Indiana Business Lawyer Blog

The Internal Revenue Service (IRS) and Department of the Treasury have promulgated final regulations impacting tax-exempt organizations with gross annual receipts that generally do not exceed $25,000. The final regulations became effective July 23, 2009. The regulations are applicable to annual filing periods beginning after 2006.

In 2006, the Pension Protection Act was passed, including a requirement that the Treasury Secretary promulgate regulations regarding the time and manner in which certain tax-exempt organizations must file annual electronic notification. The regulations that followed amend the Income Tax Regulations (26 CFR Part 1, section 6033(i)(1)), which relate to requirements for notification by entities that are not currently required to file an annual information return (Form 990) under section 6033(a)(1).

Under the final regulation, 26 CFR § 1.6033-6, tax-exempt entities under § 501(a) that are not required to file annual information returns as described in § 1.6033-2(a)(2) must submit electronic notification containing the legal name of the organization, any assumed business names, mailing and web address, tax identification number, name and address of principal officer, evidence of ongoing basis for exemption under § 6033(a)(1), and any additional information required for processing. Certain employer-created qualified pension, profit-sharing, and stock bonus plans, as defined in § 401(a) and certain religious and apostolic organizations, as defined in § 501(d) are not subject to the regulation. By submitting the electronic notification, an organization acknowledges it is not required to file a return under § 1.6033(a) because its annual gross receipts do not normally exceed $25,000. The regulation also contains requirements for record maintenance, as provided in § 1.6001. If the organization submits a complete Form 990 or 990-EZ, however, the requirements of annual electronic notification will be deemed satisfied. The final regulation does not relieve an organization from any other filing requirements.

The notification must be filed based on the annual accounting period of the organization; however, if the organization does not have an annual accounting period, notice shall be filed on the basis of the calendar year. Electronic notification must be submitted on or before the 15th day of the 5th calendar month after the close of the period for which the notification is being submitted.

The statements contained herein are for informational purposes only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have any questions regarding this article, please contact an attorney.

Here is a case that could describe many farmers and other businessmen retaining independent contractors. It is summer time and paint crews travel from farm to farm offering to paint grain bins or other outbuildings. Almost every farmer owning grain bins will have had this experience and many of us have hired the crews to perform painting tasks. Do you also require the contractor to produce or sign a certificate of insurance that the contractor has insurance, including workers’ compensation insurance for their employees? My guess is that many farmers seal the deal verbally and move on after the price is agreed upon. Read on….

Indiana Supreme Court has granted transfer of a case involving Indiana's workers' compensation statute and a farmer's insurance policy which aimed at excluding the farmer's liability coverage. Everett Cash Mutual Insurance Company vs. Rick Taylor and Katrina Taylor, No. 02A03-0808-CV-386 (Ind. Ct. App. 2009), transfer granted (September 3, 2009).

In Everett, a farmer employed an independent contractor business to paint his house, grain bin, and barn. The farmer did not check to see if the business carried workers' compensation insurance for its employees and in fact they did not. One of the business' employees came into contact with an electrical wire while painting and was injured.

The employee initially filed a workers' compensation claim against the independent contractor business, but he discovered the business had no such insurance. He then amended his complaint to name the farmer, alleging the farmer failed to verify whether the independent contractor business had workers' compensation insurance pursuant to Indiana Code 22-3-2-14(b). At no time did the employee file any tort-related claims against the farmer.

Continue reading " LIABILITY PITFALLS THAT COULD RUIN YOUR DAY " »

This past May, the Indiana Court of Appeals ruled on a breach of a non-compete agreement case addressing whether a former employee’s covenant not to compete with his past employer was enforceable under Indiana law and determined the proper measure of damages for a breach of this agreement.

Coffman, an employee of Olson & Co., an accounting firm (“Olson”), signed a non-compete Agreement in 2005, which specified that in the event of termination of employment, he would not directly or indirectly compete for Olson’s clients in the firm’s geographical area for a period of two years. The Agreement did not restrict employees from seeking accounting jobs elsewhere. The Agreement specified that if Coffman chose to provide accounting services for any of Olson’s clients during the two year period following termination of employment, he must pay Olson an amount equal to two times the amount of that client’s most recent twelve month billings. He must also notify the firm of his relationship with these clients in writing, and if Coffman failed to notify Olson of his intent to perform services for prior employees, the amount due to Olson shall be three times that client’s most recent twelve month billing.

