September 2018 Legal News & Notes


The September 2018 issue of Miller, Miller & Canby's Legal News & Notes quarterly email newsletter announces three new firm attorneys, Maryland estate tax changes, a new liability for Maryland general contractors, new sales tax regulations based on the Supreme Court's Wayfair decision, and much more.  Click here to view newsletter.





Dr. Temple Grandin Captivates Audience at Rockville Science Center Event


More than 1,000 people streamed into the Strathmore Music Hall last Friday evening to hear renowned author Dr. Temple Grandin speak about her groundbreaking work in animal behavior and autism. Dr. Grandin, professor of Animal Science at Colorado State University, is known around the world for her insights on autism in humans and applications of sensory-based thinking to the humane treatment of animals.

“We were proud to be a sponsor of this important program featuring Dr. Grandin, whose work has changed our perceptions of autism and largely influenced understanding of animal behavior,” said Miller, Miller & Canby attorney Soo Lee-Cho, who is principal and co-chair of the firm’s Land Use group and has served on the Rockville Science Center’s Board of Trustees since 2009.  “We are also honored to support the important work of the Rockville Science Center in Montgomery County, as the organization strives to inspire interest in the principles of science and how they impact our communities,” she added.

Attendees of the event included dignitaries such as Montgomery County Council member Sidney Katz, Governor Larry Hogan’s Chief of Staff Matthew A. Clark, and members of the Rockville City Council, Mark Pierzchala, Beryl Feinberg, Virginia Onley and Julie Palakovich Carr, as well as supporters of the Rockville Science Center and members of the community.

Dr. Grandin’s work surrounding sensory-based thinking has made her a best-selling author and earned her global media attention; she has appeared on NPR, BBC, 60 Minutes, and in Time Magazine, The New York Times, Forbes and USA Today. HBO made an Emmy-award-winning move about her life.

During her talk at Strathmore, Dr. Grandin recounted her own journey as an autistic individual. Though she did not speak until she was almost four years old, she was fortunate to have benefited from therapy that enabled her to be mainstreamed into elementary school with her peers. Her message to the audience was one of understanding and hope:  that as a society we can benefit best by learning from each other and appreciating the different things we can all contribute. Her message of hope for autistic individuals was that they should focus on all the things they CAN do. Her autism, she stresses, allows her to see things others miss.

Dr. Grandin holds a B.A. in Psychology from Franklin Pierce College, an M.S. in Animal Science from Arizona State University and a Ph.D. in Animal Science from the University of Illinois.

After the event, Dr. Grandin signed copies of her book and further engaged with attendees.

The event was organized for the benefit of The Rockville Science Center, and sponsored by Miller, Miller & Canby and other organizations, including the Foundation for Biomedical Research.  The Rockville Science Center is dedicated to “inspiring a passion for lifelong exploration of science for our diverse community.” 

Pictured from left to right: David Delalio, Director of RSC Makerspace at Rockville Memorial Library; Melissa Scales, RSC Board of Trustee; Dr. Temple Grandin; Soo Lee-Cho, RSC Board of Trustee; Judy Ackerman, RSC Board of Trustee; and Nancy Delalio, RSC Architect





Maryland Proposes New Sales Tax Regulations Following Supreme Court’s Wayfair Decision


Wasting (almost) no time and as a direct response to South Dakota v. Wayfair, the Maryland Comptroller of the Treasury has presented proposed regulations to enforce the state’s sales tax collection requirement to out-of-state sellers, irrespective of whether those sellers have a physical presence in Maryland.

In a prior article, I detailed how the U.S. Supreme Court reversed almost 50 years of precedent relating to state sales and use tax law. Indeed, with the stroke of Justice Anthony Kennedy’s pen, Wayfair lifted a key restriction in response to a twenty-first century problem – namely, how to capture sales tax revenue from our increasing dependency on online shopping. In this regard, Wayfair has provided a bright-line rule (at least until Congress decides to weigh in) – actual, physical presence in the taxing state is no longer the standard or required.

Many States Changing Sales Tax Regulations
In the wake of Wayfair, many state tax laws and regulations (including those in Maryland) which had modeled their sales tax laws after the physical presence requirement immediately became outdated.  Now, those states have the green light to expand their tax base to include revenues from beyond their borders.  Some states may take a conservative stance and promulgate laws identical or similar to South Dakota’s which required out-of-state sellers to collect the state’s sales tax if such seller has, within one year, over $100,000.00 of gross revenue from sales delivered to the state, or 200 or more separate sales delivered to the state; while other states may be more aggressive.  Maryland is among the first states to take the plunge and has taken the conservative approach.

