Structuring Deposits: The IRS Apologizes...Again

      Last week, the United States IRS Commissioner John Koskinen made a startling apology in Congress. He apologized for the IRS seizing the bank accounts of businesses merely because they deposited a lot of cash. In most of these cases legitimate small business owners were depositing say $8000 cash every other day. Most of these stores were small grocery stores or candy stores which did a lot of cash business. Sometimes they were restaurants which did not take credit cards. The IRS used a well-known, but slightly obscure, rule that actually allows the IRS to seize assets from US citizens it believes – get it, that the IRS believes – violated Federal Cash Transaction Reporting requirements. You have seen those signs at banks: If you deposit more than $10,000 cash you must fill out a Currency Transaction Report (CTR). Who wants the hassle? So business owners would deposit less than $10,000 every other day. Banks must snitch on their customers who deposit so much cash.

      But if you deposit less than $10,000 where did go wrong? Ever heard of “structuring” deposits? That means you purposely divided your deposits below $10,000 to fly under the radar. The IRS was seizing bank accounts without ever bringing charges against the business owners. No due process.

I Want My Ring Back! Who Keeps The Ring In A Broken Engagement?

       

     Paul and Janet had been dating for about two years when Paul proposed marriage. Janet agreed and a wedding date was set. As a sign of their engagement, Paul gave her a family heirloom, an 8-carat pure white diamond on a white gold band. Three months later, Paul thought better of it and broke the engagement. He then requested the return of the ring. Janet refused, claiming it was Paul fault for breaking off the engagement and she had a right to keep it. Who wins?

      Paul does. Our firm won the lead case on this issue, Gagliardo v. Clemente, a New York Appellate Division, 1st Department case from 1992. The court held that giving an engagement ring is only a conditional gift given in contemplation of marriage. If the marriage does not go through, the gift is not completed and the ring must be returned. It is wholly irrelevant as to who caused the breakup. Just as New York has a no-fault divorce law, there is a no-fault engagement ring rule. The rule is the same in New Jersey according to Aronow v. Silver, a 1987 NJ Superior Court case.

       What if the man is already married and gave the engagement ring upon her promise to marry him when and if he got a divorce from his current marriage?

Do I Have to Testify Against My Child?

A parent’s worse nightmare. Your child comes home, all disheveled, and tell you he thinks he is in trouble. He had been at a party and may have drunk too much. On the way home, he believes he may have run someone over. He gives you all the details of what happened. He is shortly arrested and under the advise of the attorney you immediately retained for him, he refuses to speak to the police. The District Attorney figures that you must have spoken to your child about the crime and subpoenas you to testify as to what he told you before a Grand Jury. Can you be forced to reveal your child’s confidences?

The answer, at least in New York, is probably no. There is no statutory parent-child privilege, like that of attorney-client or priest-penitent privilege in New York or New Jersey. However, there is case law in New York that has arguably created such a privilege. In a case called Application of A & M, the N.Y. 4th Department Appellate Division ruled in 1978 that

Automatic Renewal Contract: There is a Way Out!

AUTOMATIC RENEWAL CONTRACTS

Don’t be misled by automatic renewal provision in your contract. In some cases, they may be invalid under New York law. Lets say that you have a 5 year contract with a computer maintenance company. The contract is about to expire and now you found a cheaper and more reliable company. You let the contract lapse and you sign with the new company. However, your old company continues to send you bills. When you contact them to complain, they tell you "sorry, but you did not read the fine print": If you did not notify them 6 months before the expiration date that you did not wish to renew, it was automatically renewed for another 5 years.

Do you have any remedy? In this case, and in many like them, you do. New York’s General Obligation Law sections 5-901 and 5-903 provides that no matter what is stated in your contract, if it is for a lease of personal property or is a contract for services, maintenance or repair to or for any real or personal property, the one providing the service must serve on you a writing, calling to your attention the renewal provisions in the contract. It must be served on you either personally or by certified mail at least 15 days and not more than 30 days prior to the time the contract calls for you to give notice whether you will renew or not. If such notice is not given, you may cancel the contract at any time, just paying for the service provided up to the time of the cancellation. However, if you do receive the notice and do nothing, you will be stuck with the renewed contract.

The courts have been very liberal in expanding the meaning of personal property. The statutes have been applied to include intellectual property, servicing MRIs, leases of vending machines, and answering services. It does not apply to personal services contracts such as providing legal services or other type of advisory services. These provisions were specifically designed to protect small businessmen who unwittingly find themselves stuck with a contract they did not want.

If you continue to receive bills from a supplier,  or a vendor claims that you are still stuck in a contract you thought had expired, don’t just assume they are right because the contract says that you did not give the proper notice. Immediately contact a lawyer. Most likely, they are wrong.

Kim Juhase, ESQ.

Partner, Novak Juhase & Stern, LLP

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