The Landlord Tenant Eviction Process in Pennsylvania

When a landlord has a tenant who fails to pay rent, a landlord must file an eviction complaint at the local magisterial district court where the property is located.  Once a complaint is filed along with a copy of the lease, a hearing is scheduled in two to three weeks.  It is very important for the landlord to sue for both back rent and possession.  The reason is if the tenant appeals he has to post the lesser of the rent in arrears or three months rent.  

The hearing is very straight forward. The landlord testifies that the tenant has failed to pay rent and a judgment is entered in the landlord’s favor for the amount of rent owed plus court costs and the court will grant the landlord possession.  The landlord can also be awarded attorney fees if they are in the lease.  However, the landlord must have a valid rental license covering the period that he or she is requesting back rent.   

After the magistrate judge enters a judgment and awards a landlord possession, the tenant has the right to file an appeal to the possession portion of the judgment within ten days. After the tenth day, the tenant can still appeal the money portion of the judgment within thirty days of the judgment, but the tenant can no longer appeal the award of possession.  A tenant would file an appeal with the Court of Common Pleas in the county, where the rental property is physically located.  When a tenant files an appeal, they ask the court to enter a Rule to Show Cause, which would require a landlord to file a civil complaint in the court within twenty days. An appeal is conducted de novo, which means a new hearing is required at the Court of Common Pleas and usually takes 9 months for the hearing to be scheduled in Delaware County.

If the tenant does not file an appeal within ten days of the judgment date and the tenant remains in possession of the property, the landlord must then file an Order of Possession with the district court on the eleventh day after the judgement date. The Constable will then call the Landlord in one to weeks after he files for the Order for Possession to arrange to meet him at the property, so  the Constable can remove the tenant from the property and the landlord can change the locks. 

When an appeal is filed by a tenant, the tenant is required to post with the court the judgment in the amount of rent in arrears or three months rent, whichever is less.  If the tenant posts the rent with the court, the tenant will be granted a supersedeas, which means that the Constable cannot move forward with the actual eviction process while the appeal is pending. Furthermore, the tenant must deliver the notice of appeal to the magisterial district court to be granted the supersedeas and serve a copy upon the landlord.

In order to obtain the posted rent after a tenant files an appeal, a landlord must file an application with the Court of Common Pleas so the rent posted by the tenant can be released from escrow.

If a tenant is claiming they are indigent, the tenant can submit an affidavit stating they do not have the financial ability to post with the court the lesser of three months rent or the actual rent in arrears and the court would permit the appeal to proceed.  If the tenant files this affidavit and has not paid rent in the month the appeal is filed, the tenant is merely required to pay one-third  of their monthly rent payment at the time of appeal. The remaining two-thirds must then be posted within twenty days of the appeal.  The tenant must then continue to pay rent every thirty days after filing the appeal with the court.  When a tenant fails to post rent with the court, the landlord can terminate the superseadas by filing to terminate the tenant’s appeal with the Court of Common Pleas.  If you are a landlord and need help evicting a tenant or getting possession, feel free to call Gregory J. Spadea at 610-521-0604.

When To Issue or Not Issue IRS Form 1099

I strongly encourage our business clients, nonprofit organizations and landlords to issue 1099 forms which are required by law. The reason is IRS Form 1099 provides the means of reporting very specific types of income from non-employment related sources that might not be reported elsewhere. If you paid someone for services (other than employees) you must issue them a 1099 by January 31 of the following year. Business income tax returns including IRS Forms 1120S and 1040, Schedule C include a question asking if Forms 1099 were filed as required and by signing your return, you are certifying that your response is true.

I recommend to all my clients to review all disbursements made from January 1, through December 31, summarizing all payments for services to unincorporated individuals and businesses where the accumulated total is $600 or more.  If you pay a Limited Liability Company (LLC) that is taxed like a corporation you still have to issue a 1099 to that LLC.  Make sure you have the correct name, employer identification or social security number and address of everyone you pay before you pay them.

