Saturday, December 30, 2006

Many New Laws Affecting Drivers Become Law In 2007

More than 1,400 new state laws will go in effect Jan. 1.

Many of those new laws will target people on the roadways.

People who drive on the wrong side of the road during a police pursuit will now be charged with an additional felony.

If you're driving past an emergency vehicle or police car that's pulled over with its lights flashing, you are now required to move over one lane to the left if it's safe.

"There have been many highway patrol officers hit in the street. Also, the many CalTrans employees and the many firefighters -- this is intended to protect those who protect," said Highway Patrol Officer Joe Zizi.

Tow companies are now required to get permission from property owners before they tow your car.

And a DUI will now show on your permanent record if the driver is under 21.

Wednesday, December 27, 2006

Do I Need An Attorney?

Question: I am a contractor in California. I am going into arbitration before the Contractors State License Board with a former customer. Do I need legal counsel?

Answer: Under certain circumstances, the California Contractors State License Board (“CSLB”) can offer arbitration to settle disputes between a contractor and a customer. If both parties agree to this procedure, then the arbitrator’s decision will be binding just as if the matter had been heard in court by a judge and jury. Therefore, the decision on whether or not to have an attorney is very important.

Whenever a client asks if they need an attorney, I like to use an analogy that we can all relate to: changing your own oil. Acting like your attorney is like trying to change your own oil. I took auto shop in high school and I can change my own oil. However, I can either spend half of my Saturday underneath my car or I can pay $20 to get someone else to do it and get a free car wash. Some people can and do represent themselves appropriately and others should leave the lawyering to the lawyers.

In a CSLB arbitration proceeding, both parties have the right to be represented by legal counsel. However, the customer will have one advantage: an expert witness paid for by the State. While legal representation is not required, I strongly recommend that contractors avoid going it alone in CLSB-sponsored arbitration.

About the Author
Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.

Using a Judgment Lien on Personal Property

Judgment creditors in California often overlook a very simple yet effective lien available to help enforce any judgment: a judgment lien on personal property ("JLPP"). A California judgment creditor can obtain a judgment lien on certain types of personal property (equipment, inventory, farm products, accounts receivable, chattel paper, negotiable documents of title) by filing a Notice of Judgment Lien with the California Secretary of State. The title JLPP is somewhat of a misnomer because the type of lien has more impact on the assets of a business rather and individual judgment debtors.

Like the judgment lien on real property, the judgment lien on personal property is a passive lien in that does not disturb the debtor's possession and use of property. Judgment liens can sometimes better serve the interests of the judgment creditor because they establish priority and are less likely to push the debtor into bankruptcy. A JLPP is particularly effective against business debtors because it can impede a debtor's ability to obtain secured financing under Article 9 of the Uniform Commercial Code.

A JLPP is one of many methods available to California judgment creditors. If you need assistance in collecting an unpaid judgment in California, please contact us for a complimentary consultation.

About the Author
Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.

Enforcing a Restraining Order

Question: I obtained a civil harassment restraining order, but the police won't respond when I call to report violations. What can I do about this?

Answer: I recently covered the topic of making the decision to get a harassment restraining order. Click here to read that article. A restraining order does no good unless you know how to enforce it.

Although law enforcement generally does a good job of enforcing civil harassment restraining orders in California, victims of harassment will sometimes encounter officers that are still reluctant to take a crime report. If the victim cannot convince the police to take a report and enforce the restraining order, the victim can initiate a civil contempt proceeding against the perpetrator.

Under California Code of Civil Procedure §§ 1218 & 1219, you may file for civil contempt for a violation of the harassment restraining order. The abuser is in "civil contempt" if he or she does anything that violates the terms of the harassment restraining order. If the court finds that the defendant violated the restraining order, the judge court sentence the defendant up to 5 days in jail and fine of up to $1000 per violation. The judge can also order the defendant to pay the legal fees incurred by the victim in bringing the contempt charges.

The ability to file contempt can empower the victim to prevent harassment when the police refuse to act. However, it is not without risks. The victim must prove guilty beyond a reasonable doubt just like a prosecutor and the defendant has the same rights as in a criminal case such as the right not to testify and the right to court-appointed counsel if the defendant cannot afford an attorney. Nonetheless, it can be a powerful tool for the victim to fight back and prevent further harassment.

If you need assistance in obtaining a harassment restraining or filing civil contempt charges in Southern California, please contact us for a complimentary consultation.

About the Author: Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.

Thursday, December 21, 2006

Class Action Lawsuit Filed Against Nintendo

This article was reprinted with the permission of the webmaster for Wii Have a Problem.

A law firm known as Green Welling LLP has petitioned for a class action lawsuit against Nintendo for what they are calling "the defective nature of the Nintendo Wii." It will be up to a judge to decide whether or not this lawsuit will move forward.

"Green Welling LLP filed a nationwide class action lawsuit on behalf of the owners of the Nintendo Wii against Nintendo of America, Inc., in the U.S. District Court for the Western District of Washington. The class action lawsuit arose as result of the defective nature of the Nintendo Wii. In particular, the Nintendo Wii game console includes a remote and a wrist strap for the remote. Owners of the Nintendo Wii reported that when they used the Nintendo remote and wrist strap, as instructed by the material that accompanied the Wii console, the wrist strap broke and caused the remote to leave the user's hand. Nintendo's failure to include a remote that is free from defects is in breach of Nintendo's own product warranty.

The class action lawsuit seeks to enjoin Nintendo from continuing its unfair or deceptive business practices as it relates to the Nintendo Wii. The lawsuit also seeks an injunction that requires Nintendo to correct the defect in the Wii remote and to provide a refund to the purchaser or to replace the defective Wii remote with a Wii remote that functions as it is warranted and intended."

Those of you familiar with class action lawsuits will remember that the plaintiffs in these cases usually receives approximately ten cents per person while the lawyers will receive a healthy percentage of the total settlement. Personally this seems like an attack on Santa's Elves, and it's fairly distressing. Why a band of lawyers have decided to take up arms against the beloved toymaker from the Land of the Rising Sun is beyond me. There are a lot hurdles this lawsuit would need to clear before it became a clear threat, but it's something to keep an eye on nonetheless.

Attorney Carl Starrett Obtains $39,000 Judgment

The Law Offices of Carl H. Starrett II has successfully obtained a default judgment against Joseph M. Encarnacion ("Encarnacion") in the amount of $39,617.62. The Court entered the judgment on December 15, 2006.

The lawsuit was filed on July 12, 2006 on behalf of Dominador C. Mauricio ("Mauricio"). The lawsuit alleged that Encarnacion failed to repay a large sum of money borrowed from Mauricio. Encarnacion failed to respond to the lawsuit and the Court entered a judgment for the loan balance of $34,000 plus interest, legal fees and court costs.

Civil judgments in California collect interest at the rate rate of 10% per year. In this case, interest will accrue at the rate of $3961.76 per year or $10.85 per day until paid. Efforts to collect the judgment will begin immediately.

About the Author:
Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.

Monday, December 18, 2006

When to Open a Line of Credit

By Chad Preston

The first hurdle faced by most small business owners is scraping up enough money to launch and maintain their new ventures. Although some newly established business owners have enough cash on-hand to jumpstart their enterprises and keep them humming along, many rely on credit, whether through the owners’ personal lines or through separate business lines—sometimes both. But how does one decide when it’s the right time to open a line of business credit, and then make the most of a credit line that has been opened?

