working from home.

Written by Bilal Kaiser

June 5th, 2014 at 9:13 am

Posted in Lawsuits,Legal News

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LA County Considering Background Checks on Ice Cream Sellers

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Shutterstock/Leonard Zhukovsky

Shutterstock/Leonard Zhukovsky

Summertime is all about relaxing, enjoying time spent outside, and having fun. But now, thanks to a new law in Los Angeles County, summertime fun faces some new regulations.

According to the Los Angeles Times, Los Angeles County is now proposing that ice cream truck vendors and other merchants who sell products to unsupervised children be subjected to background checks.

In a unanimous vote that took place on Tuesday, May 6, the county Board of Supervisors requested that its staff research the planned regulations. They’re looking for laws that “mandate fingerprinting and a criminal history report for those seeking a license for a business that serves children.” They requested that their staff turn in a report in 60 days that details businesses that serve unsupervised children, as well as information on the time and cost it would take to conduct the background checks.

Supervisor Don Knabe, who spearheaded the new proposed regulations, said, “By adding another level of scrutiny to the way we issue business licenses in Los Angeles County, we can do a better job of protecting our communities and keeping our children out of harm’s way.”

The supervisor said that applicants should be screened for abuse, sex offenses, pornography, or molestation charges. “We could be unknowingly permitting dangerous individuals to come into contact with innocent children,” he told the Times.

Currently in Los Angeles County, owners of adult businesses and purveyors who sell weapons and explosives must undergo background checks prior to receiving licenses.

Other cities and states have considered or gone through with passing ice cream truck background check laws including Iowa, Salt Lake City, and Summit County, Ohio.

Knabe stressed that in Los Angeles County, it’s a duty for adults to protect kids from danger. “As the ultimate safety net for our most vulnerable residents, we have a responsibility to protect our young children.”

Written by Kylie Jane Wakefield

May 28th, 2014 at 1:26 pm

Posted in Legal News,Regulation

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Now You See It, Now You Don’t. Or Do You?

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Shutterstock/360b

Shutterstock/360b

Snapchat, the hot app that promises messages disappear within seconds of appearing on the recipient’s phone, recently found itself in hot water with the Federal Trade Commission (FTC). The FTC questioned several of Snapchat’s privacy claims, from location data collection to the very basis of the app’s existence—the self-destructing messages—and found major lapses in the company’s privacy monitoring and practices.

According to the FTC complaint, several of Snapchat’s privacy promises didn’t hold water, including collection of users’ location data; a bypass around warnings indicating a recipient had taken a screenshot of a message; and some types of “deleted” content actually becoming available when a device was connected to a computer.

The Snapchat case highlights the needs for businesses of all sizes—from extremely popular apps to mom-and-pop e-commerce sites and anyone in between—to pay special attention to consumer privacy protections. Just last December, global retailer Target found itself struggling to explain how 70 million customers’ payment and other private information was stolen from its servers.

If your business collects data from users, both the content of the data as well as the methods in which it is being transmitted needs to be examined and protected if necessary. Be sure to state explicitly what you are collecting from customers and site visitors, and be conscious of what you say about privacy and where. As was the case with Snapchat, the app’s privacy policy didn’t necessarily outline all of its privacy protections; many of the privacy related verbiage was found on the company website, on its FAQ page and on app store descriptions.

Most states have laws around data collection along with what needs to happen should there be a breach. Here’s a really good list from the National Conference of State Legislatures that outlines each state’s legislation around security breaches.

The good news is, focusing on customer privacy from the start not only helps you conform with online best practices, it puts you on the right track. As your business grows there’s bound to be additional scrutiny—and an FTC inquiry is the last thing anyone wants.

Written by Bilal Kaiser

May 27th, 2014 at 10:03 am

Posted in Legal News,Privacy

Tagged with