Beyond having to possibly face an IRS or State audit, if you fail to file the correct information by the deadline, fail to include all the required information on a return, or if you include incorrect information, you can be subjected to an array of steep penalties if you cannot show reasonable cause.  If the payee fails to furnish his or her taxpayer identification number (TIN), they are subject to backup withholding at a 28% rate. If you do not collect and pay backup withholding from affected payees as required, you may become liable for any uncollected amount.

Closeup of overlapping Form 1099G Certain Government Payouts and W-2 forms.

Here are a few additional tips of when you do not have to issue 1099’s:

1. Do not send a 1099-MISC to an employee since that is what a W-2 is for.  Remember that someone that performs services for you is either an employee or an independent contractor, but not both.  

2. Do not send a 1099 to someone you’ve paid by credit card, debit card or by services like PayPal. Such payments will be reported on a 1099K that they will receive from their merchant services provider

3. Do not use Form 1099-MISC to report employee business expense reimbursements. Report payments made to employees under a non-accountable plan as wages on Form W-2. 

4. If you pay a non-U.S. citizen who works remotely via the Internet from another country, you do not need to file a 1099 for that person. However, if the foreign worker performs any work inside the United States, you would need to file the 1099. For that purpose, you should have that foreign worker fill out, sign and return to you Form W-8BEN.

5. Do not issue 1099’s to corporations.

If you need help issuing 1099’s or have any questions, please contact Gregory J. Spadea at 610- 521-0604.  The Law Offices of Spadea & Associates, LLC prepares tax returns year round.   

3 Rules To Follow If You Are Stopped For DUI or DWI in Pennsylvania

Drunk Driver being pulled over by police.

Even people with high alcohol tolerances can drink too much and find themselves in a situation where police stop their car for suspicion of driving under the influence (DUI) or Driving While Intoxicated (DWI). In these situations it is important that a person remember three basic rules: (1) don’t refuse a Breathalyzer Test, (2) don’t answer any questions even if the officer threatens to arrest you, and (3) tell the police officer about any physical limitations and injuries which would affect your balance or movement.

  1. Don’t refuse a Breathalyzer Test

    In Pennsylvania, everyone who drives a car on the road has given police implied consent to conduct a Breathalyzer Test. If you refuse the breathalyzer, Pennsylvania Department of Transportation (PENDOT) can still suspend your driver’s license for 12 to 18 months even if you’re not convicted in criminal court. The reason is because driving is a privilege in Pennsylvania and PENDOT can impose a suspension through its administrative powers which are separate from criminal proceedings. Therefore even if your attorney wins your DUI case, PENDOT can still suspend your driver’s license.

    If you take the Breathalyzer Test you will not only avoid a potential civil penalty from PENDOT but it can also improve your criminal case. A good attorney can dispute the results of a Breathalyzer because there are a number of issues can affect a BAC reading.

  2. Don’t Answer Any Questions

    If you are stopped for suspicion of DUI, police more than likely are going to arrest you no matter what you tell them. A typical question from a police officer is “have you had anything to drink tonight?” People will tell the officer they are coming from a friend’s house and just had one drink. However they are better off telling the officer that they aren’t going to answer any questions but that he is free to give a Breathalyzer Test or a Field Sobriety Test. Police officers are trained in the law and understand that everyone has the constitutional right to remain silent. Most police officers will respect this right and simply continue with the traffic stop by giving you a field sobriety test or taking you into custody.

    Keep in mind you could be arrested for a DUI even if you are not driving. If you have actual, physical control of a vehicle while under the influence, then that can be enough for an officer to arrest you. In Pennsylvania, the terms “operating” and “actual physical control” are basically the same. They generally mean that the driver is in the vehicle and could make it move, even if the driver is not trying to move the care when the officer finds him. Therefore, telling the officer why you were sleeping in the car while the radio and the heat are on will not help your case.

    Answering questions will never improve your DUI case because the officer is probably asking the question because he either smells alcohol on your breath or observed your car swerving or violating some traffic law. This is what gave the officer probable cause or reasonable suspicion to stop your car in the first place. If you answer a question it will only hurt your DUI case because you’ve given the police more circumstantial and possible direct evidence of your intoxication. A statement like “I only had a little to drink,” or “I am coming from a party,” can persuade a judge that the police officer had probable cause to arrest you. It’s always better to remain silent and simply cooperate with the police officer with regards to field sobriety tests, Breathalyzer Tests, and blood tests, but never make any verbal or written statements.

