This is a reminder that April 1, 2012 is the first day the United States Citizenship and Immigration Services (“USCIS”) will begin accepting H-1B petitions filed on behalf of nonimmigrant workers for the 2013 fiscal year (“FY 2013″) that begins on October 1, 2012.

In FY2012, H-1B filings did not exceed the available statutory quota until October 19, 2011, but in some earlier years, prior to the recent recession, the statutory quota was reached much earlier in the H-1B filing cycle, even as early as the first day of the filing cycle.

It is unknown at this time how the number of H-1B filings for FY 2013 will compare to the number of H-1B petitions received by USCIS in the past. With the economy improving, and more hiring taking place, it is possible that the statutory quota will be met much earlier than last fiscal year.

As such, employers who desire to hire H-1B aliens subject to the statutory quota should consult with immigration counsel as soon as possible regarding filing on the first day of the H-1B cycle, or as early in the cycle as feasible.

The H-1B visa classification is for temporary employment of foreign professionals in specialty occupations, including but not limited to, information technology professionals, business analysts, financial managers, engineers, architects, and allied health professionals such as physical therapists, as well as fashion models. There is a yearly statutory cap of 65,000 H-1B approved petitions for the general category, of which 6,800 are reserved for Chile and Singapore Free Trade H-1B visas, resulting in only 58,200 for all other nationalities. There is an additional quota of 20,000 for foreign professionals with advanced degrees (Master’s degrees or higher) from U.S. institutions.

Petitions filed on behalf of beneficiaries who will work only in Guam or the Commonwealth of the Northern Marianas Islands are exempt from the cap until December 31, 2014.

Exemptions from the annual quota cap may apply in instances of: requests for extensions of stay for current H-1B workers; amendments to H-1B petitions requesting a change in the terms of employment for current H-1B workers; and change of employer petitions for individuals already in H-1B status. In addition, petitions for new H-1B employment are not subject to the annual cap if the foreign professional will be employed at an institution of higher education or a related or affiliated nonprofit entity, or at a nonprofit research organization or a governmental research organization. Employers desiring to hire H-1B aliens and that believe a cap exemption may apply should consult with immigration counsel to analyze their situation well before the H-1B cap is reached.

H-1B visa petitions for nonimmigrant workers accepted April 1 until quota met is a post from: Gunster Law Firm

White, a shareholder practicing in technology, corporate and securities law in Fort Lauderdale, says the new legislation known as the Leahy-Smith America Invents Act is the most fundamental change to the system in years. 

Speed and focus will be essential for companies large or small who wish to navigate the time-consuming and expensive patent process, especially in highly technical fields such as biotech and pharmaceuticals. 

Read the entire Florida Trend article: Filing Patents: Act Fast.

Bob White’s patent tips for Florida businesses is a post from: Gunster Law Firm

The Financial Crimes Enforcement Network (“FinCEN”) recently issued an advisory (“Advisory”) providing guidance to financial institutions regarding their obligations under the Bank Secrecy Act (“BSA”) when providing financial services to a foreign-located money services business (“MSB”). The Advisory follows the final rule issued by FinCEN on July 21, 2011 regarding certain definitions and other regulations relating to MSBs, including an expansion of the definition of MSB, whereby an entity may now qualify as a MSB under the BSA based on its activities within the United States, even if none of its agents, agencies, branches or offices are physically located in the United States.

As a result of the foregoing, financial institutions may find it necessary to update their anti-money laundering programs if they provide financial services to foreign-located MSBs or engage in financial transactions with these entities.

Read a complete copy of the February 15, 2012 FinCEN advisory.

New advisory for financial institutions’ obligations vis-a-vis foreign-located Money Service Business is a post from: Gunster Law Firm

On February 13, 2012, the Securities and Exchange Commission issued a No-Action Letter to the Fenwick & West LLP law firm. This No-Action Letter is good news for private companies that are approaching the statutory 500 shareholder limit (which would generally require them to register as public reporting companies under Section 12(g) of the Securities Exchange Act of 1934). Exceeding this limit can be very painful for a company, as it may be forced to register its class of shares under the Securities Exchange Act of 1934, which would require significant disclosures of information (the same as if it had undertaken an initial public offering) without realizing any of the benefits of public company status. The No-Action Letter will allow private companies to issue certain equity-based compensation to employees, directors and some consultants without triggering the reporting requirements of the 500 shareholder limit. Read Fenwick’s original request for the No-Action Letter (which describes the background of this situation).