Coffman terminated his employment with Olson on September 1, 2006 and formed his own accounting Limited Liability Company soon after. Seventeen of his clients terminated their relationship with Olson and hired Coffman to perform accounting services. Coffman did not notify or compensate Olson, and Olson soon thereafter filed suit alleging breach of the non-compete agreement.

Continue reading " Indiana Business Law - Non-Compete Agreement: Former Employer Has Protectable Interest in Customer Goodwill; Proper Measure of Damages for Breach of Non-Compete Agreement is Lost Net Profits as Liquidated Damage Clause was Unenforceable " »

Recently, the Indiana Supreme Court decided that a business that loses customer traffic due to a State highway expansion project is not entitled to compensation.¹ In State of Indiana v. Kimco of Evansville, Inc., the State took, by eminent domain, a strip of land in front of a shopping center to expand a state highway.² As a result, southbound drivers could not longer access the shopping center through one of the main entrances and the shopping center lost the ability to widen or change the main entrance in the future.³ The State paid the shopping center for the strip of land, but refused to compensate the shopping center for "consequential damages" resulting from the reduced customer flow.⁴

The Court held that under Indiana law, the physical taking of the strip of land and the State's "coincident roadway improvements" were two distinct governmental actions.⁵ In this case, the reduction in customer traffic to the shopping center did not qualify as a taking.⁶ The Court acknowledged a compensable taking would have occurred had the state project highway completely eliminated all points of access to the shopping center.⁷ However, in this case, the highway project did not eliminate access to the main entrance for northbound drivers and there was another access point for southbound drivers.⁸ Finally, the Court explained that commercial property owners do not have property rights in the "free flow of traffic" past their properties nor do they have a right to "unlimited access" to adjacent property at any point along a State highway.⁹ Thus, the State's "coincident roadway improvements" that reduced customer flow and revenues to the shopping center did not constitute a compensable taking.¹⁰

Erin Casper Borissov is an associate at Parr Richey Obremskey Frandsen & Patterson LLP, with offices in Indianapolis and Lebanon practicing in the areas of energy and telecommunications law and corporate law.

The statements contained herein are matters of opinion only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have any questions regarding this article, please contact an attorney.

¹State of Indiana v. Kimco of Evansville, Inc., 902 N.E.2d 206, 208 (Ind. 2009).
²Id.at 208.
³Id.at 214.
⁴Id.at 209.
⁵Id.at 216.
⁶Id.at 214.
⁷Id.at 214.
⁸Id.at 214.
⁹Id.at 214-15.
¹⁰Id.at 216.

On July 14, 2009, the Indiana Court of Appeals issued an opinion in a case affecting Indiana municipal law, Board of Commissioners of Hendricks County v. Town of Plainfield, addressing whether a town had proper standing to ask for declaratory judgment to validate their own ordinance. The Court also addressed whether a town may exercise storm water jurisdiction and whether the town could charge storm water fees for property that was outside the corporate boundaries of the municipality.

On July 24, 2006, the Board of Commissioners (“Commissioners”) of Hendricks County adopted Ordinance No. 2006-15 (“County Ordinance”), which created a county storm water management board pursuant to Indiana law for the purpose of managing storm water. No fee structure was adopted.

Two weeks later, the Town Council of Plainfield (“Plainfield”), a town located in Hendricks County, adopted Ordinance No. 20-2006 (“Town Ordinance”) which established a Storm Water Department for the purpose of implementing storm water conditions and engaging in operation and maintenance activities to comply with both federal and state environmental laws. The Plainfield Town Ordinance authorized the new Storm Water Department “to impose a storm water fee on all property within the sewage works system service area.” The sewage works service area was defined by the Town Ordinance to include all property within the corporate boundaries of the municipality of Plainfield, but also included any property outside the corporate boundaries of Plainfield that used Plainfield’s services.