Maryland Proposed Sales Tax Regulations
Maryland’s proposed regulation is identical to the minimum requirements set forth by South Dakota. Specifically, the Comptroller has proposed expanding the definition for an “out-of-state vendor” that is required to collect Maryland sales tax to include such vendors that have, within one year, over $100,000.00 of gross revenue from sales delivered to Maryland, or 200 or more separate sales delivered to Maryland.  In short, any out-of-state vendors meeting either of these thresholds will be deemed to have the requisite “substantial nexus” with Maryland. If approved, the new Maryland sales tax regulations go into effect beginning October 1, 2018. Click the download attachment link below to view the proposed Maryland sales and use tax code.

What Online Retailers Should Do
Out-of-state sellers delivering goods or services to Maryland residents or businesses need to be aware of this development and any other State sales tax regulations that may arise in the future. October 1 is approaching, and if the regulation is approved, businesses will find themselves with compliance issues thrust upon them. Any out-of-state businesses that are concerned with how this potential regulation will affect them (or any in-state businesses concerned with other states’ proposed laws/regulations) need to consider meeting with a tax professional to discuss the applicability and compliance of these laws/regulations on their operations. Maryland is among the first dominoes to fall in response to Wayfair. However, more states may soon follow and businesses need to be cognizant of new developments in any state where they deliver goods or provide services.

Indeed, unless Congress exercises its authority under the Commerce Clause to enact legislation to address these sales tax base expansions, it is only a matter of time before states start pushing the envelope on the substantial nexus requirement for how much contact a business needs to have in a particular state to expose it to that state’s taxing authority. Until that time, businesses need to monitor and comply with any new laws, or risk facing assessment or audit.

Chris Young
is an associate in the Business & Tax practice at Miller, Miller & Canby. He focuses his practice on tax controversy work and helping clients deal with new tax regulations. He may be reached at 301-762-5212 or at clyoung@mmcanby.com.  View more information about Miller, Miller & Canby's Business & Tax practice by clicking here.
 





MD Appellate Blog: Introducing the Applicants for the Court of Appeals and Court of Special Appeals


Miller, Miller & Canby litigation attorney, Diane Feuerherd, authored a recent Maryland Appelate Blog which introduced the applicants for the Court of Appeals and Court of Special Appeals based on three vacancies on Maryland’s appellate courts, arising from the forthcoming retirements of Judge Sally D. Adkins of the Court of Appeals, Chief Judge Patrick L. Woodward of the Court of Special Appeals, and Judge Deborah Sweet Eyler of the Court of Special Appeals.

Click here
to read the full blog article.

In December 2017, Ms. Feuerherd joined the joined the Maryland State Bar Association’s Maryland Appellate Blog as its Blog Manager. Founded in 2013, the Maryland Appellate Blog is sponsored by the MSBA Litigation Section, and is dedicated to disseminating information about appellate practice and appellate law. The blog covers news from Maryland’s Court of Appeals and Court of Special Appeals, as well as the U.S. Supreme Court and U.S. Court of Appeals for the Fourth Circuit. It features commentary from a number of contributors and guest authors, including coverage of notable arguments, practice tips, commentary on implications of specific rulings or trends, and interviews with appellate judges.

Diane Feuerherd
is an associate in Miller, Miller & Canby’s Litigation Practice Group and focuses her practice in appellate, commercial and business litigation. She has successfully represented individuals, property owners, and businesses in a variety of matters ranging from administrative hearings before the Board of Appeals of Montgomery County, to trials in state and federal courts, and to appeals before the Court of Special Appeals and Court of Appeals. She may be reached at 301-762-5212.





MM&C Attorneys James Thompson and Jody Kline Honored for the 13th Year as Best Lawyers in America


Best Lawyers® released the 25th Edition of Best Lawyers in America on August 15, 2018. Miller, Miller & Canby’s Jim Thompson and Jody Kline have been recognized on the Best Lawyers list in their respective areas of practice every year since first being named in 2007. Mr. Thompson has been recognized for Eminent Domain and Condemnation Law and Mr. Kline for Land Use and Zoning Law. In 2013, Mr. Thompson was also named a “Best Lawyer of the Year” for his accomplishments. This prestigious award is a testament to their long-standing reputations for their individual legal abilities and professionalism.  

