https://activerain.com/blogs/jasonbfreeman en-us https://activerain.com/blogsview/5631868/but--your-honor--there-s-a-coronavirus-pandemic-higa---mcgrath But, Your Honor, There’s A Coronavirus Pandemic—Higa & McGrathZachary J. MontgomeryMr. Montgomery is a dual-credentialed attorney and CPA. He is also a Certified Fraud Examiner and has gained diverse business and tax experience from Deloitte & Touche, PricewaterhouseCoopers, and Ernst & Young. He also serves on the Federal Tax Policy committee for the Texas Society of CPAs. Jason B. Freeman, J.D., CPA, IRS Tax Defense, Attorney-CPA (Freeman Law, PLLC) Tue, 23 Feb 2021 05:58:59 -0800 https://activerain.com/blogsview/5631868/but--your-honor--there-s-a-coronavirus-pandemic-higa---mcgrath https://activerain.com/blogsview/5631865/how-will-states-deal-with-budgetary-issues- How will states deal with budgetary issues?George W. RendziperisGeorge Rendziperis provides state and local tax advice to companies in the oil and gas, manufacturing, financial services, private equity, real estate, technology and service sectors. He has more than 15 years of experience advising clients on controversy, litigation, planning, implementation and compliance issues related to income and franchise tax, sales and use tax, excise and property taxes, unclaimed property, and tax incentives and credits. Prior to joining Freeman Law, George was Counsel at Bracewell and held positions with leading tax and consulting firms. Jason B. Freeman, J.D., CPA, IRS Tax Defense, Attorney-CPA (Freeman Law, PLLC) Tue, 23 Feb 2021 05:56:15 -0800 https://activerain.com/blogsview/5631865/how-will-states-deal-with-budgetary-issues- https://activerain.com/blogsview/5628203/so-you-made-money-on-gamestop--now-what--a-primer-on-capital-gains So You Made Money on GameStop, Now What? A Primer on Capital GainsBy Ryan Dean: Ryan Dean is a licensed attorney with the State Bar of Texas. He practices in the area of federal and state tax controversy, white-collar defense, business and tax planning, and civil litigation. He previously served as an extern for Senior Federal Judge A. Joe Fish of the Northern District of Texas and as a law clerk for the Department of Justice: Tax Division. Jason B. Freeman, J.D., CPA, IRS Tax Defense, Attorney-CPA (Freeman Law, PLLC) Mon, 15 Feb 2021 06:02:12 -0800 https://activerain.com/blogsview/5628203/so-you-made-money-on-gamestop--now-what--a-primer-on-capital-gains https://activerain.com/blogsview/5626272/salt-alert--texas-apportionment-rule-change George W. RendziperisGeorge Rendziperis provides state and local tax advice to companies in the oil and gas, manufacturing, financial services, private equity, real estate, technology and service sectors. He has more than 15 years of experience advising clients on controversy, litigation, planning, implementation and compliance issues related to income and franchise tax, sales and use tax, excise and property taxes, unclaimed property, and tax incentives and credits. Prior to joining Freeman Law, George was Counsel at Bracewell and held positions with leading tax and consulting firms.george@freemanlaw.comSalt Alert: Texas Apportionment Rule Changes Jason B. Freeman, J.D., CPA, IRS Tax Defense, Attorney-CPA (Freeman Law, PLLC) Wed, 10 Feb 2021 11:44:47 -0800 https://activerain.com/blogsview/5626272/salt-alert--texas-apportionment-rule-change https://activerain.com/blogsview/5626125/substitute-return-penalties-are-valid-llanos-v--commissioner A must read by: Zachary J. MontgomeryMr. Montgomery is a dual-credentialed attorney and CPA. He is also a Certified Fraud Examiner and has gained diverse business and tax experience from Deloitte & Touche, PricewaterhouseCoopers, and Ernst & Young. He also serves on the Federal Tax Policy committee for the Texas Society of CPAs.Substitute Return Penalties Are Valid—Llanos v. Commissioner Jason B. Freeman, J.D., CPA, IRS Tax Defense, Attorney-CPA (Freeman Law, PLLC) Wed, 10 Feb 2021 06:06:32 -0800 https://activerain.com/blogsview/5626125/substitute-return-penalties-are-valid-llanos-v--commissioner https://activerain.com/blogsview/5624050/recent-tax-court-conservation-easement-decision A must Read:Recent Tax Court Conservation Easement Decision Jason B. Freeman, J.D., CPA, IRS Tax Defense, Attorney-CPA (Freeman Law, PLLC) Fri, 05 Feb 2021 05:43:51 -0800 https://activerain.com/blogsview/5624050/recent-tax-court-conservation-easement-decision https://activerain.com/blogsview/5622967/how-to-successfully-request-irs-penalty-relief