Use an Umbrella in the Sun
When asked, “When should a small business open a line of credit?” Barbara Weltman, a small business and tax expert, quotes Mark Twain: “A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain.

“A business should try to get a line of credit in place when they don’t really need it, so that it will be there for them when they do,” she says.

Weltman says that because a business owner never really knows what the future holds, getting credit early is a must. “As soon as the business is going, you should try for credit. It might be a modest amount at first, but having credit is a way to build up credit, in a sense. Having credit, creating a track record will help the business to qualify for [more] credit.”

Don’t Jump in Too Soon
Before opening a line of credit, newly established companies may want to wait until they’ve been in business a few months and have established themselves, says Michelle Dunn, founder and president of Never Dunn Publishing, LLC, Plymouth, N.H. You want to have some credit history before jumping right in, says Dunn, who has more than 18 years of experience in credit and debt collection. If you don’t have any business credit cards or vendors who have let you charge anything, use a tax ID number and a bank account that can be checked as a reference.

“The right time for any business to apply for credit or open a credit account would be … [when] they are able to pay their bills in-full every month and they’re not struggling. Because if they’re struggling already and then they apply for credit they’ll probably be denied credit,” Dunn says.

“I think that a lot of [small businesses] try to open credit right away when they first open their business, so they’re not established, they don’t have any credit history and then if [they] go and apply for credit again it will show on [their] credit report that [they] just applied and if it’s not that long—that’s always a negative thing,” Dunn says. “You don’t want to apply over and over for credit.”

There are times when a loan may be a better choice for funding purchases, such as equipment or property acquisitions, Weltman says. But when you’re looking for money to help you with working capital, a line of credit would fit the bill. A small business owner may qualify for a line of credit more easily than he or she could for traditional commercial loans, she notes.

“I think businesses need credit. That’s really how things work,” she says. “The good thing about a line of credit as opposed to another kind of borrowing is you have that money at your disposal but you’re actually only paying for the amount that you use. If you obtain a $50,000 line of credit, but only use $10,000, you’re only going to be paying interest on the $10,000 and then as you pay it back you have a greater pool to borrow from again. Having a line of credit gives you more control over your money.”

Don’t Make It Personal
Many small business owners use their personal credit, either because it’s easy and available or they have not yet established business credit. Both Weltman and Dunn agree that your personal credit should be separate from your business line.

“[Using personal credit] doesn’t help the business build up separate credit and it also may be more costly in terms of interest than what the business rate could be,” Weltman says.

“You will want them to be separate, but in the beginning, it won’t be, because you don’t have any other credit,” Dunn says. “Especially if you’re a sole proprietor, when someone checks your business credit, you’re personal credit will come up.

“[Small business owners] don’t realize that when you first open a business, your personal credit is your business credit, so if you have bad credit personally, you’ll want to clean that up before you start your business,” she says.

Weltman agrees. “The most important thing for a small business owner when it comes to obtaining business credit is to first take care of your personal credit rating and make sure that you clean that up and make sure you have a good personal FICO score,” she says.

Small business owners will almost always be required to guarantee the line for their businesses, Weltman says, a fact that many owners are unaware of. Another misconception, she says, is that the owner will not be on the hook for the money. When it comes to small business lines of credit, the owner usually has to guarantee payment. So, many owners are told if they form a corporation or a Limited Liability Company (LLC), they don’t have personal liability, but that doesn’t apply in this situation, she says.

In some cases, businesses don’t need credit to sustain operations, but that doesn’t mean that they should disregard the importance of establishing good credit. For these companies, it is still a good idea to create solid credit histories because it gives them additional financial options for the future. “If you have a business for 10 years and you never paid on credit or opened a credit account and then you suddenly need to, that could hurt you,” Dunn says.

Wednesday, December 13, 2006

Office Holiday Parties - How to Avoid More Than a Headache the Day After

Although the company holiday party is an opportunity to relax a bit and enjoy a fun evening with the people you see Monday through Friday, it's important to remember that this is a work function. Your boss is there. Your boss' spouse is there. This means that it is not a good time to introduce your rendition of Dancing With The Stars or that joke that seemed just a little too edgy for the office. With the popularity of camera and video phones, you can bet that what happens at the company party won't stay at the company party. So, whether you're the boss or enjoying a night out on the boss, here are some tips for your next company party:
  • Talk to your HR Department in advance. Set a strategy to address anyone who's party going gets out of hand.
  • Set a "7th inning stretch". If alchohol will be available, consider closing the bar an hour before the festivities finish to allow people to clear their heads before driving.
  • and finally...if you're having any doubts about taking your partygoing to the next level, ask yourself if you would do the same action at tomorrow's staff meeting. Chances are, you'll opt to save that fun for another time and thank yourself in the morning!

About the Author: Lisa F. Starrett has been a certified paralegal since 1993 and has more than 12 years of experience in human resources and recruiting. As a paralegal with the Law Offices of Carl H. Starrett II, she works in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.

Tuesday, December 12, 2006

Gift Certificate Expiration Dates

Question: Do gift certificates expire? I am in California and I just found some gift certificates that I received for Christmas in 2000. Are they still any good?

Answer: With Christmas coming up, I've been getting a lot of questions about gift certificates. Under California law, most gift certificates cannot contain an expiration date, and are valid until redeemed or replaced.

There are exceptions to this rule: (1) certificates issued prior to January 1, 1997; (2) certificates that are distributed under various awards programs; (2) certificates that are sold to employers or to nonprofit and charitable organization for fundraising purposes; (4) and certificates for food products.

California law also bans nearly all service fees on retailer gift cards and gift certificates with one limited exception. On a rechargeable card with a balance of $5 or less, the issuer may charge a dormancy fee of $1 per month after 24 months of inactivity. Even a balance inquiry counts as activity that prevents this fee. All other service fees are prohibited.

California law even allows for the cash redemption of gift certificates. Click here to read the full text of the law regarding gift certificates in California.

About the Author
Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.

Wednesday, December 06, 2006

Ten Tips For Saving Taxes in 2006

With the end of 2006 approaching, there is still time to save money on your tax bill. Here are 10 useful tips that you can use:

  • Business owners can purchase an SUV on credit and get up to a $25,000 instant deduction as well as the benefit of an additional depreciation amount to the extent that the SUV costs more than $25,000.
  • Business owners can purchase a 3/4 ton truck (or larger) and write the whole amount off up to $108,000.
  • Setup a SEP retirement account in 2006 and you will not have to fund the retirement account until October 15, 2007 if you file extensions.
  • Owners of businesses who use the Cash Accounting Method can ask their clients or customers to refrain from paying invoices until 2007. This will defer the taxes into the next year.
  • Business owners can pay bills in December 2006 that are due in January 2007 in order to obtain an early write off.
  • Property owners can rent a space in your home to their business as an office and write off part of the utilities, insurance, taxes, interest, repairs and depreciate part of the home. The business should be a corporation or an LLC. Otherwise you may take the office in the home deduction for your schedule “C”.
  • Incorporate if your own a small business that is netting more than $35,000 annually. Business owners can realize tax savings as well as protect personal assets. The rush is on to incorporate on Jan 02, of 2007.
  • Teachers can still write off up to $250. However, there is no line on the 1040 to list it anymore as the write off was approved after the forms were printed.
  • Purchase a new car and write off the sales tax in 2006.
  • The biggest tax tip is to avoid preparing your own taxes. Software cannot replace a professional in using every benefit available to you. You will save time, taxes and reduce your chances of being audited.