  3. Tell the Police Officer about any Physical Limitations You’ve Had in the Past

    A standard field sobriety test requires that a person perform certain movements so that a police officer can assess a person’s motor skills. These tests, however, are often difficult to perform even for a person who has not consumed any alcohol. There are three standard field sobriety tests – (1) the walk and turn, (2) the one leg stand test, and (3) the Horizontal Gaze Nystagmus (HGN) test.

    1. The first two tests require you to walk on a straight line or balance on one foot. If you’ve had any type of surgery, played sports, or have any knee or leg injuries this will affect your ability to perform these tests correctly. Telling the officer that you’ve had an injury in the past will put the police, the prosecution, and the court on notice that the results of the field sobriety test may not be a fair indication of your intoxication. This will also allow your criminal defense lawyer to argue that the police didn’t have probable cause to arrest you based on the results of the field sobriety test.

      With regards to the HGN Test, police officers are trained in the law but there is a great deal of case law which says that they can’t fairly use the results of the HGN Test to determine a person’s impairment. HGN is the involuntary jerking of the eyes and there is a strong argument that only a medical professional can accurately assess the real results of this test.

      If you are stopped for DUI it’s important to keep these three rules in mind because it will not only protect your rights but put your attorney in the best position to successfully defend your case. If you have questions call Gregory J. Spadea at 610-521-0604.

Seasons Greetings and Happy New Year!

Seasons Greetings and Happy New Year!

Happy Thanksgiving

Happy Thanksgiving

How Much Can I Deduct For a Business Car or Truck in 2014 under IRC Section 179

Lot full of cars

To encourage businesses to buy equipment as well as cars and trucks Congress passed Internal Revenue Code (IRC) Section 179. For passenger vehicles, trucks, and vans (with a gross weight of less than 6,000 pounds), that are used more than 50% in a qualified business use, the total deduction for depreciation including both the Section 179 expense deduction as well as 50% Bonus Depreciation is limited to $11,060 for cars and $11,160 for trucks and vans. If the automobile cost $20,000 and is used 100% for business the business would get an IRC Section 179 deduction of $11,060 and a regular depreciation deduction of $1,788 (20% of the $8,490.00 difference). If the vehicle is used less than 100% for business both the Section 179 deduction and regular depreciation deduction are reduced proportionately based on the actual business use percentage.

SUV’s, trucks and vans with a gross vehicle weight rating above 6,000 lbs. but no more than 14,000 lbs. qualify for expensing up to $25,000 if the vehicle is financed and placed in service prior to December 31. In addition the business can deduct 50% of the remaining cost over $25,000 as bonus depreciation. However, the 50% bonus depreciation break will expire on December 31, 2014 unless Congress extends it.

For example, a new heavy SUV used 100% for business that costs $52,000 and qualifies for Section 179 could be written-off in 2013 as follows:

First Year Section 179 Deduction:                        $25,000
Bonus Depreciation (50% of remaining balance):  13,500
Regular Depreciation (20% of remaining balance):  2,700
Total First-Year Write-Off:                                     $41,200

However, businesses that experience net operating losses cannot claim an IRC Section 179 deduction that would create or increase an overall business tax loss. However they may take the 50% bonus depreciation deduction, and carry the remaining net operating loss forward were it can be used in future years.

If you have any questions or need help with your taxes or business deductions call Gregory J. Spadea of Spadea & Associates, LLC in Ridley Park at 610-521-0604. Spadea & Associates, LLC prepares business and individual tax returns year round.

What Every Residential Landlord Should Know In Pennsylvania

Due Diligence in Screening Prospective Tenants
You should have the prospective tenants fill out a rental application and sign consents so you can request their credit report. Ensure the prospective tenants have stable employment and check their references by calling their current landlord. If the tenant does not have good credit, find out why. If the tenant has a reasonable explanation for not having good credit such as a divorce, get the tenant to have a cosigner who has good credit to sign the lease with them.