Another must read by Matthew Roberts: Mr. Roberts is a Principal of the firm. He served nearly three years as an attorney-advisor to the Chief Judge of the United States Tax Court in Washington, D.C. Matthew received his Bachelor of Accountancy and his Master of Science in Taxation from the University of Mississippi, and his LL.M. in Taxation from New York University.How to Successfully Request IRS Penalty Relief Jason B. Freeman, J.D., CPA, IRS Tax Defense, Attorney-CPA (Freeman Law, PLLC) Wed, 03 Feb 2021 08:48:43 -0800 https://activerain.com/blogsview/5622967/how-to-successfully-request-irs-penalty-relief https://activerain.com/blogsview/5622225/covid-19-relief--think-again- A must read by Zach Montgomery: Mr. Montgomery is a dual-credentialed attorney and CPA. He is also a Certified Fraud Examiner and has gained diverse business and tax experience from Deloitte & Touche, PricewaterhouseCoopers, and Ernst & Young. He also serves on the Federal Tax Policy committee for the Texas Society of CPAs.COVID-19 Relief? Think Again!—Corporate Charitable Contributions for Disaster Relief Jason B. Freeman, J.D., CPA, IRS Tax Defense, Attorney-CPA (Freeman Law, PLLC) Tue, 02 Feb 2021 09:16:25 -0800 https://activerain.com/blogsview/5622225/covid-19-relief--think-again- https://activerain.com/blogsview/5620326/tolling-tax-statutes-of-limitations Looking forward to presenting today on Tax Statutes of Limitations - we'll be covering the waterfront.Please take the time to share this link, it is with great respect that I want to share this information.Tolling Tax Statutes of Limitations: Collections, Refund, Claims, IRS Audits, and the Right to Finality Jason B. Freeman, J.D., CPA, IRS Tax Defense, Attorney-CPA (Freeman Law, PLLC) Thu, 28 Jan 2021 11:31:30 -0800 https://activerain.com/blogsview/5620326/tolling-tax-statutes-of-limitations https://activerain.com/blogsview/5619801/primer-on-irs-s-new-voluntary-disclosure-practice--secret-weapon My colleague, Matthew Roberts, and I recently published an article in Today's CPA Magazine - A Primer on the IRS’s New Voluntary Disclosure Practice: A Taxpayer's Secret Weapon.A Primer on the IRS’s New Voluntary Disclosure Practice: A Taxpayer's Secret Weapon Jason B. Freeman, J.D., CPA, IRS Tax Defense, Attorney-CPA (Freeman Law, PLLC) Wed, 27 Jan 2021 05:23:29 -0800 https://activerain.com/blogsview/5619801/primer-on-irs-s-new-voluntary-disclosure-practice--secret-weapon https://activerain.com/blogsview/5619794/online-retailers-and-remote-sellers--sales-and-use-tax Excellent post from George W. Rendziperis on the state sales tax rules for online retailers and remote sellers. Just recognized by the Texas State Bar as one of the top ten posts for the week!Online Retailers and Remote Sellers: Sales and Use Tax Jason B. Freeman, J.D., CPA, IRS Tax Defense, Attorney-CPA (Freeman Law, PLLC) Wed, 27 Jan 2021 05:19:12 -0800 https://activerain.com/blogsview/5619794/online-retailers-and-remote-sellers--sales-and-use-tax https://activerain.com/blogsview/5619740/forget-uncle-sam-watch-out-for-the-texas-comptroller A must read by Zach Montgomery:Forget Uncle Sam watch out for the Texas Comptroller Jason B. Freeman, J.D., CPA, IRS Tax Defense, Attorney-CPA (Freeman Law, PLLC) Wed, 27 Jan 2021 05:05:27 -0800 https://activerain.com/blogsview/5619740/forget-uncle-sam-watch-out-for-the-texas-comptroller https://activerain.com/blogsview/5618858/irs-updated-procedure-for-penalties IRS Updated Revenue Procedure for Reducing or Avoiding Understatement Penalties and Tax Return Preparer PenaltiesIRS Updated Procedure for Penalties Jason B. Freeman, J.D., CPA, IRS Tax Defense, Attorney-CPA (Freeman Law, PLLC) Mon, 25 Jan 2021 08:22:26 -0800 https://activerain.com/blogsview/5618858/irs-updated-procedure-for-penalties https://activerain.com/blogsview/5618855/the-tax-court-in-brief The Tax Court in Brief Jason B. Freeman, J.D., CPA, IRS Tax Defense, Attorney-CPA (Freeman Law, PLLC) Mon, 25 Jan 2021 08:17:39 -0800 https://activerain.com/blogsview/5618855/the-tax-court-in-brief https://activerain.com/blogsview/5617665/mere-change---f--reorganization-qualifies-in-spite-of-change-in-plan Mere Change?