And remember, there are limits and special conditions to the above, so consult your tax expert to make sure you can qualify for any of the above benefits.

About the Author: John Leslie, a certified QuickBooks Pro Advisor, has 20 years of experience in the tax field. Mr. Leslie is a member of the Lakeside Chamber of Commerce has been involved in the San Diego business community since 1986 and has lived in the area for over 40 years. His strong ties to the community have shaped the client-business philosophy for which IRSTAXHELP.COM is known.

California DMV to Start Suspending Vehicle Registrations of Uninsured Drivers

The California Department of Motor Vehicles ("DMV") has announced plans to step up efforts to crack down on uninsured drivers. The process began in January 1, 2006 when all insurance companies were required to begin provide information to the DMV on automobile policies to California drivers. Beginning in July 2006, law enforcement court personnel were given access to DMV files to check the insurance status of any registered vehicle.

The final step began in October 2006. The DMV can now suspend the registration of any vehicle if the liability insurance has expired, been cancelled or if the insurance company has not provided electronic proof of insurance for a driver's vehicle.

The DMV has already mailed thousands of letters to car owners warning them that their registrations may be suspended if they can't prove they have auto insurance. The DMV will also review information on the 22.4 million private vehicles registered in the state. The DMV will cross-check records of registered car owners in a database of insured vehicles that's updated by insurance companies. If the program works as planned, California drivers should have greater assurance that the car next to them is properly insured.

About the Author:
Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.

Saturday, December 02, 2006

Update on Star Ambulance Investigation

After announcing an investigation of Star Ambulance in conjunction with Special Investigations Agency, NBC 7/39 in San Diego began to cover the story. Star Ambulance went out of business without notice to its employees, leaving behind thousands of dollars in bounced paycheck. Click below to see the entire story:

Please contact us if you have any information about the Star Ambulance and the wherabouts of founders Larry McEwen and Frank Westbrook.

Friday, December 01, 2006

California Court Grants Partial Victory to Supporters of Mount Soledad Cross

In the recent case of Paulson v. Abdelnour, the Court of Appeal for the Fourth Appellate District of California (Division One) granted an important victory in the battle to save the Mount Soledad War Memorial in San Diego. The Court of Appeal reversed a trial court decision that invalidated the passage of Proposition A. Proposition A mandated that the City of San Diego Donate the Mount Soledad Memoral, including the cross and surrounding to land, to the federal government to be maintained as a war memorial.

Although a cross has existed on Mount Soledad in some form since 1913, the Mount Soledad War Memorial Association received permission from the City of San Diego ("City)" to erect the present cross as a memorial to fallen Korean War veterans. Mount Soledad is an 822-foot-tall hill that lies between Interstate 5 to the east and the Pacific Ocean to the west.

In 1989, Phillip Paulson ("Paulson") filed a lawsuit against the City seeking removal of the Mount Soledad Cross. Paulson claimed that allowing a cross to remain on public land violated both the California and United States Constitutions. Since 1989, numerous courts have made rulings in one form or another regarding the constitutionality of the Mount Soledad Cross.

In 2005, Congress passed a law that designated the Mount Soledad site as a national veteran’s memorial. The act providing for the designation recites: "Not later than 90 days after the date on which the City of San Diego, California, offers to donate the Mt. Soledad Veterans Memorial to the United States, the Secretary of the Interior shall accept, on behalf of the United States, all right, title and interest of the City in and to the Mt. Soledad Veterans Memorial."

The act further states that upon acquisition of the memorial by the United States, the Secretary of the Interior "shall administer the Mt. Soledad Veterans Memorial as a unit of the National Park System, except that the Secretary shall enter into a memorandum of understanding with the Mt. Soledad Memorial Association for the continued maintenance by the Association of the cross and surrounding granite memorial walls and plaques of the Memorial."

In response, the San Diego city council placed Proposition A on a special July 26, 2005, election ballot allowing the citizens of San Diego to directly decide whether the invitation offered by the federal government should be accepted. Proposition A passed on July 26, 2005, by 76 percent of the vote. Paulson challenged Proposition A in court and the trial ruled that the land proposed land transfer was unconstitutional.

The Court of Appeal reversed. In a 33 page ruling, the Court noted that nothing in Proposition A or the federal legislation mandated keeping the cross as part of the memorial. The Court also noted that the matter was decider by the voted and the Court refused speculate whether San Diego voters were motivated by secular or religious reasons.

Although Paulson recently passed away, the remaining plaintiffs could still appeal to the California Supreme Court and this decision does not terminate the federal court proceedings. However, it does bring Mount Soledad supporters one step closer to preserving a cross and war memorial that have existed for more than 50 years.

Tuesday, November 28, 2006

Corporations and Small Claims Court in California

Question: Our corporation is suing a former client (another corporation) for non-payment of services. Does one of our corporate officers have to show up in small claims as plaintiff or can our business manager represent us - as she knows the full particulars of the actions.

Answer: A corporate officer should attend with the business manager and then ask permission from the judge for the business manager to speak on behalf of the corporation. It is the best way to make sure the case is not continued.

Under most circumstances, Code of Civil Procedure § 116.540 limits who can appear on behalf of a corporation in small claims court. That person appearing must be a "regular employee, or a duly appointed or elected officer or director, who is employed, appointed, or elected for purposes other than solely representing the corporation in small claims court." Your business manager could technically appear on behalf of the corporation. However, most small claims matters are heard volunteer attorneys who are appointed as "temporary" or "pro tem" judges and they are sometimes not familiar with the provisions of this code section.

Sending a corporate officer is not totally necessary, but it can lend credibility to the proceedings. It is common practice for a business to send a credit manager, but all it takes is the inconvenience of one dismissed case to see that the better practice is to also send a corporate officer.

About the Author
Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.

Sunday, November 26, 2006

Investigation of Star Ambulance Announced

With the assistance of attorney Carl H. Starrett II, Special Investigations Agency ("SIA") is conducting an investigation into Star Ambulance, Inc., which formerly held its principal office at 4400 Palm Ave., Suite C, La Mesa, CA 91941. Star Ambulance was formed by Larry McEwen in November 2000.

In March 2006, Emergency Medical Technicians employed by Star Ambulance allege that their paychecks began to bounce. A few months later, the former employees allege that Mr. McEwen closed the company bank accounts, sold the ambulances on hand to Fire Etc. which sells used fire equipment and left the employees without paying more than $20,000.00 in wages.

If you or anyone you know has any information regarding Star Ambulance, Inc. or any of the following employees of Star Ambulance, please click here to visit our website.

Larry McEwen - Chief Executive Officer
Frank Westbrook - Chief of Operations, Director of Business Development
Anna Chen - Director of Customer Relations Medical Accounting

About the Author:
Kevin M. LaChapelle, director of Special Investigations Agency, began his career as a Loss Prevention and Safety Manager for a retail warehouse in San Diego. He then served as a Police Officer specializing in Street Gang Prevention/Intervention strategies and Community Oriented Policing. Mr. LaChapelle was the recipient for many awards for his leadership within the community.

Saturday, November 18, 2006

New Bankruptcy Audit Requirements Announced for Southern California

When Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ("BAPCPA"), one of the reforms included a requirement for random audits of case files. The guidelines for debtor audits for cases in San Diego County and Imperial County have been finalized.