Fenwick is the law firm that represents Facebook in its current initial public offering. Fenwick had previously sought and obtained similar relief specifically for Facebook in 2008. In this No-Action Letter, however, Fenwick obtained a much broader exemption from the SEC on this issue. Since the No-Action Letter was issued to the law firm rather than to a single company, the relief from these public reporting requirements should be very broad and should be applicable to any company whose situation is close enough to that described by Fenwick in its request for the No-Action Letter.

The situation that Fenwick used here involved “restricted stock units” (“RSUs”). RSU’s as described by Fenwick in the No Action Letter are equity compensation vehicles that generally entitle the holder to receive shares of a company’s common stock if certain future conditions are met before the RSUs expire. These RSUs are widely used by some companies, but there was a question regarding whether the issuance of an RSU caused the recipient to become a shareholder of the company, thus increasing the number of total shareholders and potentially causing the company to exceed the 500 shareholder limit.

The SEC granted an exemption in the No-Action Letter for the issuance of RSU’s to employees, directors and certain consultants. In addition to other existing strategies, this should provide good opportunities for larger private companies to provide equity-based compensation to these parties with RSU’s while avoiding the problems of premature public disclosure requirements.

Further relief in this area is likely to occur as Congress and securities regulators are closely examining proposals to raise the 500 shareholder limit. The SEC’s small business advisory group recently recommended that this limit be doubled. Many commentators and practitioners feel that this 500 shareholder limit is outdated and does not reflect the reality of many large, fast-growing companies like Facebook, Twitter and Zynga. All of these companies obtained relief similar to that granted in the No-Action Letter for their individual situations. Many commentators and practitioners also feel that this relatively low shareholder limit has substantially slowed the growth of these types of companies.

This is a highly technical area of compensation and securities law, and a misstep here could really hurt a company and its ability to do future securities offerings. This could be especially bad if a company is contemplating an IPO soon. Thus, companies must be careful in structuring an equity compensation plan that relies on the logic of the No-Action Letter. Be aware that the SEC carefully explained that the exemption granted in the No-Action Letter is based solely on Fenwick’s description of the specific RSU plan, and that any different facts or conclusions might not allow a company to be eligible for the exemption.

All private companies who are or anticipate approaching the 500 shareholder limit should take a careful look at the No-Action Letter, as it may present great opportunities to continue to issue equity compensation prior to an IPO without triggering premature public disclosure requirements.

SEC’s No-Action Letter is good news for pre-IPO companies is a post from: Gunster Law Firm

Dear Friends & Clients,

Gunster’s most recent Family Wealth Compass newsletter, prepared by our Private Wealth Management Services Group, may be of interest to you and your high-net-worth clients.

Best regards,
Clemente L. Vazquez-Bello

Read the newsletter now: Family Wealth Compass: Charting a course for your family’s future (February 2012)

Family Wealth Compass: Charting a course for your family’s future (February 2012) is a post from: Gunster Law Firm

Fenwick is the law firm that represents Facebook in its current initial public offering. Fenwick had previously sought and obtained similar relief specifically for Facebook in 2008. In this No-Action Letter, however, Fenwick obtained a much broader exemption from the SEC on this issue. Since the No-Action Letter was issued to the law firm rather than to a single company, the relief from these public reporting requirements should be very broad and should be applicable to any company whose situation is close enough to that described by Fenwick in its request for the No-Action Letter.

The situation that Fenwick used here involved “restricted stock units” (“RSUs”). RSU’s as described by Fenwick in the No Action Letter are equity compensation vehicles that generally entitle the holder to receive shares of a company’s common stock if certain future conditions are met before the RSUs expire. These RSUs are widely used by some companies, but there was a question regarding whether the issuance of an RSU caused the recipient to become a shareholder of the company, thus increasing the number of total shareholders and potentially causing the company to exceed the 500 shareholder limit.