—“F” Reorganization Qualifies in Spite of Change in Plan Jason B. Freeman, J.D., CPA, IRS Tax Defense, Attorney-CPA (Freeman Law, PLLC) Fri, 22 Jan 2021 05:53:07 -0800 https://activerain.com/blogsview/5617665/mere-change---f--reorganization-qualifies-in-spite-of-change-in-plan https://activerain.com/blogsview/5617664/tax-court-denies-award-in-recent-whistleblower-tax-case- Tax Court Denies Award in Recent Whistleblower Tax Case. Jason B. Freeman, J.D., CPA, IRS Tax Defense, Attorney-CPA (Freeman Law, PLLC) Fri, 22 Jan 2021 05:51:26 -0800 https://activerain.com/blogsview/5617664/tax-court-denies-award-in-recent-whistleblower-tax-case- https://activerain.com/blogsview/5614708/tax-court-in-brief Tax Court in Brief Jason B. Freeman, J.D., CPA, IRS Tax Defense, Attorney-CPA (Freeman Law, PLLC) Mon, 18 Jan 2021 07:19:32 -0800 https://activerain.com/blogsview/5614708/tax-court-in-brief https://activerain.com/blogsview/5612492/a-second-class-of-stock-may-not-jeopardize-your-s-election- Insight by Zachary Montgomery: A Second Class of Stock May Not Jeopardize Your S Election! Jason B. Freeman, J.D., CPA, IRS Tax Defense, Attorney-CPA (Freeman Law, PLLC) Thu, 14 Jan 2021 06:55:05 -0800 https://activerain.com/blogsview/5612492/a-second-class-of-stock-may-not-jeopardize-your-s-election- https://activerain.com/blogsview/5611748/motivation-rule-21-90 Motivation Rule 21/90 Jason B. Freeman, J.D., CPA, IRS Tax Defense, Attorney-CPA (Freeman Law, PLLC) Tue, 12 Jan 2021 08:08:04 -0800 https://activerain.com/blogsview/5611748/motivation-rule-21-90 https://activerain.com/blogsview/5611746/state-and-local-tax--entity-formation-for-certain-texas-activity Insight from George Rendziperis: STATE AND LOCAL TAX: ENTITY FORMATION FOR CERTAIN TEXAS ACTIVITY Jason B. Freeman, J.D., CPA, IRS Tax Defense, Attorney-CPA (Freeman Law, PLLC) Tue, 12 Jan 2021 08:03:23 -0800 https://activerain.com/blogsview/5611746/state-and-local-tax--entity-formation-for-certain-texas-activity https://activerain.com/blogsview/5611744/skating-on-thin-ice Insight by Zachary Montgomery:Skating on Thin Ice: IRS Does Not Recognize Organization’s 501(c)(3) Status Jason B. Freeman, J.D., CPA, IRS Tax Defense, Attorney-CPA (Freeman Law, PLLC) Tue, 12 Jan 2021 07:57:49 -0800 https://activerain.com/blogsview/5611744/skating-on-thin-ice https://activerain.com/blogsview/5487928/freeman-law-s-compendium-of-recent-coronavirus-legislation-and-regulatory-reform Freeman Law’s most up-to-date Compendium of Recent Coronavirus Legislation and Regulatory Reform is being made available to the public here. Please check back regularly, as we will be updating the Compendium on a daily basis to incorporate new and forthcoming guidance and laws.   Click below for a link to our website and blog: https://freemanlaw.com/freeman-laws-compendium-of-recent-coronavirus-legislation-and-regulatory-reform-2/ Jason B. Freeman, J.D., CPA, IRS Tax Defense, Attorney-CPA (Freeman Law, PLLC) Mon, 13 Apr 2020 17:32:35 -0700 https://activerain.com/blogsview/5487928/freeman-law-s-compendium-of-recent-coronavirus-legislation-and-regulatory-reform https://activerain.com/blogsview/5487927/flattening-the-economic-curve--the-high-points-of-coronavirus-tax-relief As previously posted on Forbes.com. The following post is from Freeman Law, PLLC, and is available at www.freemanlaw.com.   By Jason B. Freeman  The novel coronavirus pandemic may be unlike anything that we have ever seen.  And so it stands as a living, breathing crucible through which to test Newton’s well-known proposition: that for every action there is an equal and opposite reaction.  Indeed, the Congressional response to the careening economy left in the pandemic’s wake is, for its part, unlike any that we have seen in modern times.  It is nothing short of the largest economic relief bill in American history.  But will it be enough?  Only time will tell.On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief and Economic Security Act—better known as the CARES Act.  With the economy teetering on the brink of recession and businesses reeling from commercial stagnation, Congressional delegates came together for long enough to all-but-unanimously support a 2-trillion-dollar economic-relief package.  After passing in the Senate by a 96-0 margin, the measure was adopted by the House of Representatives through a voice vote with minimal dissension in its ranks.  The Act employs an array of tax breaks, retroactive amendments to the Tax Cuts & Jobs Act of 2017 (the “TCJA”), immediate rebates, and expanded loan relief to small businesses designed to incentivize employee retention.  This article will hit the high points—broader analysis of its provisions will come in the days ahead.Individual Rebates.  