Commencing with cases filed by individual debtors on and after October 20, 2006, Chapter 7 and Chapter 13 cases will be selected for audit pursuant to §603 of the Bankruptcy Code. According the Office of the United States Trustee, these audits will be focused on determining the accuracy, veracity and completeness of petitions, schedules and other information provided by debtors.

Cases will be selected both randomly (one out of at least every 250 cases filed for the Southern District of California) and based upon debtor's income or expenses having a greater than average variance from the statistical norm for the district. The audits will be performed by independent firms selected by the United States Trustee using auditing standards developed by the United States Trustee Program (the "USTP"). These Debtor Audit Standards have been published in the Federal Register and are posted to the USTP's website at:

The Office of United States Trustee will send a letter to Debtor's Attorney, or a pro se Debtor, indicating that a case has been selected for audit, enclosing a form for the attorney to indicate whether the audit firm can directly contact a represented debtor about documents and an information sheet about the audit for the debtor. The letter will also identify the firm that will be conducting the audit and the documents that must be produced to the audit firm. These documents include the following:
  • Pay stubs for the six calendar months prior to filing;
  • Two years of federal tax returns, including any schedules and forms;
  • Account statements for all depository and investment accounts for the six calendar months preceding the date of the filing of the petition, plus the month in which the petition was filed, along with sufficient documentation to reasonably explain the source of deposits or credits, and the purpose of checks, withdrawals or debits; and
  • A copy of any divorce decree and/or property settlement entered within the last three years, and any current child support/alimony obligation involving the debtor.

Debtors will have 21 days to provide the audit firm with the requested documents. Debtors must cooperate with the audit firm and provide records to the auditor. A debtor's discharge may be revoked if the debtor does not satisfactorily explain the failure to make available all documents or property requested by the audit firm.

Once the audit is complete, the audit firm will issue a report which must specify any material misstatements of income, expenses, or assets that identified by the audit firm. Before including a material misstatement in an audit report, the audit firm will contact the debtor's counsel, or the pro se debtor, in writing, notifying the debtor of the concern and offering the debtor an opportunity to provide an immediate written explanation for the item(s) in question.

Audit firms file the audit report with the court and transmit it to the United States Trustee. The clerk of court must send a notice to creditors in cases in which one or more material misstatements have identified in an audit report.

If material misstatements are not adequately explained by the debtor, the United States Trustee may take appropriate civil action and, where appropriate, make a criminal referral to the U.S. Attorney.

For more information regarding debtor audits, please contact us.

About the Author
Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.

Monday, November 06, 2006

Explanation of a Chapter 7 Discharge

For most individual debtors, the purpose of filing for Chapter 7 bankruptcy is to receive a discharge of their debts. What exactly does a does discharge do?

Collection of Discharged Debts Prohibited

The discharge prohibits any attempt to collect from the debtor a debt that has been discharged. For example, a creditor is not permitted to contact a debtor by mail, phone, or otherwise, to file or continue a lawsuit, to attach wages or other property, or to take any other action to collect a discharged debt from the debtor. There are also special rules that protect certain community property owned by the debtor's spouse, even if that spouse did not file a bankruptcy case. A creditor who violates this order can be required to pay damages and attorney's fees to the debtor.

However, a creditor may have the right to enforce a valid lien, such as a mortgage or security interest, against the debtor's property after the bankruptcy, if that lien was not avoided or eliminated in the bankruptcy case. Also, a debtor may voluntarily pay any debt that has been discharged.

Debts That are Discharged

The chapter 7 discharge order eliminates a debtor's legal obligation to pay a debt that is discharged. Most, but not all, types of debts are discharged if the debt existed on the date the bankruptcy case was filed. If this case was begun under a different chapter of the Bankruptcy Code and converted to chapter 7, the discharge applies to debts owed when the bankruptcy case was converted.

Debts that are Not Discharged

Some of the common types of debts which are not discharged in a chapter 7 bankruptcy case are:
  • Debts for most taxes
  • Debts incurred to pay nondischargeable taxes (applies to cases filed on or after 10/17/2005)
  • Debts that are domestic support obligations
  • Debts for most student loans
  • Debts for most fines, penalties, forfeitures, or criminal restitution obligations
  • Debts for personal injuries or death caused by the debtor's operation of a motor vehicle, vessel, or aircraft while intoxicated
  • Some debts which were not properly listed by the debtor
  • Debts that the bankruptcy court specifically has decided or will decide in this bankruptcy case are not discharged
  • Debts for which the debtor has given up the discharge protections by signing a reaffirmation agreement in compliance with the Bankruptcy Code requirements for reaffirmation of debts
  • Debts owed to certain pension, profit sharing, stock bonus, other retirement plans, or to the Thrift Savings Plan for federal employees for certain types of loans from these plans.

This information is only a general summary of the bankruptcy discharge. There are exceptions to these general rules. Because the law is complicated, you may want to consult an attorney to determine the exact effect of the discharge in this case.

Tuesday, October 31, 2006

Top 10 Mistakes: Preliminary 20-Day Notice

By Suzanne Ervine, Construction Commando

1. Failing to Provide a Preliminary Notice at All. Any subcontractor who enters into a contractual relationship exceeding $400 is required by law to prepare and serve a Preliminary Notice. Failure to do so constitutes grounds for disciplinary action by the Registrar of Contractors.

2. Serving the Notice Too Late. To preserve Mechanic’s Lien or Stop Notice rights, a Preliminary Notice must be served within 20 calendar days of the first date services were performed or materials were provided on a job. If the Preliminary Notice is served later than 20 days after you first worked on a job, you are entitled to Lien or Stop Notice rights only for work performed within the 20 days prior to serving the Notice.

3. Waiting Until the 19th Day to Prepare the Notice. Putting off the preparation of a Preliminary Notice leaves little time to resolve any problems that may arise, such as difficulty reaching the prime contractor to request additional information, or delays at the governmental offices where you need to verify information in recorded documents and/or building permits. Furthermore, because the law requires the Notice to be sent via certified or registered mail, simply arriving at the Post Office even 5 minutes after the counter closes could result in missing the cutoff. Plan ahead!

4. Mailing the Notice by Regular First Class Mail. The Preliminary Notice may only be served by personal delivery, or by first class certified or registered mail. Sending the Notice by regular first class mail is not sufficient, and the courts have ruled against contractors who did not comply with the strict requirements of the statute. In IGA Aluminum Products, Inc. v. Manufacturers Bank, the court ruled, “The statute clearly states that proper notice is a prerequisite to perfecting a mechanic's lien, and that if service of the notice is accomplished by mail, the notice must be sent by registered or certified mail.” Proof that the Notice was served by mail in accordance with the statute must be accompanied by either the return receipt of certified or registered mail, or by a copy of the record of delivery; or in the event of nondelivery, by the returned envelope itself.

5. Providing an Arbitrary Estimate of the Total Price for the Job. While the law requires a Preliminary Notice to contain an estimate of the total price of a job, any such estimate must be a good faith estimate. The estimate must be “a derived figure, arrived at by rational analysis.” (Rental Equipment, Inc. v. McDaniel Builders, Inc..) Estimates that are “made up out of whole cloth” are insufficient.