The SEC granted an exemption in the No-Action Letter for the issuance of RSU’s to employees, directors and certain consultants. In addition to other existing strategies, this should provide good opportunities for larger private companies to provide equity-based compensation to these parties with RSU’s while avoiding the problems of premature public disclosure requirements.

Further relief in this area is likely to occur as Congress and securities regulators are closely examining proposals to raise the 500 shareholder limit. The SEC’s small business advisory group recently recommended that this limit be doubled. Many commentators and practitioners feel that this 500 shareholder limit is outdated and does not reflect the reality of many large, fast-growing companies like Facebook, Twitter and Zynga. All of these companies obtained relief similar to that granted in the No-Action Letter for their individual situations. Many commentators and practitioners also feel that this relatively low shareholder limit has substantially slowed the growth of these types of companies.

This is a highly technical area of compensation and securities law, and a misstep here could really hurt a company and its ability to do future securities offerings.  This could be especially bad if a company is contemplating an IPO soon. Thus, companies must be careful in structuring an equity compensation plan that relies on the logic of the No-Action Letter.  Be aware that the SEC carefully explained that the exemption granted in the No-Action Letter is based solely on Fenwick’s description of the specific RSU plan, and that any different facts or conclusions might not allow a company to be eligible for the exemption.

All private companies who are or anticipate approaching the 500 shareholder limit should take a careful look at the No-Action Letter, as it may present great opportunities to continue to issue equity compensation prior to an IPO without triggering premature public disclosure requirements.

For more information, contact author Bob White.

SEC’s No-Action Letter is good news for pre-IPO companies is a post from: Gunster Law Firm

 Rule 10b-17 and FINRA Rule 6490

Section 10(b) of the 1934 Securities and Exchange Act (the “Exchange Act”) is one of the anti-fraud provisions of the Exchange Act and imposes liability on persons engaged in the use of “manipulative or deceptive devices or contrivances”  in connection with the purchase or sale of a security. Pursuant to its rule making authority, the SEC has enacted a number of rules (the most well-known of which is Rule 10b-5) which regulate these manipulative and deceptive devices and contrivances in order to protect investors.

Less well-known among these rules is Rule 10b-17 which relates to untimely announcements of record dates. Specifically, Rule 10b-17 states that failure by an issuer of a class of securities publicly traded to give 10-days’ prior notice to FINRA of the establishment of record dates relating to dividends, distributions, stock splits, or rights or other subscription offerings, constitutes a “manipulative or deceptive device or contrivance” for Section 10(b) purposes.

FINRA Rule 6490 (effective as of September 27, 2010) codified the Rule 10b-17 notification requirements and requires issuers subject to the rule to pay the applicable fees in connection with their submission of the required notice. Most notably, notifications which are late can trigger a late fee of up to $5,000.

Our company is privately-held so why should we care?

 At first glance, the rules above seem to only apply to companies who have securities which are publicly traded. In fact, the rule explicitly says this. However, there’s more to the story. While technically privately-held, a company’s shares may be deemed to be “publicly traded” within FINRA’s interpretation of both rules if its shares are traded over-the-counter on the OTCBB or other similar market (e.g., the OTC Markets formerly known as the “Pink Sheets”).

Unlike the Nasdaq and NYSE, the OTCBB does not have any listing requirements and therefore, any company can potentially be quoted on the OTCBB. If a broker-dealer decides to become a market-maker in a company’s common stock, it can apply to have the stock quoted on the OTCBB. The information required to commence trading is very minimal. Interestingly (and maybe surprisingly) a company’s stock can be quoted and traded on the OTCBB without its knowledge or consent. Thus, it is possible that a company could, involuntarily and unknowingly, become subject to the notification requirements of Rule 10b-17 and Rule 6490. In fact, this has happened and OTCBB-listed companies have received correspondence from FINRA requesting that they file a late notice as well as pay the $5,000 late filing fee.

What can be done to protect the company?

 Aside from manually checking the OTCBB prior to establishing a record date to verify that a company’s stock is not being quoted, there is not much that can be done to reduce the risk of Rule 10b-17 and Rule 6490 violations. A company could request an exemption from the SEC pursuant to Rule 10b-17(b)(2), however, there is no guarantee that such request would be approved. Moreover, the SEC might approve an exemption but condition its approval on certain specified terms. Therefore, privately-held companies may need to actively monitor the OTCBB to minimize the risk of violating these SEC and FINRA rules.