Jim Thompson has been a leader in Miller, Miller & Canby's Litigation Group for more than 35 years, concentrating his practice in eminent domain (with partner Joe Suntum) and in real estate valuation litigation, as well as in property tax assessment appeals (with partner Mike Campbell) and general civil litigation. For more than a decade, Mr. Thompson represented Maryland as the sole member in the Owners’ Counsel of America, a national network of property rights attorneys with demonstrated excellence in this area, focusing upon the representation of landowners in eminent domain litigation. Currently Mr. Suntum is the selected member for the state of Maryland. With Mr. Thompson’s breadth of legal experience, proven results, mature judgment, and tenured leadership within the judicial system and the bar, having served as president of the Maryland State Bar Association, he brings the ideal blend of proven trial experience and legal skill to client representations.

Jody Kline has led Miller, Miller & Canby’s Land Development department since 1981, focusing his practice in land use, zoning and subdivision law and representing clients in many of Montgomery County’s planning and economic development initiatives. In addition to zoning and subdivision law, he represents clients in matters related to master planning, zoning text amendments, conditional use permits, building permit issuance, and other administrative and real estate matters related to land use and development. His clients include residential and commercial developers, private individuals, religious institutions, private schools, non-profit entities and municipal corporations and agencies.

Best Lawyers® is the oldest and most respected attorney ranking service in the world. For more than 30 years, the organization as assisted those in need of legal services to identify the attorneys best qualified to represent them in distant jurisdictions or unfamiliar specialties. Best Lawyers lists are published in leading local, regional, and national publications across the globe.

For more information about Jim Thompson and Miller, Miller & Canby’s Eminent Domain and Condemnation Law practice click here or for information about Jody Kline and Miller, Miller & Canby's Land Use and Zoning Law practice click here. View the firm press release by clicking the Download button below.





Miller, Miller & Canby Sponsors Rockville Science Center Event with Dr. Temple Grandin


On September 7, the Rockville Science Center will be hosting a talk by Dr. Temple Grandin on the subject of “Understanding Animal Behavior and Autism”.  America's leading expert and educator in autism and animal psychology, Dr. Grandin will share her insights on these subjects while also addressing humane management and handling of animals as they interact with humans. She will elaborate on her concept of sensory-based thinking, which has created widespread interest among parents of children on the autism spectrum, research scientists, and physicians.  The event will be held at The Music Center at Strathmore in Rockville, Maryland at 7:30 p.m.

“We are proud to sponsor this important program featuring Dr. Grandin, whose work has changed our perceptions of autism and largely influenced understanding of animal behavior,” said Miller, Miller & Canby attorney Soo Lee-Cho, who is principal and co-chair of the firm’s Land Use group and has served on the Science Center’s Board of Trustees since 2009.  “We are also honored to support the important work of the Rockville Science Center in Montgomery County, as the organization strives to inspire interest in the principles of science and how they impact our communities,” she added.

Dr. Grandin is internationally renowned for her discoveries about cognition in the form of pictures and its application to autism in humans as well as to the study of animal behavior. She is highly regarded as a successful autistic individual who has written extensively on the subject of autism. Time magazine named her one of the 100 most influential people in the world in 2010. She has appeared on 20/20, 48 Hours, CNN, and 60 Minutes, and has also been featured in The New York Times, Forbes and U.S. News and World Report.

She has published numerous best-selling books, including Thinking in Pictures, Animals in Translation, Animals Make Us Human, The Autistic Brain: Thinking Across the Spectrum, and Emergence: Labeled Autistic.  

Dr. Grandin holds a B.A. in Psychology from Franklin Pierce College, an M.S. in Animal Science from Arizona State University, and a Ph.D. in Animal Science from the University of Illinois. She is currently Professor of Animal Science at Colorado State University in Fort Collins, Colorado.

Proceeds from this event will support the Rockville Science Center. To learn more about Rockville Science Center and the event click here. To purchase tickets click here.

Check out the WTOP Community Spotlight here.

About Miller, Miller & Canby
In 2016, Miller, Miller & Canby celebrated 70 years of serving the legal needs of metropolitan Washington, DC. As the oldest law firm in Montgomery County, MD, the firm recognizes that this milestone reflects the relationships built and maintained with our clients, friends and the business community, many spanning multiple generations. The firm maintains its focus on its core areas of practice: Land Development, Real Estate, Eminent Domain, Tax Appeals, Litigation, Business and Tax, and Trusts, Estates and Elder Law. Since the firm’s founding in 1946, land use and zoning law has been a critical component of the package of legal services that Miller, Miller & Canby has provided to clients. For more information on the firm’s land use and zoning practice, contact Soo Lee-Cho at 301.762.5212 or email.
 