The highlight for many individual Americans is the CARES Act’s so-called “advanced recovery rebate.”  It works like this: Americans who file single, head-of-household, or married-filing-separate tax returns are entitled to an advanced rebate of $1,200, unless they are subject to the phase-out rules that are described below.  Couples filing on a married-filing-jointly basis are entitled to a rebate of $2,400.  Taxpayers can tack on an additional $500 for each qualifying child, which generally means tax dependents who are under the age of 17.  The rebates will be paid “automatically,” with many Americans simply receiving a deposit in their bank account.But the phase-out rules—a manifestation of that trite truism that what Congress giveth, Congress taketh away—may rain on a rebate-expecting taxpayer’s parade.  Under these rules, if a taxpayer makes a threshold amount of money (technically, has an “adjusted gross income,” or “AGI” in tax jargon, in excess of a specified amount), then the promised rebate is reduced, eventually to zero.  Generally, the IRS will apply the phase out based on the taxpayers’ 2019 tax year if a return has been filed or 2018 if no return has been filed for 2019, although there may be exceptions for certain taxpayers. Here is how the phase out works: For an individual who files a single or married-filing-separate tax return, the phase out begins when they make (technically, have an AGI of) more than $75,000.  The rebate is reduced by $5 for every $100 over this phase-out threshold.  So, if this individual taxpayer makes $99,001, the individual rebate is completely “phased out.”For head-of-household filers, the phase-out threshold starts at an adjusted gross income of $112,500.  The rebate completely phases out at $146,000.  And for married-filing-joint taxpayers, the phase-out threshold begins at $150,000 and the rebate completely phases out at $198,000. So, to demonstrate how this all works, let’s say that you are a single taxpayer making $50,000 a year.  Great.  You are entitled to a $1,200 rebate.  But let’s say that you are fortunate and industrious enough to make $90,000 a year.  Well, you are going to be entitled to a rebate of only $450.  That is calculated (for those who do not like simple math, look away!) by recognizing that your income exceeds the $75,000 threshold amount by $15,000 ($90,000 – $75,000 = $15,000).  The rebate that you are entitled to is reduced by 5% of the amount exceeding $75,000 (that is the same thing as saying $5 for every $100 over $75,000), which is $750.  We subtract $750 from the $1,200 that you would otherwise get and—voila!—you arrive at $450.  Now to the other marquee provisions of the Act. The Paycheck Protection Program (“PPP”) Loans.  The CARES Act appropriated an eye-popping $349 billion to a newly-established SBA loan program known as the Paycheck Protection Program or PPP for short.  The PPP is designed to provide loans of up to $10 million to small businesses, all in an effort to encourage employers to retain their workforces during the coronavirus crisis.  And if the loan proceeds are used for the right things, the loan will actually be forgiven.  In that sense, it functions more like a grant than a loan. PPP loans are generally available to businesses with 500 or fewer employees, although there are some exceptions for businesses in the hospitality and dining industry.  Sole proprietors, independent contractors, and self-employed individuals are all generally eligible.  PPP loans must be made before June 30, 2020.  A PPP loan recipient can get a loan of up to either (i) $10 million or (ii) two-and-a-half times their average monthly payroll costs, whichever number is lower. PPP loan proceeds can be used for the following categories of costs: (1) payroll costs; (2) costs related to continuing group health care benefits; (3) employee salaries, commissions or similar compensation; (4) interest on mortgage obligations; (5) rent; (6) utilities; and (7) interest on debt obligations incurred before February 15, 2020. PPP loans are backed by a SBA guarantee.  They are “non-recourse” and do not require a personal guarantee or collateral.  PPP loans come with an interest rate of 1%, and payments can be deferred for six months.  There is no prepayment penalty and the SBA will not charge a fee on a PPP loan.  