6. Deviating from the Required Language in the “Notice to Property Owner” (private works only). California law is very specific about the language required in a Preliminary Notice for private works of improvement. The California Civil Code sets forth the exact language required in the “Notice to Property Owner” contained on the face of the Preliminary Notice. California courts have long held that deviation from this language will render your Notice invalid. In Harold L. James, Inc. v. Five Points Ranch, Inc., the court held that, “Where the Legislature has provided a detailed and specific mandate as to the manner or form of serving notice upon an affected party that its property interests are at stake, any deviation from the statutory mandate will be viewed with extreme disfavor” (emphasis added).

7. Failing to Verify Proper Identities of Notice Recipients. Many subcontractors rely on information obtained from the prime contractor. However, this is insufficient and could render your Notice invalid, thus barring any future mechanic’s lien or stop notice legal action. Contractors seeking to enforce a lien or stop notice remedy have a duty to inspect readily available public records to determine the identities of a property owner or construction lender. In Romak Iron Works v. Prudential Ins. Co., the court held that Civil Code section 3097, subsections (i) and (j) “impose on a prospective stop notice claimant the duty to examine…the building permit and the specially-indexed official records of the county.” The court further ruled that, “If he fails to examine the two sources, subdivisions (i) and (j) operate to charge him with constructive notice of the information recorded in either.” Ignorance is no excuse – make sure you check the official public records!

8. Failing to File the Preliminary Notice with the County Recorder. Although not required by law, filing a copy of the Notice with the County Recorder can help contractors ensure that mechanic’s lien or stop notice rights are fully protected. If a contractor has filed a Preliminary Notice, the County Recorder is required to notify him of any subsequently filed Notice of Completion or Notice of Cessation. If a property owner files either of these documents, the time within which to file a mechanic’s lien or stop notice action is shortened to just 60 days for prime contractors, or 30 days for subcontractors and suppliers. Notification of this shortened time frame enables you to seek legal counsel and initiate legal action before the deadline. Please note, however, that the County Recorder’s failure to notify a potential claimant of a Notice of Completion or Cessation does not extend the amount of time you have to initiate litigation to perfect the lien or stop notice.

9. Failing to Send a Copy of the Notice to the Surety Company. To enforce a claim on a payment bond, notice must be given to the bond surety and bond principal within 15 days of the recording of a Notice of Completion or Notice of Cessation (or within 75 days after completion of the work if neither Notice is recorded). This payment bond notice can be accomplished by simply serving the bond surety with the Preliminary Notice, and further ensures that a very short 15-day deadline is not missed.

10. Serving Only One Notice if Multiple Notices Are Required. Generally, a contractor must serve only one Preliminary Notice per job, regardless of the length of time or amount of materials and services provided. However, if you are providing services or materials to a jobsite under multiple contracts with multiple subcontractors, a separate Notice must be prepared and served pursuant to the contract with you have with each subcontractor. This most often occurs with suppliers who provide materials to many contractors for the same job.

About the Author: Suzanne Ervine is a Registered Legal Document Assistant and owner of Construction Commando. A trained paralegal and bookkeeper, Ms. Ervine specializes in assisting contractors with preliminary notices, mechanic’s liens, stop notices, bond claims, and bookkeeping. She is a member of the American Institute of Professional Bookkeepers and the California Association of Legal Document Assistants. Together with her husband Roger, she owns and operates Fidelity Electric, a full-service electrical contracting company. Contact Suzanne at

Tuesday, October 24, 2006

The Red Flags of Scams

While schemes and scams take infinite forms, there are a few basic principles underlying all of them. Knowing the common danger signals and ways to defend yourself can save you time and money.

Be alert for these red flags:

-- A deal that sounds much better than any being advertised by firms you know to be legitimate (offers that are "too good to be true");

-- A sales promoter who is not based locally and provides no telephone number and uses a P.O. Box or mail drop rather than a full street address;

-- A name and/or logo that closely mimics a well-known respected brand or business;
-- Sales literature that uses pressure words, such as "urgent" or "final deadline;"

-- Undue pressure, threats or harassment either in writing, in e-mail, during a phone call or in personal contact;

-- An immediate request or demand for a check, money order or cash to be picked up by a courier or to be sent to a mail drop or P.O. Box;

-- Vague answers or none at all to key questions you ask about the offer;

-- Insistence that you finalize a deal orally without a written contract or other documentation in writing;

-- A demand for personal information, such as your Social Security number or credit-card number.

Be your own best protector. Even with all the consumer protection agencies and laws on the books, you must protect yourself and investigate before you invest. There is no stronger remedy for fraud than a consumer who refuses to be conned. The BBB recommends the following tips:

-- Take your time and read thoroughly before you sign. Fully understand any contract and make sure it matches what the salesperson told you.

-- If asked to purchase goods sight unseen, compare the prices and warranties with those offered by local stores. You run a risk of getting inferior merchandise when you order products from unfamiliar businesses without being able to inspect them first.

-- Be firm in the face of pressure. Say "no" and just hang up the phone. Thieves are stealing more than money -- they're stealing people's hopes and dreams and their security.

-- Protect your privacy. Never provide personal information unless you know who's requesting it, why and how it will be used.

-- Don't believe it just because you saw it on the Internet. Obtain the company's physical address and phone number and check the company out with the BBB.

Please visit for additional tips, warnings, and scam alerts.

Sunday, October 08, 2006

Voting on California Ballot Propositions

I am often asked by clients, friends and relatives for recommendations on how to vote on ballot initiatives. In the upcoming general election, California voters will be asked to make decisions on 13 different initiatives. My goal in this article is to provide a brief summary of each law and my recommendation on each measure.

Bond Issues:
As a general rule, I vote no on nearly all bond issues. It is all too common for the legislature to recommend a bond issue when dealing with a perceived problem. Instead of paying to repair things out of the current budget, a bond issue means that the state is borrowing the money and pledging our future taxes dollars as collateral on the loan. As any consumer knows, there is only so much that one can borrow before the cost of the debt service becomes a burden on future budgets and causes budget cuts.

Proposition 1A: This measure is designed to protect gas tax revenues dedicated to the Transportation Infrastructure Fund (created in 2002) from being used for any purpose other than transportation improvements. The proposal places limits on the ability of measure would also prohibit the Legislature from diverting funds and requires repayment plus interest within three years. This measure is designed to prevent revenue from a previously approved bond for other projects or other budgetary needs. In order to protect the integrity of this previously approved bond measure, I recommend a "yes" vote.

Proposition 1B: The bond proposal would provide $19.9 billion to be used for highway improvements, public transit, air pollution reduction, and port security. I believe bond issues are a sign of bad fiscal planning and are used too much. I recommend a "no" vote.

Proposition 1C: This bond proposal would provide $2.8 billion to be used for housing and emergency shelter for battered women, low-income seniors, and homeownership assistance. While the goal is admirable, the money for this project can be obtained without borrowing. I recommend a "no" vote.

Proposition 1D: This bond proposal would provide $10.4 billion to be used for kindergarten-university school repairs, overcrowding reduction, and earthquake safety. This is a "one size fits all" bond proposal. The need for this type of bond can be decided and approved at the local level, so I recommend a no vote.

Proposition 1E: This bond proposal would provide $4.09 billion to be used for disaster preparedness and flood prevention. The money can for this project can be obtained without borrowing money. I recommend a "no" vote.