For more information, contact Gustav Schmidt or David C. Scileppi. 

Your company may be ‘publicly traded’ without your knowledge – and there may be a price to pay is a post from: Gunster Law Firm

This Monday, February 6, 2012, President Obama signed a new Executive Order (“Executive Order”) blocking the property and interests in property of the Government of Iran and Iranian financial institutions. The Executive Order requires U.S. persons to block all property and interests in property of: (i) the Government of Iran; (ii) all Iranian financial institutions, and (iii) all persons determined by the Secretary of the Treasury to be owned by, controlled by, or acting for or on behalf of, any of those parties, when that property comes within the United States or within the possession or control of U.S. persons.

The Executive Order defines the term “Government of Iran” as the Government of Iran, any political subdivision, agency or instrumentality thereof, including the Central Bank of Iran, and any person owned or controlled by, or acting for or on behalf of, the Government of Iran. The term “Iranian financial institution” means a financial institution organized under the laws of Iran or any jurisdiction within Iran (including foreign branches), any financial institution in Iran, any financial institution, wherever located, owned or controlled by the Government of Iran, and any financial institution, wherever located, owned or controlled by any of the foregoing.

Previously, under the Iranian Transactions Regulations, U.S. financial institutions receiving instructions to execute transactions involving the Government of Iran were not required to block the transactions, but were only required to reject those instructions (unless the transactions were exempt or otherwise authorized by OFAC). Pursuant to the Executive Order, transactions involving the Government of Iran or Iranian financial institutions must now be blocked unless such transactions are exempt or authorized by OFAC.

Read a complete copy of the Executive Order 13599: Blocking property of the government of Iran and Iranian financial institutions (February 5, 2012)

For more information, please contact the authors: Clemente Vazquez-Bello, Andres A. Fernandez, Marina Olman and Gabriel Caballero

President Obama signs new executive order blocking the property interests of the Iranian government, financial institutions is a post from: Gunster Law Firm

IRS Commissioner Shulman warns that the “unprecedented effort against identity theft sends a strong, unmistakable message to anyone considering participating in a refund fraud scheme this tax season . . . we are aggressively pursuing cases across the nation with the Justice Department, and people will be going to jail.”

With tax season on its way, taxpayers must educate themselves about identity theft. This type of theft usually takes place early in the tax filing season when thieves file tax returns with stolen social security numbers and obtain refunds. The IRS and the Department of Justice took action on this issue just last month, bringing enforcement actions in various locations in Florida which included Miami, Ft. lauderdale, Port St. Lucie, Ocala, Tallahassee, Fort Myers, and Pensacola. As a result, in Miami, owners of a check cashing store were charged with conspiracy in connection with an IRS tax refund check cashing scheme; in Pensacola, five were indicted for a fraudulent prisoner income tax refund scheme; and in Tallahassee, nine defendants were indicted in a tax refund scheme.

What is identity theft?

Identity theft occurs when someone uses another’s personal information without permission to commit fraud or other crimes using the victim’s name, social security number or other identifying information. Usually these types of thieves use a legitimate taxpayer’s identity to fraudulently file a tax return and claim a refund. However, as a taxpayer you may not realize that you are a victim until you receive a letter from IRS stating that more than one tax return was filed with your information, that you have a balance due, or that IRS records show wages from an employer that you have never worked for!

How does a legitimate taxpayer reduce the risk of identity theft?

First, you should know that the IRS does NOT initiate contact with taxpayers by email to request personal or financial information. This means that the IRS will not attempt to initiate contact with a taxpayer using text messages and social media channels. A taxpayer can report suspicious emails to phishing@irs.gov or by phone at 1-800-366-4484.