Robert Daum owned property within Plainfield’s sewage works service area, but outside the corporate boundaries of Plainfield. Plainfield sent notice to Daum stating that he, on behalf of himself and his two businesses, Daum LLC and Daum Trucking, Inc., would have to pay a storm water fee of $182.00 per month starting on September 29, 2006, and that this amount would increase to $364.00 per month on January 1, 2007. Daum paid the monthly bill under protest starting on January 1, 2007.

Continue reading " INDIANA MUNICIPAL LAW - TOWN DOES NOT HAVE STANDING TO SEEK DECLARATORY JUDGMENT TO VALIDATE ITS OWN ORDINANCE AND MAY NOT LEGALLY IMPOSE A STORM WATER FEE ON PROPERTY OUTSIDE ITS MUNICIPAL BOUNDARIES " »

This past May, the Indiana Court of Appeals ruled on a municipal annexation case coming out of Madison County. The Indiana municipal law case dealt with whether a county board of commissioners had standing to file a complaint challenging acts of annexation by a town of land in a formerly unincorporated area of the county.

In Indiana, the statutory framework of annexation consists of three stages: Legislative adoption of an ordinance annexing of certain territory and pledging to deliver certain services within a fixed period, an opportunity for remonstrance by affected landowners, and judicial review. Without the filing of a remonstrance, a court is not authorized to grant judicial review. Pursuant to Indiana law, the following code sections specify when a remonstrance may be filed: Ind. Code 36-4-3-11 allows a remonstrance to be filed by landowners in the annexed territory, Ind. Code 36-4-3-15.5 permits owners of land within ½ mile of the annexed territory to appeal the annexation, Ind. Code 36-4-3-16 allows property tax payers within the annexed territory to file a complaint against the municipality if it fails to implement the fiscal plan associated with the annexation, and Ind. Code 36-4-3-17 allows property owners on the border of a municipality to file a petition seeking disannexation with the works board of the municipality.

This dispute began when Madison County (“Madison”) approved the Summerbrook Planned Unit Development, which was to be developed by D.B. Mann Development, Inc, (“Mann”) on June 6, 2000. Per the approval of Madison, Mann was to pay fire service fees of up to $400,000 to Green Township at the time Summerbrook went through secondary review.

After the Town of Ingalls (“Ingalls”) passed two ordinances which commenced the process of annexing Summerbrook, and Ingalls filed a complaint naming Madison and Mann as defendants, seeking a declaration as to whom is entitled to receive the fire service fee. Ingalls shortly thereafter annexed Summerbrook by ordinance. Madison filed a counter claim and cross complaint requesting a declaration that the first two ordinances passed by Ingalls were illegal and void, and that the third which annexed Summerbrook was therefore invalid. The trial court found that because: (1) Madison owned no land in any of the annexation territories, (2) Madison owned no land within a half mile of the annexation territories, and (3) Madison had no other interest that could properly be used as a basis for challenging annexation, Madison lacked standing to challenge any of Ingalls’ annexations, and granted Ingalls summary judgment on all of Madison’s claims. The trial court also held that Mann lacked standing.

Madison appealed, contending that the trial court erred in its determination that Madison had no standing to challenge Ingalls’ acts of annexation, and that it was “aggrieved or adversely affected by the annexations because the annexations interfere with Madison’s ability to properly tax.”

Despite policy arguments made by Madison, the Indiana Court of Appeals held that the sole means for any party to challenge an annexation is remonstrance, and because Madison does not meet the specifications of Ind. Code 36-4-3-11, 15.5, 16, or 17 for gaining standing to remonstrate, Madison County thus does not have the standing to seek the intervention of the court.

See Madison County Board of Commissioners v. Town of Ingalls, 905 N.E.2d 1022 (Ind. Ct. App. 2009).

Jeremy L. Fetty is an associate at Parr Richey whose practice focuses on corporate law, utility law, municipal law, and labor and employment law. The statements contained herein are for information purposes only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have questions regarding this article, please contact an attorney.