The SBA has also waived its otherwise-applicable requirement that the recipient be unable to obtain credit somewhere else. A PPP loan recipient must provide a certification that:The uncertainty of current economic conditions makes the loan request necessary to support ongoing business operations; The funds will be used to retain workers and maintain payroll or make mortgage, lease, or utility payments; There are no other duplicative loan applications; and During the period from February 15, 2020 through December 31, 2020 the borrower has not received other duplicative PPP loan amounts under the CARES Act.And now to the grand finale: If used properly, the PPP loan can be forgiven, in whole or in part.  The loan proceeds will be forgiven to the extent that they are used to pay the following costs during the eight-week period following the loan: (1) payroll costs; (2) interest on a debt for real or personal property that was incurred in the ordinary course of business before February 15, 2020; (3) a rent obligation under a leasing agreement that was in force before February 15, 2020; and (4) payment for electricity, gas, water, transportation, telephone, or internet access if the service began before February 15, 2020.  While not in the Act itself, the SBA’s interim guidance provides that no more than 25% of the amount forgiven can be attributable to non-payroll costs.  In other words, in order to have the entire loan forgiven, at least 75% of the loan proceeds must be used on payroll costs. While the forgiveness of a debt is normally treated as a taxable event—and, thus, as gross income for federal tax purposes to the extent of the liability that is forgiven—the CARES act specifically provides that the amount of the PPP loan that is forgiven will not be subject to tax.  The forgiven loan thus looks more like a grant than a loan. But buyer beware, as there are some restrictions in place that can limit the amount of the loan that is forgiven.  For example, if an employer reduces the number of employees during the eight-week period after the loan, the amount of forgiveness may be reduced.  In addition, if the employer reduces the total salary or wages for an employee by more than 25%, the forgiveness may also be reduced, although this particular limitation does not apply to employees who make more than $100,000. Employee Retention Credit for Employers. The CARES Act provides eligible employers with access to a potential credit against their employment taxes.  The credit is generally available to employers carrying on a trade or business during 2020 who saw operations fully or partially suspended due to an order from a governmental authority limiting commerce, travel, or group meetings due to COVID-19 or who experienced a drop of one-half or more in their gross receipts compared to the same quarter in the prior year.  The credit, however, is not available to a recipient of a PPP loan. The employee retention credit allows for a credit of one-half of the wages paid to employees due to these circumstances.  The amount of wages taken into account during any particular quarter cannot be more than $10,000 for any particular employee.  And wages that are paid for family or sick leave under the Families First Coronavirus Response Act (the “FFCRA”) are not eligible for the credit.  Instead, the FFCRA provides for a separate and distinct credit for those payments. Where available, the CARES Act’s employee retention credit can be used against the 6.2% social security taxes that are imposed on the employer under the Federal Insurance Contributions Act (“FICA”).  While that is good, note that it does not provide a credit against the 1.45% Medicare tax imposed on the employer. Payroll Tax Deferral.  The CARES Act also postpones the due date for depositing the employer portion of certain payroll taxes.  This postponement also applies to 50% of the self-employment taxes on earnings after the date of the CARES Act.  Just like with the employee retention credit, however, the deferral is not available to a recipient of a PPP loan. Where available, the Act delays the payment of the 6.2% employer portion of social security taxes imposed under FICA—at least on wages paid for work starting on the date of the Act through the end of 2020.  The payment of one-half of these taxes is delayed until December 31, 2021.  The due date for the other half is delayed until December 31, 2022.  For many employers, this delay will free up a substantial amount of cash and infuse liquidity that can be used to keep their workforce employed.  