Proposition 83: Commonly know as "Jessica's Law", this measure is designed to improve monitoring and increase penalties for convicted sex offenders. Some data suggestions that as many as one quarter of registered sex offenders fail to keep their addresses up to date, effectively dropping out of sight. The new law would increase penalties for violent and habitual sex offenders and child molesters, restricts how close to schools and parks they may live, and requires lifetime Global Positioning System monitoring for felony registered sex offenders. I recommend a "yes" vote on this measure.

Proposition 84:
This is another bond proposal that would provide $5.4 billion to be used for water quality and supply, safety, flood control, and state and local park improvements. I believe the state legislature should go back to the "pay as you go" approach and better prioritize how it spends our tax dollars. I recommend a "no" vote on this measure.

Proposition 85:
Under California law, a minor child can obtain an abortion without parental permission. Proposition 85 would not require parental permission, but it would require the physician to notify at least one parent with certain exceptions. A doctor would not be required to give parental notification in the case of a medical emergency or an appropriate court order. Proposition 85 would also impose a 48-hour waiting period before the procedure could take place in order to provide for a girl and her parents to discuss the planned abortion and obtain counseling. I do not believe any medical procedure should be allowed on a minor child without parental permission unless a true emergency exists. This measure is a step in the right direction, so I recommend a "yes" vote.

Proposition 86: This measure would add a $2.60 per pack tax on cigarettes to support hospitals, health programs, smoking prevention plans and tobacco regulation. This is yet another new tax. Less than 10% of the tax revenues go toward helping smokers quit or keeping kids from starting. The largest share, almost 40%, goes to hospitals, many of which are funding the campaign for the new tax. I recommend a "no" vote on this measure.

Proposition 87: This measure would creates a 1.5 percent to 6 percent tax (depending on oil price per barrel) on producers of oil extracted in California to fund a $4 billion program to reduce petroleum consumption by 25 percent. This is essentially a tax increase to encourage reduced gas consumption. Gas prices are already too high and it would damage California's economy and drive more businesses away, so I recommend a "no" vote.

Proposition 88: This measure would create a $50 tax on each real-property parcel, excluding certain elderly and disabled homeowners, to fund K-12 education. This measure would open up yet another way to circumvent Proposition 13 and there are no protections or controls on how the money will be spent. I recommend a "no" vote on this measure.

Proposition 89: This measure would impose a .2 percent income-tax increase on corporations and financial institutions to fund political campaigns and would imposes new limits on campaign contributions and creates eligibility requirements for state elective offices. I have never been a fan of publicly funded campaigns and the measure appears to impose unconstitutional limits on campaign spending. I recommend a "no" vote on this measure.

Proposition 90: This measure was in response to a controversial decision by the U.S. Supreme Court that gives the states broad authority to take private property for private economic development using the power of eminent domain. This measure would bar local governments from using the notion of increased tax revenue to condemn private property and turn it over to private developers. The measure would also increase payments to property owners who experience "substantial economic loss" as a result of new government rules and regulations. I have never supported the idea of using government power to take a private property unless it was for a true public purpose such as roads, libraries or police and fire stations. I believe this measure is a step in the right direction, so I recommend a "yes" vote on Proposition 90.

Wednesday, October 04, 2006

San Diego ADA Lawyer Strikes Again

In another example of ADA lawsuit abuse, San Diego attorney Theodore A. Pinnock has filed another series of predatory lawsuits under the Americans With Disabilities Act ("ADA"). Mr. Pinnock was recently in the news for threatening the entire community of Julian with a class action ADA lawsuit. One Julian business decided to close down rather than fight the threatened lawsuit. Mr. Pinnock's latest victims are businesses in the City of La Mesa.

According to a story recently aired by Channel 8 News, Mr. Pinnock has filed a lawsuit against Reed's Hobby Shop and 5 neighboring businesses. Rather than notifying a business of any alleged noncompliance with the ADA, Mr. Pinnock adopts the "shoot first, ask questions latter" approach to litigation. Instead of allowing a business owner to make modifications, he files a lawsuit and demands money before providing a specific list of repairs. Mr. Pinnock's lawsuits are often filled with vague, boilerplate language that provides no specific guidance to a business owner regarding the alleged ADA violations.

While the Americans with Disabilities Act has been around since 1990, there is no government agency really set up to enforce the law or to educate the public regarding ADA requirements. This leaves a vacuum that allows inventive lawyers to sue businesses that are not in full compliance. There is a common misperception that older buildings and businesses are protected by a "grand father" clause, but this is simply not the case. Attorneys like Mr. Pinnock use this misconception as a method to exploit small businesses owners by demanding thousands of dollars in unnecessary legal fees.

No reasonable person would be intentionally noncompliant with the ADA. In fact, being ADA-compliant increases the potential customer base for a business. 99% of business owners would gladly correctly any ADA violations. Because of this, it is my belief that Congress should amend the law to allow a business cited for ADA violations a respite of 90 days to correct problems and avoid lawsuits. This change in the law would encourage voluntarily compliance with the ADA while preventing unnecessary litigation that is financially devastating to small business owners.

About the Author
Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.

Thursday, September 28, 2006

How to Sell A House When the Co-Owner Refuses

Question: My brother and I bought a house together. I want to move out, but he refuses to sell or buy me out. Is there a simple and inexpensive way to do this?

Answer: Unless your brother is willing to negotiate, you have few alternatives besides litigation. As co-owners, you both have the right to possession of the entire house. Co-ownership can often make the co-owners reluctant roommates. Each of you also has a near-absolute right to force a sale (or split) of the property through a specialized kind of lawsuit called "partition."

Partition lawsuits are very difficult without the assistance of an attorney. If your brother decides to fight the lawsuit and take matter to trial, it can become expensive and take a long time. When faced with a partition lawsuit, the once-unwilling owner often becomes much more willing to negotiate an out-of-court solution.

Sometimes the solution is a buy-out; other times, the parties agree on a sale, in which case, if there is an on-going dispute over how much money each is entitled to (the net proceeds in a partition sale are divided the same as the ownership percentages AFTER adjustments for excess outlays made by one co-owner for mortgage payments, property taxes, insurance, necessary repairs, etc. and for rents received by the owner in possession from third-party tenants), the owners may wish to agree to have that handled by post-sale arbitration.

If all else fails, you can hire a lawyer to prepare and file the lawsuit, but you should instruct the lawyer to keep pressing for a negotiated settlement.

About the Author
Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.

Thursday, September 21, 2006

Skip Tracing the Address of a P.O. Box Holder

Question: I have a client who owes me money, but the only address I have for this person is a P.O. Box. How can I get a physical address to serve the lawsuit?

Answer: You actually have two options to get the lawsuit. If the matter is a small claims lawsuit, California law allows service by certified mail. The court clerk sends a copy of the claim to the defendant. The defendant must sign and return a receipt to the clerk. There is a fee for this type of service.

In cases where service by certified mail is not allowed (which is most cases) or the box holder will not sign for certified mail federal postal allows you to obtain the address information. Click here to download a copy of the required form from the website for the U.S. Postal Service. I recommend going to the post office where the box is located to peronally turn in the form. I also recommend bringing along a copy of subpoena, lawsuit or other legal process in case the postal clerks question you. Once you have the address information, you should be able to effect service on the defendant.

About the Author
Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.

Wednesday, September 20, 2006

IRS Issues Spring 2006 Statistics of Income Bulletin

WASHINGTON — The Internal Revenue Service today announced the release of the Spring 2006 issue of the Statistics of Income Bulletin. For the first time, the Bulletin takes a detailed look at individual noncash charitable contributions.