New Maryland Law Imposes Liability on General Contractor for Subcontractor's Failure to Pay Wages


Maryland general contractors be alert!  Effective October 1, 2018, Maryland law imposes new liability on general contractors for unpaid wages on a project.  The General Contractor Liability for Unpaid Wages Act (the “Act”) is modeled on a recent District of Columbia law.  The law is designed to ensure that subcontractors comply with state wage laws and pay their employees in a timely manner. If the subcontractor fails to pay as required, the general contractor will now be jointly and severally liable for such failure in accordance with Maryland wage & hour laws, which can include punitive (treble) damages and attorney’s fees. The Act also applies to sub-subcontractors on down, which means a general contractor can be liable for wage violations at any tier of a project.

General Contractor Should Include Indemnification Clause in Subcontract

The Act requires the subcontractor to indemnify the general contractor for "any wages, damages, interest, penalties, or attorney's fees owed as a result of the subcontractor's violation," unless indemnification is provided for in a contract between the general contractor and the subcontractor, or if the subcontractor was unable to pay its employees because the general contractor failed to pay the subcontractor as required. An indemnification clause should be written into the subcontract for added security, although this will only be beneficial if the subcontractor is solvent and has the ability to reimburse the general contractor.  If the subcontractor goes out of business or declares bankruptcy, the general contractor is fully on the hook for damages.  

General Contractor Should be Selective with Subcontractors

In light of this new risk, the general contractor should be selective in awarding projects to subcontractors.  The general contractor would be wise to avoid contracting with unknown companies unless a bond or other security is posted by the subcontractor.  Additionally, the subcontract should require the subcontractor to produce on demand its certified payroll records to prove compliance with wage laws.

Michael Campbell
is a partner in the litigation group at Miller, Miller & Canby. He focuses his practice on commercial, real estate and construction litigation.  Please feel free to contact Mr. Campbell at 301.762.5212 or send him an email for an inquiry.  For more information about the firm’s litigation practice, click here. For more information about the firm’s business and contract law practice, click here.





E-commerce Businesses Beware: Supreme Court Ruling May Expose You to Sales Tax on Interstate Sales


Earlier this summer, in Justice Anthony Kennedy’s final opinion before announcing his retirement, the Supreme Court threw 50 years of precedent into the wind with a decision that underscores the rise of e-commerce in our daily activities.  

 

“I wish there was a way to know you’re in the good old days before you’ve actually left them.”
              -Andy Bernard, The Office

For online businesses that are not currently collecting sales tax on interstate sales, the above quote took on special meaning this summer.  Those businesses, whether they know it or not, are in the good old days right now as a recent Supreme Court ruling is likely to leave them exposed to new sales tax obligations as well as burdensome and cumbersome compliance requirements.

New Supreme Court Ruling on Sales Tax

The Supreme Court’s ruling is a response to a twenty-first century problem.  In short, the evolution of the Internet brought with it a new marketplace – a virtual one, where buyers can do everything from grocery shopping to annual birthday and holiday shopping, all from the comfort of their living room sofas.  Indeed, consumers are prone to laziness and, when given the choice, have generally opted against getting dressed and leaving their house to go to the store.  As such, the convenience of the online shopping experience, combined with the sales tax savings, has given shoppers the incentive (or justification) to change their purchasing habits.

However, the rules are changing and the playing field is leveling, albeit slightly.

In South Dakota v. Wayfair, 585 U.S. ___ (2018), the Court concluded that the long-standing rule for allowing states to compel out-of-state retailers to collect sales tax was not only “unsound and incorrect,” but antiquated by modern standards.  That long-standing rule?  Actual, physical presence in the taxing state.  In other words, a Maryland business that hasn’t stepped one foot in Virginia can ship sales across the Potomac and incur no obligation to collect sales tax from the Virginian that bought its products.  However, if that Maryland business shipped its sale to Ocean City, MD, the sales tax obligation kicks in.  An advantage?  Most likely the failing brick and mortar stores like Sears, Toys R Us, and Circuit City would say so.

However, the physical presence rule was fraught with issues almost from the beginning.  Indeed, limiting physical presence had generally been manageable, but with the dawn of the Internet and the rise of e-commerce, restricting physical presence has become easier and more prevalent.  In turn, states began losing tax revenue to the current tune of between “$8 billion and $33 billion every year,” according to the Court.  In response, states began enacting laws in an attempt to recapture as much of that money as possible.  In doing so, the states started stretching the definition of physical presence, or they began ignoring it altogether.  

In short, the Wayfair concluded that other connections or contacts with the taxing state are sufficient to meet with constitutional requirements. 

What Does this Mean for Your Online Businesses and Why You Need a Tax Attorney?

Now, not only is physical presence adequate, certain economic contacts or “virtual connections” are enough to expose an online business to a state’s sales tax regime.  