Next, you should follow these tips, which are recommended by the IRS to reduce your risk:

• Don’t carry your Social Security card or any document(s) with your SSN on it.
• Don’t give a business your SSN just because they ask. Give it only when required.
• Protect your financial information.
• Check your credit report every 12 months.
• Secure personal information in your home.
• Protect your personal computers by using firewalls, anti-spam/virus software, update
  security patches, and change passwords for internet accounts.
• Don’t give personal information over the phone, through the mail or on the Internet unless
  you have initiated the contact or you are sure you know who you are dealing with.

Also, Department of Justice attorneys have cautioned that people often make the mistake of providing their SSNs to doctor’s offices and other medical facilities. Providing this type of information is not necessarily required and can increase a person’s risk of identity theft.

Carefully select a reputable professional to submit your return

Recently, a tax preparer was sentenced to 18 months in prison and ordered to pay $784,000 in restitution for filing fraudulent tax returns, identity theft and unauthorized use of another person’s Social Security number. The return preparer conducted a fraudulent tax filing scheme in which false employer earnings statements were submitted in support of tax returns for various individuals, some of whom were unaware that their personal information was being used to file and obtain tax refunds. The preparer’s scheme generated several hundred thousand of dollars of fraudulent refunds and was discovered after the preparer’s employer conducted an audit, noticed suspicious transactions and reported them to the IRS.

What does a taxpayer who is a victim of identity theft need to do?

If you do receive a notice from the IRS, open the letter. Interestingly, many people who receive mail from the IRS do not open these letters because they are immediately struck by panic and fear. Next, you need to respond immediately to the name and number provided in the IRS letter. You may also need to complete Form 14039, IRS Identity Theft Affidavit. There is also a special IRS unit, the IRS Identity Protection Specialized unit that a taxpayer can contact at 1-800-908-4490.

If you have any questions on the material in this newsletter, please contact:

Lu-Ann Dominguez
954.468.1393 • ldominguez@gunster.com

Tax Advice Disclosure: To ensure compliance with requirements imposed by the IRS under Circular 230, we inform you that any U.S. federal tax advice contained in this communication (including any attachments), unless otherwise specifically stated, was not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any matters addressed.

Tax refund fraud and identity theft become high priorities as tax season approaches is a post from: Gunster Law Firm

Since 2011, Section 5000C of the U.S. Internal Revenue Code has imposed an IRS-administered withholding tax on billions of dollars of products and services sold annually by foreign vendors to U.S. federal government agencies.

One of the many issues raised by Section 5000C is the possibility that foreign and U.S. banks in the chain of payment may be liable for U.S. tax as withholding agents. For example, under the federal government’s SmartPay2 credit card program, the federal government reimburses the Smartpay2 credit card issuing banks, which reimburses vendors’ foreign and U.S. credit card merchant banks, which pays to those vendors, the amount of federal government purchases from those vendors using Smartpay2 cards. There are currently over 350 agencies participating in the SmartPay2 credit card program, spending $30 billion annually, through 100 million transactions on over three million credit cards. Some foreign and U.S. merchant banks may be concerned that future IRS guidance could effectively require them to withhold tax from those vendors’ Smartpay2 credit card sales, unless the merchant bank obtains documentation showing the vendor is a U.S. company, the vendor’s product or service originated in a non-taxable country, or the vendor’s sale meets some other possible exemption from Section 5000C withholding.

While the IRS business plan through June 2012 states that IRS will give priority to Section 5000C, that plan does not promise any formal guidance on withholding issues by any specific date. However, as discussed in the attached article by Alan S. Lederman, a shareholder in the Gunster tax department, it seems possible that the IRS will use the policy decisions made in its final 2011 regulations, concerning since-repealed withholding of federal tax on U.S. vendors and their merchant banks, to guide the IRS in drafting rules concerning withholding of the Section 5000C federal tax on foreign vendors and their merchant banks.

To read a complete copy of the article, please click here.

If you have any questions on the material in this newsletter or article, please contact:

Alan S. Lederman
954.713.6415 • alederman@gunster.com

Graham Hill
954.468.1312 • ghill@gunster.com

Tax Advice Disclosure: To ensure compliance with requirements imposed by the IRS under Circular 230, we inform you that any U.S. federal tax advice contained in this communication (including any attachments), unless otherwise specifically stated, was not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any matters addressed.

Section 5000C Tax Raises Withholding Issues For Banks is a post from: Gunster Law Firm