Georgia Garnishment Laws Changed...Again!

Governor Nathan Deal recently signed into law House Bill 683 which specifically authorizes non-lawyers to sign garnishment pleadings on behalf of a company.  As discussed in our blog dated September 20, 2011, the Georgia Supreme Court issued an opinion that an attorney must sign all garnishment pleadings filed by a company in superior or state court.  Any company employee who signed such pleadings was engaging in the unauthorized practice of law.   This legislation counter-acts this ruling, and allows companies to go back to their routine practice of having human resources or payroll professionals sign garnishment pleadings.  The new legislation increases the amount of fees that a company may deduct for processing the garnishment.  Please note that while non-lawyers may once again sign garnishment pleadings submitted to superior or state court, an attorney must represent the company if the company’s answer is contested or if the company is in default.  If you have any questions regarding garnishment proceedings, including how your company can deduct fees for processing garnishments, please contact your MBN attorney. 

Companies Now Required to Use Attorney When Answering Garnishments

On September 12, 2011, the Georgia Supreme Court adopted an informal State Bar of Georgia opinion stating that any non-lawyer who answers a garnishment in Georgia is engaging in the unauthorized practice of law.  This decision means that all companies must now use an attorney licensed in Georgia when answering a summons of garnishment.  If a company does not have in-house counsel, then it must engage outside counsel to review and prepare the answers to a summons of garnishment.  Any non-lawyer employee who answers on behalf of a company will effectively be engaging in the unauthorized practice of law, and the court may issue a default judgment against the company because the answer was not filed by a licensed attorney. 

Everyone Needs to Get Ready for the Tax Increases in 2011

As mentioned in our prior article entitled “Here It Comes Again: Tax Increases in 2011”, starting January 1, 2011, the Federal Government will impose a $3.8 trillion tax hike if Congress does nothing to stop the tax increases coming into effect.  This tax increase is not just on the “wealthy”. It will affect most every American who pays income taxes through higher tax rates on individuals, families, and small businesses.  Married couples and parents will especially be subject to higher taxes, and there will be significant tax hikes on investments.  Even the death tax – repealed entirely for 2010 – will be resurrected on January 1, 2011. 

So how will the family budgets of typical taxpayers be affected by these tax hikes?

• A family of four earning $50,000 per year could pay more than $2,100 in higher taxes.  
• A single mom earning $36,000 per year could pay over $1,100 more in taxes. 
• Married senior citizens earning $40,000 per year could pay more than $1,400 in higher taxes.

Here are the details: 

Typical Tax Return #1: Middle-income Family of Four
Filing Status: Married, filing joint return Children: 2 Adjusted Gross Income: $50,000
	Without the 2011 Tax Hike	With the 2011 Tax Hike
Standard deduction	$11,600	$9,750
Personal exemptions	$15,000	$15,000
Taxable income	$23,400	$25,250
Tax liability	$2,652	$3,788
Child credit (non-refundable portion)	$2,000	$1,000
Total tax	$652	$2,788
The 2011 tax increase: $2,136

Calculations are based on Joint Committee on Taxation (JCT) estimates of various tax parameters reflecting expected inflation adjustments for 2011.

Typical Tax Return #2: Modest-income Single Parent
Filing Status: Head of Household Children: 1 Adjusted Gross Income: $36,000
	Without the 2011 Tax Hike	With the 2011 Tax Hike
Standard deduction	$8,600	$8,600
Personal exemptions	$7,500	$7,500
Taxable income	$19,900	$19,900
Tax liability	$2,373	$2,985
Child credit (non-refundable portion)	$1,000	$500
Total Tax	$1,373	$2,485
The 2011 tax increase: $1,112

Calculations are based on Joint Committee on Taxation (JCT) estimates of various tax parameters reflecting expected inflation adjustments for 2011.  

