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Very soon, the federal government could know what you bought for dinner last night, or whether you and your wife are having a nasty email fight about something very personal-and they could know this all because of CISPA-The Cyber Intelligence Sharing and Protection Act of 2013. If you’re using gmail, Google might already know this information, but our Constitution has traditionally protected us from the federal government getting its hand on such intimate, personal information without a warrant or court oversight.

CISPA is a bill that will be voted upon very soon in the U.S. House of Representatives; it allows for voluntary information sharing between private companies and the federal government. The bill’s language and provisions continue to be amended and shaped in closed-door, secret meetings by the U.S. House Intelligence Committee. In principal, the bill is supposed to prevent cyber-attacks. But it does this through sweeping, unprecedented information sharing provisions that allow and in fact encourage private companies, like Facebook and Google, to turn over every intimate detail they’ve collected about you from your online activities, your emails, your texts, your shopping habits, your web-browsing activities, etc., to the US government.

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Sure, we’ve all heard that mobile software applications collect more personal data from our smart phones than they need to or should; and the mobile apps’ privacy policies are such a byzantine morass, none of us read them anyway. But the news that the most popular children’s mobile software apps are surreptitiously collecting and then selling to dozens, even hundreds, of marketers and third parties exactly where our children are at all times, what their mobile phone numbers are, and where exactly they go and what they do online, and that this all being done without notice to parent or child…well that creeps out even the most jaded adult.

Yesterday, December 10, 2012, the Federal Trade Commission released a detailed Report replete with research and data that demonstrates the most popular mobile software apps designed for, marketed to, and used by our children are doing all of this, and in so doing, may be running afoul of numerous federal and state consumer protection/deceptive advertising and privacy laws.

The 12/10/12 Report is a follow-up to a February 2012 FTC report wherein the FTC surmised that there may be significant privacy issues with mobile apps designed for and targeted to children. After releasing the February 2012 report, the FTC did its homework: it investigated 400 popular children’s mobile software apps; it reviewed the apps’ stated privacy policies; and it tested the apps’ actual data collection and tracking practices. What it found is troubling, to say the least.
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Jennifer O’Brien, a tenured New Jersey public school elementary teacher with 13 years of teaching experience and a master’s degree in education, was teaching a class of 23-first grade students (all of whom were minorities and mostly six-years old), when she posted on her own, private Facebook page these comments about her job to her 300+ Facebook friends and their friends of friends, “I’m not a teacher-I’m a warden for future criminals!” O’Brien didn’t stop there; she later posted to Facebook, “They had a scared straight program in school-why couldn’t [I] bring [first] graders?”

When NJ school officials came across the Facebook post and confronted O’Brien, she said she didn’t intend her comments to be offensive or racist statements, but otherwise she essentially was unrepentant. Parents were deeply concerned and angered by O’Brien’s Facebook posts; protests formed outside of the school attended by dozens; and parents demanded their children be removed from O’Brien’s classroom. O’Brien was dismissed from her position; her dismissal was affirmed by an Administrative Law Judge (ALJ); and ultimately, O’Brien appealed to a NJ state appellate court. O’Brien argued that her dismissal constituted a violation of her First Amendment rights of free speech because (1) her comments addressed a matter of legitimate public concern, i.e., school discipline, and (2) because her comments were made on her private Facebook page, they were protected speech.
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United States citizens have an obligation to report to the IRS on Schedule B of their U.S. Individual Income Tax Return, Form 1040, whether they had a financial interest in, or signature authority over, a financial account in a foreign county in a particular year by checking “Yes” or “No” in the appropriate box and identifying the country where the account was maintained. They further have an obligation to report all income earned from foreign financial accounts on the tax return and to pay the taxes due on that income.
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In this economy, many small businesses continue to struggle just to stay afloat and, out of desperation, find means of shuffling business funds around to pay immediately due bills and put off paying others. Some business owners have used employment tax withholding to use the government as a bank to ‘borrow the money for a short while’ during financially difficult times with good intentions to pay it back later. Others have been prosecuted for collecting employment taxes from their employees and willfully failing to pay them to the IRS. Former IRS Commissioner Mark W. Everson has stated that the “failure to pay employment taxes is stealing from the employees of the business.”
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As tax defense attorneys and former IRS prosecutors, we are very experienced in resolving Maryland and federal tax problems. One of the common issues we encounter involve the failure to pay Maryland sales and use tax.

I. Applicable Statutes and Case-Law
Section 11-102(a) of the Tax-General Article, Annotated Code of Maryland, imposes a sales and use tax on a retail sale in Maryland, or a use of tangible personal property or a taxable service in Maryland, unless otherwise provided. See MD. CODE ANN., TAX-GEN. § 11-102(a)(1)-(2). Section 11-601 of the Tax-General Article, Annotated Code of Maryland, provides for the payment of sale and use tax to the Comptroller of Maryland by buyers or vendors. See MD. CODE ANN., TAX-GEN., § 11-601(b)-(c) (West 2010).

If a vendor that is liable for the payment of sales and use tax, including interest and penalties, is a limited liability company (hereinafter, “LLC”), then personal liability for the same extends to all members of the LLC if there is no operating agreement, or to those individual who manage the business and affairs of the LLC if there is an operating agreement. Id. at § 11-601(d)(2). Under Tax-Gen. § 11-601(e), a member of an LLC is not considered to be managing the business and affairs of the company solely by doing one or more of the following: (a) consulting with or advising the individuals who manage the business and affairs of the company; (b) directing the management of the company in the same manner as a director of a corporation directs the management of a corporation; or (c) voting on any matter required to be voted on by the members of the company. See id. at § 11-601(e).
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As a lawyer who has successfully defended many types of insider trading allegations by both the SEC and CFTC, I am often asked to explain what type of insider trading is prohibited by the CFTC within the commodities and futures markets?