But a word of caution: Like the employee retention credit, the delayed due date does not apply to a recipient of a PPP loan who has part, or all, of that debt forgiven. We have just covered several of the more prominent aspects of the CARES Act.  But in truth, they really just scratch the surface of a complex, interrelated web of relief provisions.  The Act itself provides for a host of tax credits and related measures designed to quell the collateral damage caused by a global “supply shock” and to right a pandemic-stricken economy.  In the end, it is more of a relief package than a stimulus bill—an effort to stem the tide of an economic freefall.  In that respect, it is truly of a scale and type that is unlike anything we have seen in modern times, possibly ever.  Whether it proves to be an “equal and opposite” reaction to this novel foe, however, remains to be seen. For a comprehensive compendium of recent coronavirus legislation and regulatory reform, click here.For a link to the above post, click here. Jason B. Freeman, J.D., CPA, IRS Tax Defense, Attorney-CPA (Freeman Law, PLLC) Mon, 13 Apr 2020 17:30:29 -0700 https://activerain.com/blogsview/5487927/flattening-the-economic-curve--the-high-points-of-coronavirus-tax-relief https://activerain.com/blogsview/5482844/force-majeure-and-coronavirus---act-of-god--or-breach-of-contract- The following post is from Freeman Law, PLLC, and is available at www.freemanlaw.com.   By Jason B. Freeman Does a pandemic like the Coronavirus trigger a contractual force-majeure clause?  A force-majeure clause is sometimes referred to as an “act-of-god” clause. And perhaps nowhere are the concepts of “church” and “state” more integrally connected than where the secular law resorts to defining an “act of god.”  Where applicable, a force-majeure clause allows a party to stop performing its contractual obligations. As the COVID-19 epidemic spreads, businesses across the globe are confronting “force majeure”-like circumstances.  Supply chains are broken; business operations shut down.  And work forces are self-quarantined or under orders to shelter in place, making contractual fulfillment difficult, if not impossible.  But whether the current state of affairs is sufficient to trigger a force-majeure defense may (like any good legal question) depend on the circumstances.  In Texas, at least, it depends on the underlying contract—whether it has a force-majeureclause in the first place, and, if so, its scope and definition.The Impact on Chinese PartnersOn March 11, 2020, the World Health Organization (“WHO”) officially declared the coronavirus a “pandemic.”  The coronavirus is believed to have originated in Wuhan, China, and Chinese businesses and logistics partners have been hit particularly hard by its fallout.  This, of course, may impact American businesses with Chinese relationships.  Notably, the People’s Republic of China (“PRC”) recognizes a force-majeure contract defense, and last month, the China Council for the Promotion of International Trade (CCPIT) issued thousands of “force majeure” certificates in an effort to legally protect Chinese exporters.  The PRC National People’s Congress Standing Committee’s Legislative Affairs Commission has also expressed its view that a liberal view of force-majeure relief is appropriate.Under the “General Provisions of the Civil Law of the [PRC]” (中华人民共和国民法总则), as well as China’s Contract Law, “force majeure” is essentially defined as “an objective event or circumstance which is unforeseeable, unavoidable and insurmountable.”  北京市第二中级人民法院课题组，《正确处理“非典”疫情构成不可抗力免责事由案件》,《法律适用》2003年第6期.  The closest historical analogue for judging how the Chinese government and courts will treat the situation is the SARS crisis.  For that, we can look to a quote from the Beijing Second Intermediate People’s Court, which then stated:“We are of the opinion that the SARS crisis is an unexpected abnormal event and an epidemic with worldwide impact, which is not only unforeseeable for the parties in dispute, but is also unforeseeable for medical experts with extensive medical knowledge. Since the outbreak of this crisis, there has been no effective method to stop its wide transmission, and the source of infection has not been precisely identified. Although many patients infected with SARS have been cured and have left the hospital, medical experts have not yet determined any effective treatment for SARS. Therefore, at least at present, such an abnormal event is an objective circumstance that is unforeseeable, unavoidable, and insurmountable by human beings. Legally speaking, it shall be deemed as a force majeure event, and specifically, a kind of natural disaster.”If history is any indication, the Chinese government seems likely to treat the epidemic as a force-majeure event.  