However, Wayfair leaves the issue unsettled.  Specifically, the Court failed to provide guidance for the type of contacts or connections, whether economic or virtual, or both, that will meet this new, constitutional standard.  But what happens in response to Wayfair is entirely predictable –legislatures will pass new laws, or expand old ones, to take advantage of this new revenue stream.  In doing so, they will push the boundaries to test the uncertainty created by Wayfair.  Accordingly, this issue will work its way back through the courts for further guidance on the type or amount of economic activity now required.

Presently, online businesses need to know how Wayfair impacts their business models and operations.  An experienced tax attorney can review the states and local jurisdictions where a business ships purchases or delivers services, or where it otherwise has any type of physical or economic presence or connection.  An in-depth analysis of the definitions for “sellers,” “vendors,” “dealers,” “retailers,” or the like, will help an online business understand its exposure to a particular sales tax regime.  If there is exposure, a review of that state or local jurisdiction’s sales tax code will be required to determine whether such exposure has ripened into an obligation.  Indeed, where a business has sales tax obligations, not only will collecting and remitting be required, but so will registration, reporting and filing; and most states have laws holding business owners or officers personally liable for failing to comply with its sales tax laws.  In addition, not only will businesses need to educate themselves with the legal and regulatory framework of multiple jurisdictions, but they will need to stay current with any new developments which may affect how and where they sell products or deliver services.  Accordingly, the good old days of sales tax being either a minor inconvenience or inconsequential are likely over for many unknowing and unsuspecting online businesses.  

Chris Young
is an associate in the Business & Tax practice at Miller, Miller & Canby. He focuses his practice on tax controversy work and helping clients deal with new tax regulations. He can be reached at 301-762-5212. View more information about Miller, Miller & Canby's Business & Tax practice by clicking here.
 





Miller, Miller & Canby Welcomes Attorney Cathy Borten to Real Estate Practice Group


Miller, Miller & Canby is pleased to welcome Cathy Borten to the real estate practice group, where she will focus in commercial real estate transactions and leasing, real estate litigation, and commercial financings and settlements.

During the course of her twenty-year career, Ms. Borten has negotiated and drafted leases and amendments for a variety of properties, including shopping centers, government facilities, airports, hotels, hospitals and retail establishments. She has also handled land use and zoning matters, appearing before county and city government bodies and pursuing zoning and text amendments in cities and counties and has represented clients in contested proceedings in both trial courts and in appellate matters. Prior to joining Miller, Miller & Canby, she was a partner in the Law Office of M. Gregg Diamond, P.C., of Bethesda, Maryland. Prior to this, she worked for the City of Gaithersburg, serving as the first in-house counsel for the city. There, she advised the Mayor and City Council and Planning Commission and drafted legislation to address a variety of city matters. She represented the City’s Planning & Code Enforcement Department in code violation proceedings, drafted and reviewed city contracts, and represented and advised city departments. She began her career working as a Law Clerk for The Honorable Paul H. Weinstein in the Circuit Court for Montgomery County, Maryland, after which she worked as an associate for a law firm in Montgomery County, handling matters for a diverse client base that included developers, wireless telecommunications firms and municipalities.

Ms. Borten is licensed to practice law in Maryland and the District of Columbia. She earned her Juris Doctorate, graduating cum laude, from Washington & Lee University School of Law and received her B.A. in Communication Arts from the University of Wisconsin-Madison.

Click the download button below to view the firm's formal press release. For more information about Miller, Miller & Canby’s Real Estate Practice, click here or contact Cathy at 301-762-5212.





Michael Campbell Selected President-Elect of American Inns of Court for Montgomery County


Miller, Miller & Canby Litigation Attorney Michael Campbell was nominated and selected as President-Elect of the Montgomery County Chapter of the American Inns of Court.  Mr. Campbell currently serves as Treasurer of the chapter and will begin his term as President in June 2019.  The American Inns of Court is a national association of lawyers, judges and other legal professionals who share a passion for legal excellence.  Through monthly meetings, the chapter hosts a dinner followed by a presentation, demonstration or guest speaker.  In this collegial environment, outside the courtroom and pressure of daily practice, members discuss legal practice, principals and methods and provide mentorship to new lawyers.

Michael Campbell is a partner in the litigation group at Miller, Miller & Canby. In addition to trial and appellate advocacy, his practice focuses on real estate litigation and property tax assessment appeals.  Please feel free to contact Mr. Campbell at 301.762.5212 or send him an email for litigation matters.  For more information about the firm’s litigation practice, click here.
 





More Entries