The Spring Bulletin also includes information about high-income individual income tax returns for Tax Year 2003, S corporation returns for Tax Year 2003, split-interest trusts for Filing Year 2004, controlled foreign corporations (CFCs) for Tax Year 2002, and the accumulation and distribution of Individual Retirement Arrangements (IRAs) for Tax Years 2001-2002.

Of the 130,423,626 individual income tax returns filed for Tax Year 2003, there were 2,536,439 returns reporting adjusted gross income of $200,000 or more and 2,573,133 with expanded income of $200,000 or more.

In addition, the Bulletin contains articles with the following information:
  • For Tax Year 2003, individuals reported noncash donations valued at $36.9 billion on Form 8283, Noncash Charitable Contribution. This is the form used by individual taxpayers when the amount of taxpayer deductions for all noncash donations on Schedule A, Itemized Deductions, exceeds $500. Of these noncash donations, corporate stock was the largest type, with 37.2 percent of the total value deducted. The average value of these stock donations was $79,279 per return. The largest number of donations reported on this form was for clothing, representing 48.0 percent of all donations. For donations where the organizational type was recorded, the largest amount was donated to foundations, which received 31.1 percent of donations.
  • A total of nearly 3.3 million S corporation returns were filed for Tax Year 2003, an increase of 5.9 percent from Tax Year 2002. S corporations continue to be the single most popular corporate entity choice representing 61.9 percent of all corporate entities. The number of shareholders for S corporations increased to nearly 5.8 million, up 2.9 percent from the previous year. Total net income (less deficit) reported by S corporations increased to $213.7 billion for Tax Year 2003 from $183.5 billion reported for Tax Year 2002. Nearly two-thirds, 62.7 percent of all S corporations, reported positive total net income. Total assets increased $169.9 billion to $2,186.6 billion for Tax Year 2003. Less than one quarter of 1.0 percent of all S corporations reported federal tax liability, for a total tax liability of $380.9 million.
  • A total of 123,205 split-interest trust information returns were filed in Filing Year 2004, an increase of 1.6 percent from Filing Year 2003. The largest group of trusts, charitable remainder unitrusts (CRUTs), increased by 1,958 returns from the previous filing year. The number of returns filed for pooled income funds decreased by 5.0 percent from 2003 to 2004. Total net income reported for charitable remainder trusts decreased by 0.4 percent from 2003 to 2004. Net long-term capital gains made up the largest percentage of total net income reported for Charitable Remainder Annuity Trusts (CRATs) and CRUTs. In Filing Year 2004, charitable remainder trust returns reported $64.0 billion in total accumulations and $6.9 billion in distributions.
  • For Tax Year 2002, the 7,500 largest foreign corporations controlled by large U.S. multinational corporations held $5.8 trillion in assets and reported receipts of $2.3 trillion. About 79.2 percent, or 5,938, of the 7,500 largest CFCs for Tax Year 2002 were concentrated in goods production (28.9 percent), services (26.1 percent) and the finance, insurance and real estate rental and leasing (24.2 percent) sectors. Approximately 52.5 percent, or 3,939, of the 7,500 largest CFCs were incorporated in Europe, which accounted for 61.9 percent of end-of-year assets, 55.7 percent of total receipts, and 57.6 percent of earnings and profits (less deficit) before income taxes. About 91.1 percent of these European CFCs were located in European Union countries.
  • For Tax Year 2002, individual income taxpayers contributed approximately $42.3 billion to IRAs. This represented an 18.3-percent increase over the contributions for 2001. In addition, $204.4 billion came into IRAs during 2002 as rollovers, usually from employer-sponsored plans (such as 401(k) plans). These rollovers represented an 8.8-percent increase over rollovers for 2001. In spite of the increase in funds flowing into IRAs for 2002, the yearend fair market value of those arrangements fell from just over $2.6 trillion for 2001 to just over $2.5 trillion for 2002. For 2002, over one-third ($14.8 billion) of the $42.3 billion in contributions was deductible. Also in 2002, more than 3.9 million taxpayers rolled over $204.4 billion to IRA plans, up from $187.8 billion in 2001. Along with that, $3.3 billion were converted from traditional IRAs into Roth IRAs.

The Bulletin includes historical data on income, deductions and tax reported on returns filed by individuals, corporations and unincorporated businesses, with selected data presented for estates. In addition, this issue presents the annual individual income tax return statistics by state for returns filed for Tax Year 2004. Statistics are also presented on tax collections, including excise taxes by type, and refunds for recent years.

The Statistics of Income Bulletin is available from the Superintendent of Documents, U.S. Government Printing Office, P.O. Box 371954, Pittsburgh, PA 15250-7954. The annual subscription rate is $53 ($74.20 foreign), single issues cost $39 ($48.75 foreign). For more information about these data, write the Director, Statistics of Income (SOI) Division, RAS:S, Internal Revenue Service, P.O. Box 2608, Washington, DC 20013-2608; call the SOI Statistical Information Services office at (202) 874-0410; or fax, (202) 874-0964.

Spring 2006 Statistics of Income Bulletin

Saturday, September 16, 2006

California Bans Use of Hand-Held Cell Phones

Drivers in California will soon be banned from using their cell phones while driving unless they use a headset or a speaker. The new legislation, signed into law by Governor Arnold Schwarzenegger on Friday, will not take effect until July 1, 2008 to allow to time to educate the public.

First time violators will be fined $20 and then $50 for each violation after that. The new law makes exceptions for emergency phone calls.

According to the National Highway Traffic Safety Administration ("NHTSA), nearly 80 percent of crashes and 65 percent of near-crashes involved some form of driver inattention within three seconds before the event. Primary causes of driver inattention are distracting activities, such as cell phone use, and drowsiness. A 2005 study released by the NHTSA showed that hand-held cell hone usage increase by 20% from 2004 to 2005.

The most common distraction for drivers is the use of cell phones. However, the number of crashes and near-crashes attributable to dialing is nearly identical to the number associated with talking or listening. Dialing is more dangerous but occurs less often than talking or listening.

Connecticut, New York, New Jersey and the District of Columbia each have enacted a jurisdiction-wide ban on driving while talking on a handheld cellular phone.

About the Author: Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.

Monday, September 04, 2006

Stopping Spam

The Federal Trade Commission receives about 300,000 samples of deceptive spam – forwarded by computer users – each day, and stores it in a database. The FTC and its law enforcement partners use the database to generate cases against people who use spam to spread false or misleading information about their products or services. To better handle the high volume of spam forwarded to the database, the FTC recently opened a new email box – SPAM@UCE.GOV. The old email address ( will be phased out.

For More Information:

Friday, September 01, 2006

California Law: Should I Get a Restraining Order?

Question: I have a neighbor who has been harassing me for two years. Every time I call the police, they tell me there is nothing they can do without more proof. They advised me to get a restraining order. What should I do?

Answer: If a police officer or sheriff's deputy advises you to get a restraining order, you would do well to heed the advice. Neighbor-to-neighbor disputes are very difficult on law enforcement officers because the officers often have little evidence to go on. A harassment restraining order is a court order signed by a judge that gives law enforcement officers very clear instructions regarding the prohibited activities. A court order gives law enforcement officers and objective standard to uphold, which is much easier to enforce than subjective complaints.

You can obtain a civil harassment restraining if you are being harassed by someone who does not live with you such as a friend, neighbor or even a stranger. If someone lives with you or if you have a "domestic relationship" with the person who is harassing you, then you should obtain a domestic violence restraining order.