Have a Good Residential Lease
The lease is very important and should outline what each party can expect from the other party during the lease term. It should contain rules that the you expect the tenant to follow. The lease should explain what charges are paid by each party such as utilities, landscaping snow removal, etc.

The lease should address late charges and eviction procedures including how long you are required to store the tenant’s belongings that are left behind. The lease should include a clause regarding Act 215 so you can recover back rent through wage garnishment. It should also have the tenant waive the written notice to quit. The lease should require the tenant to pay landlord’s attorney fees if he is evicted. It should address the notice period each party must give to terminate the lease after the first year. The lease should require the tenant to provide pay stubs annually so you can verify their employment.

Security Deposit
I recommend you take pictures of the property before you rent it. Then walk the tenant through the rental property so the tenant can see there is no property damage. Then when the tenants move out if there is damage you can take a picture of the damage and provide the tenant with before and after photos so you can explain why you are taking their security deposit. You should always give your tenants a receipt if they pay the rent or security deposit in cash indicating the date and amount received.

Limiting your Liability
You should deposit the rent in a separate bank account and should have the rental property owned by a Limited Liability Company (LLC). If you do not want to pay the 2% transfer tax to transfer the property in the LLC’s name you should have a $1,000,000 umbrella policy in addition to a $300,000 liability policy on the rental property itself. You should require your tenants to have content coverage insurance so their contents can be replaced if there is a fire or other damage. You should require the tenant to provide you with the insurance policy declarations page on an annual basis.

If you have any questions or need a good lease feel free to call Gregory J. Spadea of Spadea & Associates, LLC in Ridley Park at 610-521-0604.

Why I Should Form a Family Limited Partnership

Basic Strategy
The estate planning strategy employed by business owners is to gift limited partnership interests to family members at a discount based on their future business succession plan. This works well for succession planning because a business owner that has a successful LLC can gift the nonvoting LLC units to his children and out of his estate over time. The business owner acts as a general partner and his children are limited partners. In addition all the assets transferred to the Family Limited Partnership are protected from business creditors.

Gifting to the Limited Partnership
The general partner (business owner) can gift the limited partnership interests up to the annual exclusion of $13,000 in 2012 without filing a form 709 federal gift tax return. If the business owner wants to gift more than $13,000 per person he has to file a Form 709 return and may use part of his $5.12 million exemption in 2012. However, the value of the limited partnership shares or nonvoting LLC units may be discounted up to 30% due to their lack of marketability since there is no ready or available market to sell those shares on.

Tips on Surviving an IRS Challenge
In order for the Family Limited Partnership to survive a challenge by the Internal Revenue Service the general partner (business owner) must resist the temptation to maintain too much control over the partnership assets. The general partner should not pay personal expenses from the partnership bank account or comingle his personal funds with the partnership funds. The partnership should be operated as a separate entity and hold annual meetings to discuss management issues.

The partnership agreement should be drafted to

  1. avoid potential abuses by the general partner;
  2. address when distributions from the partnership bank account should be made;
  3. state at least three nontax reasons indicating why the partnership was formed such as:
    • To make a profit.
    • To increase the family’s wealth
    • To provide a means whereby family members can become more knowledgeable about the management and preservation of the family’s assets.*

If you have any questions about Family limited partnerships please call Gregory J. Spadea of Spadea & Associates, LLC in Ridley Park, PA at 610-521-0604.

*Estate of Turner, TC Memo 2011-209

What Is Income In Respect To Decedent (IRD) Estate Tax Deduction?

Income In Respect To Decedent (IRD) Defined

Income in respect of a decedent (IRD) is income earned by the decedent (deceased person) prior to his death but was payable or paid after his death. Income in Respect to Decedent includes the taxable portions of annuities, traditional IRAs and tax deferred retirement plans, Series EE U.S. Savings Bonds, installment agreements, partnership income, rent, wages, bonuses and vacation time paid after death. It also includes interest and dividends earned on stocks, bonds or mutual funds in the decedent’s name while he was alive, but paid after his death.

