Wilson Bennett LLC

LEGAL ALERT - NATIONWIDE - CTA reporting STILL stalled Ok, to continue this confusing, circuitous path, on January 23, the US Supreme Court granted a stay of the nationwide injunction that was issued in the Texas Top Cop case...BUT there is a nationwide injunction in another case (Smith v. U.S. Department of the Treasury), and THAT injunction is currently keeping everyone from having to file. Whew! As still reported on the FinCEN website: "In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force." Will SCOTUS undo that injunction? Will the current Administration halt all enforcement? Only time will tell. Stay tuned.

LEGAL ALERT - NATIONWIDE - CTA Reporting UN-reinstated Ok. I know. It's hard to tell these days if we are in a Monty Python skit. But yes, the people responsible for undoing the national injunction have undone the undoing of the national injunction. In other words, we are back to NOT having to file BOIs under the CTA. That's good news! Until something changes again. Stay tuned!

LEGAL ALERT - NATIONWIDE - Reporting under CTA Reinstated The 5th Circuit has dissolved the nationwide injunction, so under current law, most everyone is back to needing to file a BOI with FinCEN. But the feds have extended the Jan 1 filing deadline to Jan 13 for most people, so that is something. Those of us in the 11th Circuit are also waiting to see the outcome of the National Small Business case, but that is unlikely to be determined before the deadline. The 5th Circuit order will also likely be appealed. But until then, most of us are back to square with (with a small deadline extension). Stay tuned, and seek legal advice for help with your specific situation.

LEGAL ALERT - NATIONWIDE - Reporting under CTA Stayed On December 3, 2024, the Fifth Circuit instituted a nationwide injunction against enforcement of the reporting requirements under the Corporate Transparency Act. Thus, the January 1, 2025, deadline for over 32 million reporting companies to file a Beneficial Ownership Information report with the Financial Crimes Enforcement Network is stayed for now. [Texas Top Cop Shop, Inc. v. Garland, Civ. Action No. 4:24-CV-478] Seek legal advice to confirm before the reporting deadline runs. Meanwhile, WILSON BENNETT will continue keeping an eye out as this situation develops further. The Fifth Circuit's decision is only a preliminary one and can change. The Eleventh Circuit (as we previously reported) also has a decision in the works, but to date, that case's remedy has only been applied to the plaintiffs. The Texas Top case, having national scope, appears to protect everyone even if they are not the plaintiffs. Ultimately, we feel that the Texas Top result is the correct one. But this may become an issue that the Supremes have to weigh in on (if Congress does not simply undo the CTA itself).

LEGAL ALERT - NON-SOLICITATION OF EMPLOYEES (Georgia) As anticipated (based on the Justices' questions during oral arguments), the Georgia Supreme Court has unanimously overruled the lower court's determination that employee non-solicits require an express geographic limitation. N. Am. Senior Benefits v. Wimmer, ____ Ga. ____ (2024). Ultimately, the Georgia Supreme Court has returned Georgia businesses to where they thought they were...they can protect their employee relationships wherever located (provided that is "reasonable" under the cirmstances, and subject to out-of-state law where applicable, of course)...employee non-solicitation provisions can have IMPLIED geographic scope, which is how English (and the law) works absent an express requirement to the contrary. If you've nevertheless not had your restrictive covenant agreements reviewed by an attorney in the past few years (if ever!), now is a good time to do so while it is on your mind. Wimmer at least increases the chances that your agreements are okay, but better to know in advance.

LEGAL ALERT - NON-COMPETITION AGREEMENTS Yesterday, the judge in the Ryan case (Texas, federal court) extended her prior ban on the FTC rule to have nationwide effect. So as it currently stands, the FTC ban will NOT go into effect on September 4 as was originally scheduled (meaning that, for now, non-compete agreements will remain in force as drafted). The FTC may appeal, but that will take time. Also, the current wisdom is that (a) if Trump wins the Presidency in November, the FTC rule will be revoked in the new year and (b) regardless of who wins the Presidency, if the Ryan case goes to the U.S. Supreme Court, they will uphold the lower court’s decision, thus maintaining the ban on the FTC rule. So if you are an employer with non-compete agreements or an employee under non-compete agreements, the effect of those agreements currently remain unaffected by the FTC rule. Of course, the laws of your particular state still apply, so if you have any questions about the enforceability of your agreements, you should seek appropriate counsel.

LEGAL ALERT—ESTATE PLANNING (federal) Things we don’t see too often: a UNANIMOUS Supreme Court overturning a case that is less than 20 years old. If you meet ALL the following descriptors, you should schedule an appointment with your estate planning attorney ASAP: ·??????You own a business entity ·??????There are other owners of your business entity ·??????You have a “buy-sell” agreement triggered when an owner dies ·??????The entity (not the other owners) would buy the decedent’s shares ·??????You have or plan to use insurance to fund the buyout Last month, the US Supreme Court handed down a unanimous decision that has flown under the radar—Connelly v. US. The short version is that two brothers had the above scenario (which is very common with closely held businesses). One brother died, and the company used the insurance proceeds to buy the stock. So far so good. Relying on a 2005 case and various other authority (and frankly, per what’s been done in the industry for decades), the surviving brother netted out the entity’s receipt of life insurance proceeds against the entity’s obligation to pay the proceeds when it redeems the stock. But the Court unanimously determined that this was incorrect. Rather, the life insurance proceeds increased the value of the company (and thus the value of the decedent’s shares), and the company’s obligation to pay the funds when buying the shares back did NOT reduce the value of the company (thus also not the value of the decedent’s shares). Result: an extra $890,000 in estate tax had to be paid to the IRS. This is a rather seismic shift for estate planners. So if you are in the above situation, odds are good that your plan isn’t. As the Court noted, there are other techniques out there that solve this problem. They have their own ups and downs, of course, but better to have those explained to you so that you can decide what works best for you instead of having an unexpected (and otherwise potentially avoidable) estate tax bill.

Attended oral arguments at the Georgia Supreme Court a few weeks ago. The topic du jour? Employee non-recruitment covenants (aka employee non-solicitation covenants aka no-hire covenants aka anti-piracy covenants...but what's in a name...). Some of you may remember our prior post regarding the Wimmer case. There, the Court of Appeals held that employee non-recruitment covenants under Georgia's current statutory regime requires an express geographic limitation to be enforceable. And as every lawyer (and you covenant-nerdy non-lawyers...we know you're out there) reading this knows, employee non-recruitment covenants never have express geographic limitations! Thankfully, the GA Supremes took up the mantle. All the Justices had great questions...really great, actually...quite an impressive bench we have. Anyway, unless they were all playing Devil's Advocate (er, Devil's Jurists?), I believe they will overturn the decision and hold that an express geographic limitation is not required. Again based on their questioning, there are at least three avenues they can take to get there. But I won't bore you with those details.* I wonder which of them they will choose.... We won't have long to find out, though, so stay tuned! --RHB *The ultra-curious among you can watch the oral arguments on the Court's website so see the various points the Justices raise on why the lower court may be wrong. And the ultra-eagle-eyed among you can spot a piece of yours truly at camera edge...not that you can really tell its me...ah, well, I'll get my 15 minutes some other day....