And, in any event, it appears that the Chinese government and courts, at least at this stage, are taking a liberal view with respect to Chinese law and concepts of force-majeure relief applicable to Chinese exporters. How do Force-Majeure Provisions Operate in Texas? A force-majeure provision is a common contractual clause.  And force-majeure clauses are enforceable in Texas.However, there is no stand-alone doctrine or absolute concept of “force majeure.”  The force-majeure defense, in other words, must be based on an express provision in the contract at issue.  Said another way, “force majeure” is not a fixed or universal rule of law that regulates the content of all force-majeure clauses, but instead is a term that describes a particular type of event—e.g., an “Act of God,” that may excuse performance under the contract if so specified.The theory of force-majeure has been historically linked to “impossibility of performance.” The concept of force-majeure itself derives from French civil law, and the phrase’s etymological roots derive from the Latin vis major, meaning “superior force.”   It has historically embodied the idea that parties may be relieved of performing their contractual duties when performance was prevented by causes beyond their control—such as an act of God.[1]  However, today the scope and application of the legal concept is governed more by the specific terms of the contract than by common law theory or etymological nuance.[2]    Indeed, much of the legal concept’s historic underpinnings have given way, and “force majeure” is now really just a descriptive phrase that does not carry much inherent substance.  Its scope and application, for the most part, are completely dependent upon the terms of the contract in which it appears.[3]As such, when the parties to a contract have themselves defined the contours of the force-majeure rights in their agreement, that definition dictates the application, effect, and scope of the force-majeure rights.[4]  Therefore, courts look to the language that the parties specifically bargained for in the contract to determine the parties’ intent with respect to whether the event complained of excuses performance.[5]So Will a Force-Majeure Clause Apply? As this demonstrates, whether a force-majeure defense is applicable will depend on the terms of the contract.  The following questions may be informative: What law governs the contract? Is there a choice-of-law provision? Were there other (non-Coronavirus) factors that may have been contributing causes to the party’s failure to perform? Does the contract’s force-majeure clause refer to health pandemics, epidemics, or similar phenomena? Does the provision reference government intervention or an act of government? Does the provision reference language in the nature of “disease” or “quarantines?” What does the phrase, “act of God,” mean in the context of the specific contract? Are there contextual terms that may shed meaning or imply the scope of the phrase? Does the contract have a catchall provision? Does the contract have a notice requirement? Does the provision give rise to a termination right? Are there legal mitigation obligations? Parties may also need to consider other similar defenses, such as whether the Coronavirus-related circumstances lead to a frustration of the contract’s purpose, giving rise to the doctrine of frustration.  Or whether the contract contains a material-changes clause?  Finally, when all else fails, parties may need to read their insurance policies carefully.Parties in doubt should seek legal advice and may have time-sensitive obligations to exercise notice rights or to meet other legal requirements.  Force-majeure defenses are fact sensitive and highly dependent on the circumstances.  Freeman Law’s litigation attorneys regularly litigate complex contractual disputes and provide guidance in complex litigation matters. For more Coronavirus-related posts, see:Speedy Trial Rights and the CoronavirusFamilies First Coronavirus Response ActA Fresh Start for Many? Economic Downturn Means an Upturn in Favorable Tax SettlementsTEXAS COMPTROLLER OFFERS ASSISTANCE TO TEXAS BUSINESSES DURING THE CORONAVIRUS OUTBREAKLatest IRS Coronavirus Guidance on DeadlinesAdditional IRS Guidance on Coronavirus Tax Relief: New People First Initiative [1] 6A CORBIN, CORBIN ON CONTRACTS § 1324 (1962); Sun Operating Ltd. P’ship v. Holt, 984 S.W.2d 277, 282–83 (Tex. App. 1998).