How is IRD Reported

Often you will have to add the item to the final 1040 federal tax return of the decedent because the social security number on the tax document such as a W-2, 1099 or K-1 will be the decedent’s. Once the estate is probated the executor can retitle the retirement plans, EE U.S. Savings Bonds or other asset to the estate or beneficiaries name and tax identification number so it can be included on the return of the person or entity receiving the income.

If no beneficiary is named such as the surviving spouse, it passes to the estate, and passes by will. If the decedent did not have a will it passes by intestate law.

How Is IRD Taxed

IRD retains the same tax nature after death as it would have had if the decedent had received the item of income while alive. There is no step-up in basis for IRD items because the income was never taxed during the decedent’s life.

The IRD Estate Tax Deduction

One of the most missed deductions available to recipients of IRD is the federal estate tax deduction attributable to the IRD items. Since the amount was earned while the decedent was alive and owed to the decedent at the date of death, it is an asset of the estate. If the estate owes federal estate tax, some of it is attributable to the IRD items. When the ultimate recipient receives the items of IRD, the recipient must include these in income and pay income tax on their respective federal 1040 tax return in the year received. Thus items of IRD are potentially taxed twice, once on the federal 706 Estate Tax return and again on the recipient’s federal 1040 tax return.

The IRD estate tax deduction is calculated by re-computing the 706 without any of the items of IRD, then subtracting this number from the true federal estate transfer tax bill which includes the IRD items. This difference is the estate tax due to the IRD items. A proportionate amount of this may be deducted on the recipient’s 1040 federal tax return, by the recipient as they realize the income from the IRD item. For example, someone collecting from a deceased person’s 401(k) or traditional IRA would have a deduction of the federal estate tax on that portion of the decedent’s assets, recovered over time in the year the income was received.

If you have any questions about IRD feel free to call Gregory J. Spadea at Spadea & Associates, LLC in Ridley Park, Pennsylvania at 610-521-0604.

Welcome to the Law Offices of Spadea & Associates

At the law offices of Spadea & Associates, LLC, in Ridley Park, we have extensive experience representing individuals throughout Delaware County, Montgomery County, Philadelphia County and South Jersey. We place a high priority on personal service, ensuring that all your legal concerns are handled directly by Gregory J. Spadea or one of his associates. Before starting his own law practice in 2001, attorney Spadea was a former IRS agent and certified public accountant. Contact our offices to set up a free initial consultation.

We focus our practice on several areas of practice, including:

• Estate and tax planning: We provide advice to individuals and businesses, counseling clients and families on strategies to ensure the orderly distribution of assets at death. We also help businesses and individuals make plans to minimize their income and inheritance tax obligations.
• Estate administration and will probate: We guide you through the probate and estate administration process in as seamless a manner as possible, ensuring your responsibilities are met appropriately.
• Business law and entity formation: We work with startups to identify appropriate business structure and provide comprehensive corporate governance. We draft and review contracts and commercial leases.
• Criminal defense: Our criminal defense attorneys represent men and women who have been charged with a crime. We offer skilled criminal defense services to people charged with white collar crimes, felonies, misdemeanors, DUI (driving under the influence) and traffic violations.
• Real estate transactions and evictions: We handle all matters related to the sale or purchase of commercial or residential real estate, from the negotiation of terms to the closing. We prepare all documents necessary to successfully complete a real estate transaction, including buy-sell agreements and deeds.
• Personal injury: Our firm represents injured individuals and families in a wide range of personal injury cases, including car accidents, truck accidents, motorcycle crashes, medical malpractice, slip-and- fall and wrongful death, among others.
• Family law: We work closely with clients to deal with family law issues as efficiently and effectively as possible. Some of the types of family law cases we handle include divorce, child support, child custody, property division and spousal support.
• Immigration law: Our attorneys are mindful of the timeframes of immigration processes as we help our clients come to the United States for work, obtain lawful permanent resident status and work toward other immigration goals.

For a free initial consultation with an experienced lawyer, contact us. We are conveniently located across from Taylor Hospital.

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