A civil harassment order can last up to three years. The court will charge a filing fee, but the court can waive this fee based on your ability to pay or if the abuser has caused physical harm to you.

You may qualify for a civil harassment order if the harasser has intentionally commits a series of acts (more than one) which are frightening, annoying or harassing, and which have caused you "substantial emotional distress". The harasser does not have to be related to you in any way, but you must be able to identify the person and find him or her to serve the papers.

A civil harassment order can order the harasser:
  • to stay away from the victim, the victim's home, school, work or children's school;
  • not to telephone or contact the victim;
  • not to frighten, intimidate, annoy or harass the victim;
  • not to threaten or make any physical contact with the victim;
  • not to keep the victim under surveillance or follow the victim; and
  • not to block the victim's movement in public places.

It can also protect the victim's family or anyone else in the home from the harassment and can order the person who lost the case (either the harasser or the victim) to pay the other person's court costs and attorney's fees.

If you have been the victim of harassment, please contact us if you need further assistance.

About the Author: Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.

Monday, August 28, 2006

Enforcing Criminal Restitution Orders in California

Question: After a thief pled guilty to embezzling a large sum of money from me, the judge sentenced the defendant to prison and ordered him to pay me restitution. The defendant is now out of prison and has not repaid me the money. What can I do to collect the money owed to me?

Answer: Prosecutors often do not have the resources to collect on restitution orders, so the beneficiary of the restitution order should consider retaining private counsel to collect the amount owed. The California Judicial Council has designed a set of standardized questions the victim can use to gather information regarding the defendant's assets. See Judicial Council Form CR-200, Form Interrogatories - Crime Victim Restitution. The victim may serve the interrogatories once the restitution has remained unpaid for more than one year.

A restitution order is enforceable the same way as as a civil judgment. The victim may use all the same methods as the judgment creditor in a civil matter and many of these methods were discussed in a previous article. Common methods of enforcing restitution orders include wage garnishments, bank account levies and judgment debtor examinations. Some court clerks do not know how to issue a writ of execution based on a restitution order in a criminal case, so it may be necessary to obtain an order directing the clerk to issue the writ of execution and other court documents related to the judgment collection process.

Hiring a private attorney to collect the restitution order is a continuation of the victim's right restitution. Therefore, the victim can also recover attorney's fees incurred to recover restitution. An experienced attorney with collection experience can more aggressively and efficiently than an overworked prosecutor or an unrepresented crime victim.

About the Author
Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.

Wednesday, August 16, 2006

Better Business Bureau Warns Against Online Scam

Cut the line on phishing scams

Phishing is an e-mail in which fraudsters attempt to convince consumers to reveal personal information, such as their credit-card account numbers, checking account information, Social Security numbers and banking account passwords through official-looking fake websites or in a reply e-mail.

Phishing doesn't use a rod and reel; rather it uses the Internet and the intent is to catch consumers who are not aware of this scam.

Phishers will sail under false colors. They deliberately misrepresent themselves, just to get their hooks into consumers' personal and financial information. If consumers aren't careful, they could find themselves the catch of the day. Remember, only phonies phish for info.

Consumers can best protect themselves by following one simple rule: When in doubt, delete.

Many financial institutions might use e-mail to communicate with customers and direct them to their websites where the customers may be asked to enter personal information as part of registering for a service, such as online banking or accessing account information. However, if the e-mail wasn't initiated in response to an action by the consumer, it's a good idea to go directly to the organization's website by entering the website address (URL) rather than linking to it from an e-mail.

Here are a few ideas on how to avoid getting lured into a phishing scam:

-- Treat unsolicited e-mail requests for financial information or other personal data with suspicion. Unsolicited means the e-mail wasn't initiated in response to an action by the consumer. Do not reply to the unsolicited e-mail or respond by clicking on a link within the unsolicited e-mail message.

-- Contact the actual business that supposedly sent the e-mail to verify if it is genuine.

-- Only enter personal information on a secure website that you know to be legitimate.

-- Update anti-virus software and security patches to system software regularly.

-- Be cautious. Check your monthly statements to verify all transactions. Notify your bank immediately of any erroneous or suspicious transactions.

Monday, August 14, 2006

Health Savings Accounts for California Business Owners

Question: I just formed a new corporation. If I elect to have an S corp and hire my spouse to do a legitimate job, can I have an accountable plan to reimburse her for our family's medical expenses (not just insurance premiums) and deduct these as expenses on the corporate return?

Answer: No, but you might consider establishing a Health Savings Account ("HSA") for yourself.

When you file your taxes each year, all of the money you have deposited into your own HSA will be tax-deductible. When you visit a physician, you pay with tax-free money from your savings account at the discounted PPO rate.

When you need to purchase prescriptions, you pay with tax-free money from your savings account at the discounted PPO rate.

Some medical expenses not covered under traditional health plans are covered under the HSA. (dental work, vision care, lasik, braces, maternity, etc.)

By funding the HSA account every year, you will reduce your taxes each year plus, more importantly, it will give you a larger and larger cushion against unexpected "catastrophic" type claims in the future.

Dipping into your HSA savings account is NOT the same as dipping into your pockets - your HSA is the functional equivalent of "insurance coverage for the small bills" - what you don't have to use is yours to keep - which is dramatically different than paying an insurance company a few thousand dollars a year to do virtually the same the "small" bills. Pay yourself not the insurance company.

HSA funds can be used to pay any provider with no network restrictions.

About the Author
John Leslie, a certified Quickbooks Pro Advisor, has 20 years of experience in the tax field. Mr. Leslie is a member of the Lakeside Chamber of Commerce, has been involved in the San Diego business community since 1986 and has lived in the area for over 40 years. His strong ties to the community have shaped the client-business philosophy for which IRSTAXHELP.COM is known.

Monday, July 31, 2006

Court to City of San Diego: Stop Discriminating Against Churches

In December 2005, I wrote about an article covering claims by a local pastor that the City of San Diego discriminated against churches by charging higher rental rates for use of City facilities than what it charges other nonprofit organizations. The Canyon Ridge Baptist Church filed a lawsuit to force the City to rescind what it alleges to be discriminatory rental policies. The Church rents a community center from the City for its Sunday services. In a recently published article, the San Diego Union-Tribune is reporting that the Church is winning the lawsuit

After reviewing media reports and court records, it was clear that the City charges the Church rates that are as much as 22 times the rates charged to other nonprofit organizations. The Union-Tribune reports that a federal judge issued an injunction temporarily that prohibits the City from the collecting the high rates. Instead of paying up to $818 per week that the City might charge to a private business, the Church will pay $208 like other nonprofit groups.

The lawsuit is apparently close to settlement, which will most likely result in reimbursement of rent to the Church and the City will most likely also have to pay the legal fees incurred by the Church. When I first brought this to the attention of Donna Frye, who represents the district where the Church is located, she declined to do anything about it.

When I contacted Frye's office, she refused to comment because the matter was in litigation, instead of asking to have this issue placed on the Council agenda to discuss changing the rental policies. It was never clear if Councilmember Frye opposed or supported the policies in question, but she refused to take a public stance and I find that very disturbing. I think Frye and the other members of the San Diego City Council owe it to the people they represent to stand up against City policies that are clearly discriminatory instead of hiding behind the questionable advice it received from the City Attorney's officen in this matter.

About the Author: Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.