[2] Tejas Power Corp. v. Amerada Hess Corp., No. 14-98-00346-CV, 1999 WL 605550, at *3 (Tex. App. Aug. 12, 1999).[3] Id.[4] Sun Operating Ltd. P’ship v. Holt, 984 S.W.2d 277, 283 (Tex. App. 1998).[5] Perlman v. Pioneer Ltd. P’ship, 918 F.2d 1244, 1248 (5th Cir. 1990). Jason B. Freeman, J.D., CPA, IRS Tax Defense, Attorney-CPA (Freeman Law, PLLC) Sat, 28 Mar 2020 07:13:51 -0700 https://activerain.com/blogsview/5482844/force-majeure-and-coronavirus---act-of-god--or-breach-of-contract- https://activerain.com/blogsview/5482726/speedy-trial-rights-and-the-coronavirus The U.S. Supreme Court announced that it is postponing upcoming oral arguments.  The last time that it did that was more than a hundred years ago in 1918 as a response to the Spanish flu.[1]  Case in point that our judicial system is undergoing strains that, while not entirely unprecedented, are rarely seen.  And that strain will test constitutional values in the months to come.The Sixth Amendment to the U.S. Constitution guarantees American defendants the right to a speedy trial.  This right has a noble lineage.  It was memorialized in the Magna Carta, and our founding fathers recognized it as a fundamental stalwart of liberty.But the public health crisis left in the wake of Coronavirus—with social-distancing practices and orders to shelter-in-place—leaves serious questions about our criminal justice system’s ability to cope with the fallout.State and federal courts across the country are suspending and postponing criminal jury trials.  More will come.  The only question is: for how long?The United States has the largest prisoner population in the world—with some 2-million-plus inmates.  That figure implies a significant pipeline of would-be prisoners or convicts.  So the question has serious systemic implications.The Sixth Amendment provides:“[i]n all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the State and district wherein the crime shall have been committed.”The Supreme Court has recognized that “the Sixth Amendment's guarantee of a speedy trial ‘is an important safeguard to prevent undue and oppressive incarceration prior to trial, to minimize anxiety and concern accompanying public accusation and to limit the possibilities that long delay will impair the ability of an accused to defend himself.’”  United States v. Loud Hawk, 474 U.S. 302, 312 (1986) (quoting United States v. Ewell, 383 U.S. 116, 120 (1966)).  It is, in other words, fundamentally important to a society that values individual rights and securing the presumption of innocence—a legal maxim more engrained in American society than perhaps any other.  But the right has somewhat malleable contours.Just what constitutes a “speedy trial”—and satisfies the Sixth Amendment right—varies from case to case depending on the circumstances.  The Supreme Court has articulated a four-part test to determine whether a delay violates the right.  That test looks to the “[l]ength of delay, the reason for the delay, the defendant's assertion of his right, and prejudice to the defendant.”  None of the factors is dispositive.  Rather, they must all be considered, along with any other relevant circumstances.  It remains to be seen how the coronavirus will play into this test.As a result, the novel coronavirus raises serious questions for our criminal justice system.  Courts in the Northern District of Texas, for example, have suspended jury trials and grand jury panels for more than a month—and possibly more.  This has, perhaps, become the norm.  While these delays will fall under the statutory Speedy Trial Act’s exclusion (Sec. 316(h)(7)(A)), their implications under the Sixth Amendment are not as clear.  It seems that the “COVID-19” defense may become a common theme in months to come. [1] While the Court’s postponement of argument sessions in light of public health concerns is not unprecedented, it is a rare occurrence.  The Court postponed scheduled arguments for October 1918 in response to the Spanish flu epidemic.  The Court also shortened its argument calendars in August 1793 and August 1798 in response to yellow fever outbreaks. Jason B. Freeman, J.D., CPA, IRS Tax Defense, Attorney-CPA (Freeman Law, PLLC) Mon, 30 Mar 2020 08:00:02 -0700 https://activerain.com/blogsview/5482726/speedy-trial-rights-and-the-coronavirus