Typical Tax Return #3: Married Senior Citizens
Filing Status: Married, filing joint return Children: 0 Adjusted Gross Income: $40,000, including $5,000 in dividends[1]
	Without the 2011 Tax Hike	With the 2011 Tax Hike
Standard deduction	$13,800	$13,800
Personal exemptions	$7,500	$7,500
Taxable income	$18,700	$18,700
Qualified dividends	$5,000 taxed at 0% (special rate for taxpayers in the 10% or 15% brackets)	$5,000 taxed at 15% (ordinary income rate)
Total tax	$1,370	$2,805
The 2011 tax increase: $1,435

Calculations are based on Joint Committee on Taxation (JCT) estimates of various tax parameters reflecting expected inflation adjustments for 2011.

While the effect of these tax increases on any particular taxpayer’s family budget will depend on that

taxpayer’s specific facts and circumstances, these typical tax returns make clear that this tax hike is not limited to just the “wealthy”.

As these examples show, married couples and taxpayers with children will be hit particularly hard because of the re-imposition of the marriage penalty and the reduction in the child credit scheduled for January 1, 2011.

Proper Estate and Asset Protection Planning are more important now in anticipation of the tax increases than they have been in 8 years. Planning now may save you and your family taxes in the future. If we can assist you with these matters give me or one of our other Estate Planning attorneys a call.

_______________

[1] A recent study by Ernst & Young found that 65% of dividends were on tax returns with total income under $100,000 and 36% were on returns with total income under $50,000. Also, based on 2008 data The Tax Foundation, confirmed that seniors are especially reliant on dividend income.  Even though they filed roughly one-third of tax returns showing dividend income, seniors earned just under half (48%) of all dividend income.

Partially adopted from the Tax Tracker, Part II

Update Regarding Effective Date of New Georgia Non-Compete Law

A recent development calls into question the effective date of the new Georgia law governing restrictive covenants and non-competes.  As previously noted, on November 2, 2010, Georgia voters approved a new constitutional amendment providing for substantial changes in the law governing non-compete and confidentiality agreements, and based upon the language in the statute, the changes would have applied to such agreements entered into on and after November 3, 2010.  There appears, however, to have been an inconsistency in the wording of the House Resolution and the wording in the Constitutional Amendment as it was passed with respect to the effective date of the statute, and as a result, the new law will likely only apply to restrictive covenants and non-compete agreements entered into after January 2, 2011.  Any new agreements entered into between November 2, 2010 and January 2, 2011 may still be subject to interpretation and enforcement under the former law.  Accordingly, the effective date is unclear and employers should not enter into new agreements prior to January 3, 2011 with the expectation that the new law will apply. 

For a more detailed discussion of the new law, please contact one of the attorneys at Minor, Bell & Neal.

Georgia's New Annual Administrative Dissolution Process

Georgia has implemented an annual administrative dissolution process for corporations, limited partnerships and limited liability companies that are not current on their annual registrations. Annually (it occurred in September of this year), the Secretary of State will conduct a mass administrative dissolution of all non-current entities. Given the filing deadlines for annual registrations, it is possible for your entity to be administratively dissolved if it missed a single filing, including the initial filing.

Georgia corporations file the first registration within 90 days of the date of incorporation, and between January 1 and April 1 each year thereafter.  Limited liability companies, limited partnerships and foreign corporations file the first registration between January 1 and April 1 of the year following the initial filing, and between January 1 and April 1 each year thereafter.

If the registration isn’t received by the deadline the Secretary of State will send out a notice of its intent to administratively dissolve the entity. The notice goes to the principal address of the entity as shown on the Secretary of State’s records. You need to check the Secretary of State’s website to be sure your entity’s address is correct. If the registration isn’t paid within 60 days of the notice date, the entity will listed as “active/noncompliance” and will be dissolved on the mass dissolution date.

Once the entity is listed as “active/noncompliance”, its status cannot be changed online. An application for reinstatement must be requested and filed along with a $100 filing fee, a $25 late penalty and any unpaid annual registration fees. The Secretary of State’s website indicates that you can expect a 30 day processing time on the application.