I. General Overview and Background of CFTC
Generally, regulation of the U.S. financial markets is divided between the Securities and Exchange Commission (“SEC”), with authority over securities, and the Commodity and Futures Trading Commission (“CFTC”), with authority over futures/derivatives. See Gary Rubin, CFTC Regulation 1.59 Fails to Adequately Regulate Insider Trading, Note, 53 N.Y.L. SCH. L. REV. 599, 606 (2008-09). The Commodity Exchange Act (“CEA”) of 1936 was the first major congressional initiative aimed at regulating derivatives. See Commodity Exchange Act of 1936, ch. 545, 49 Stat. 1491 (1936) (codified as amended at 7 U.S.C. § 1 (2006)); see also id. at 604. Generally, the CEA expanded upon prior acts by increasing the Secretary of Agriculture’s authority and making it “unlawful to engage in commodity brokering without first registering with the secretary.” Rubin, supra, 53 N.Y.L. SCH. L. REV. at 605 (citing CEA § 5, 49 Stat. at 1492-97).

The CFTC was established by the Commodity Futures Trading Commission Act (“CFTCA”) of 1974, which granted the CFTC the exclusive authority to regulate futures contracts. See 7 U.S.C. § 2(a)(2). The CFTC is a federal regulatory body that regulates the entire commodities futures industry. In its mission statement, the CFTC describes its main purposes as preventing fraud and promoting competition, stating, “[t]he CFTC’s mission is to protect market users and the public from fraud, manipulation, and abusive practices related to the sale of commodity and financial futures and options, and to foster open, competitive, and financially sound futures and option markets.” CFTC, About the CFTC, http://www.cftc.gov/About/MissionResponsibilities/index.htm.

Prior to the enactment of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act” or “the Act”), the CFTC was viewed as “a regulatory agency with a small bark and even less bite.” Peter J. Henning, C.F.T.C. Is Set to Get Tougher on Fraud, New York Times, Dealbook, available at http://dealbook.nytimes.com/2010/11/01/c-f-t-c-is-set-to-get-tougher-on-fraud/. However, with the enactment of the Dodd-Frank Act, the CFTC has gained new authority to regulate derivatives, credit default swaps and the exchanges that will trade these contracts.
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Generally speaking, a Maryland corporation provides protection to individuals from personal liability associated with debts of the corporate entity. When a plaintiff or creditor is able to go after an owner’s personal assets, it is commonly called “piercing the corporate veil”.

Maryland law is crystalline that the corporate entity will be disregarded only when necessary to prevent fraud or to enforce a paramount equity. The mere fact that all or almost all of the corporate stock is owned by one individual or a few individuals will not afford sufficient grounds for disregarding corporateness Continue reading →

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Simply put, an insurance agent has no general duty to advise its insureds, with regard to essentially anything after the issuance of the policy. In Maryland, as well as other jurisdictions, the basis for not holding agents to a standard of care stems from a fear that to do so would create a situation where the tort floodgates would open to allow claims against brokers whenever an incident surrounding the policy occurs. While the question of duty can become more complex when the agent is acting on behalf of the insured, as opposed to the insurance company, the question is not affected in a relevant way.

Regardless of the status of the agent, when viewed exclusively in the insurance context, once the policy is issued, the insured is responsible for noticing any problems with the policy and bringing them to the attention of the agent immediately. With regard to administration of the policy following issuance, the basis for not requiring a duty of care stems from a belief that such would require an agent to continuously monitor a clients assets and adjust coverage accordingly. Since agents are generally in a position where they must rely on the information given to them by the insured, imposing a duty of care is unreasonable.
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On of the most common dispute between businesses involves a tort know as tortious Interference of contract. Maryland recognizes two types of tortious interference claims: “inducing the breach of an existing contract and, more broadly, maliciously or wrongfully interfering with economic relationships in the absence of a breach of contract.” Kaser v. Fin. Prot. Mktg., Inc., 376 Md. 621, 628 (2003).

The two claims share the same elements – intentional acts done with the unlawful or wrongful purpose to cause damage to plaintiff’s lawful business with actual damage resulting – and can arise only out of the relationship between three parties, the two parties to the contract and a separate interferer. The three-party relationship applies equally in the instance of a business relationship where no express contract exists; however, in such situations, the right of an individual to interfere is treated more broadly.
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To the surprise of many commercial litigators, Maryland does not recognize an independent breach of fiduciary duty claim. The Court of Special Appeals recently stated “In a claim for monetary damages at law … an alleged breach of fiduciary duty may give rise to a cause of action, but it does not, standing alone, constitute a cause of action.” Wasserman v. Kay, 197 Md. App. 586, 631 (2011).

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Many businesses approach classifying workers as a tax strategy: classify someone who performs services for you as an employee, and the employer must withhold federal income taxes, withhold and pay social security and Medicare taxes, and pay unemployment tax on wages paid to an employee. Classify that same worker as an independent contractor, and the worker, not the business, is responsible for the related employment taxes. Seem like an easy decision? Think again. A mere label does not determine the employer-employee relationship for tax purposes, and misclassification can result in potentially crippling tax liabilities.
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Contact Information
Maryland Offices:
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400 E Pratt St Suite 900
Baltimore, MD 21202
Office: (410) 385-2225 Toll Free: (800) 385-2243 Fax: (410) 547-2432 Email: firm@silvermanthompson.com
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1 W Pennsylvania Ave #905
Towson, MD 21204
Phone: (410) 494-7100 Email: firm@silvermanthompson.com
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Washington, DC 20006
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