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The Secrets to Online Safety

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Written by Michael D. Ellis
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Cybersecurity and other online threats to businesses are, unfortunately, an increasingly common occurrence. In addition to phishing, spoofing, and other well-known email scams, cyber criminals are deploying increasingly sophisticated attacks. In recent months, our office has been contacted by many clients who have been victims or attempted victims of numerous cybersecurity attacks. Below are some tips and points to help prevent or address a cyberattack or other online threats.

 

  • Pay Careful Attention To The Sender’s Email Address: While seemingly obvious, failing to take this precaution can have a significant harmful impact on your company. Employees should always check to make sure the name displayed matches — exactly — the actual email address. A nefarious sender can change the display name to whatever is expected to most likely get a response, including a manager’s or coworker’s name. In addition, make sure that the actual email address is from the expected sender and not just a similar domain. For example, if the expected sender was Acme, Inc., which had a web domain of acme.com, any emails from Acme, Inc. would likely come from @acme.com email addresses. A client in this situation started receiving emails from an @acmeinc.com email address, which turned out to be fraudulent.  
  • Buy Your Business’s Domain Name, as well as adjacent names: Domain squatting or cybersquatting—where a third-party registers the domain name for your company and offers to sell it for a (sometimes exorbitant) price—is a practice as old as the Internet itself. Depending on what trademark rights you have in your business’s name, you may have options to challenge the cybersquatter under trademark law, the Anticybersquatting Consumer Protection Act, or the Internet Corporation of Assigned Names and Numbers (“ICANN”) dispute resolution procedures. While these options can end with a positive result, the procedures are often cost- and time- intensive. A better approach is to take preventative measures. It is generally a good idea to obtain the domain name for your business, as well as any “adjacent” names. These adjacent names include abbreviations, confusingly similar variations, and the corporate structure for your business. Using the Acme, Inc. example from above, the business owner should consider obtaining acme.com, www.acmeinc.com, www.acmecorp.com, and, potentially, www.akme.com. A business should also consider the “.net,” “.biz,” and,”.info” domain names for their business as well. Cost is always a consideration, but registering your business’s domain name early could be important to preventing more costly litigation or dispute-resolution procedures in the future. Another benefit is that you will preempt the ability for a cybercriminal to impersonate your business by using your business’s domain name to defraud third parties.
  • Get A Trademark Registration: Many businesses—particularly start-ups and early stage companies—overlook the importance of trademarks. A trademark registration protects your business or product name in your industry and provides mechanisms to help ensure that a competitor or fraudster does not benefit from your business’ goodwill. Addressing trademarks early—including both a clearance search and an application for registration—can help mitigate future and more expensive issues. It can be devastating for a young business to spend years building up their brand, only to then receive a cease-and-desist letter from a prior user of that name. Rebranding (or defending a trademark suit) is an expensive and arduous process that can often be avoided by taking early steps to protect your trademark(s). While often not thought about in the context of “cybersecurity,” ensuring that your business properly protects its name and related trademarks can be very important when fighting cybersquatters or fraudsters.  
  • Be Wary Of Third-Party Escrow Or Holding Companies: Online marketplaces, such as eBay, Craigslist, and Facebook Marketplace, are popular platforms for both individuals and businesses to sell goods. A business will setup a virtual storefront that allows users to browse and purchase goods. But consumers can sometimes be skeptical that the online storefront is “real,” and are understandably concerned that the purchased good will never be received. Third-party escrow or holding companies offer services in which a buyer’s payment is held in escrow until delivery of the purchased good is confirmed. In theory, this practice protects both parties to the transaction because the seller does not ship the good until the escrow company confirms receipt of the purchase funds. Unfortunately, scammers will pretend to be an escrow service and buyers will purchase fake goods by sending the money to the fake escrow company. To make matter worse, the scammers will list a real company for the contact info, so the real company begins receiving angry calls demanding delivery of the goods. For businesses, following some of the other tips in this article—such as purchasing the proper domain names—can help mitigate this risk. For buyers, it is important to take the extra step of verifying that the escrow company is legitimate and has a relationship with the seller. Often, a simple telephone call to the escrow company can prevent fraud before it happens.
  • Cybersecurity Or Cyber Liability Insurance: Often offered by the same providers of other business insurance, a cyber liability insurance policy can provide coverage events and incidents that are not covered by typical E&O, CGL, or other business liability insurance. Because this is an emerging industry, costs and coverage can vary greatly. However, there can be third-party coverage, such as the loss of customer data, as well as first-party coverage, such as losses caused by a business’s internal network being taken down. Cyber liability insurance can also help with remediation costs, such as legal, investigative, and communications.   

These materials are made available by Stibbs & Co., P.C. for informational purposes only, do not constitute legal or tax advice, and are not a substitute for legal advice from qualified counsel. The laws of other states and nations may be entirely different from what is described. Your use of these materials does not create an attorney-client relationship between you and Stibbs & Co., P.C. The facts and results of each case will vary, and no particular result can be guaranteed. The facts and results of each case will vary, and no particular result can be guaranteed.


 

Topic: IP
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IRS Extends Time to Elect Portability

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Written by Maggie Book
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There is now an opportunity for surviving spouses to take advantage of the higher Estate Tax and GST Tax Exemptions before they sunset in 2026. On Friday, July 8, 2022, the IRS released Revenue Procedure 2022-32, which supersedes Revenue Procedure 2017-34 and extends the period certain estates must make a “portability” election under IRC § 2010(c)(5)(A).

Who Must to File an Estate Tax Return?

The Estate Tax Return is filed for two types of Estates. The Estate Tax Return is required to be filed[1] for Decedents with a gross estate (plus any taxable lifetime gifts) that exceed the Estate and GST Tax Exemption  in the year of their death, or in the case of funding certain types of trusts. The Estate Tax Return is not required for Decedents when the gross estate and taxable lifetime gifts is less than the Estate and GST Tax Exemption in their year at death.  

Who Should File an Estate Tax Return

The 2010 Tax Act permits a surviving spouse to inherit the unused Deceased Spouse’s Unused Exclusion Amount (DSUE) by filing an Estate Tax Return. Therefore, Estates with a net worth below the estate tax exemption in the year of the Decedent’s death, may file an Estate Tax Return to elect portability and transfer the DSUE to the surviving spouse (“Portability Return”).

Anyone whose spouse passed away within the last five years with a current net worth greater than $5M should consider filing an Estate Tax Return to Elect Portability. The Tax Cuts and Jobs Act of 2017 (TCJA) doubled the estate, gift, and generation skipping transfer tax exemption and will expire January 1, 2026. Unless Congress passes a new law prior to the expiration of the TCJA, the estate, gift, and generation skipping transfer tax exemption will return to its base of $5M with an annual adjustment linked to the consumer price index. The number of Estate Tax Returns filed was reduced tremendously by the TCJA and will likely increase upon its expiration.

 

When Does an Estate Tax Return Need to Be Filed?

The Estate Tax Return is due nine months from the Decedent’s date of death. You may file for an automatic 6 month extension by filing IRS Form 4768. For purposes of filing a Portability Return only, the IRS also established an automatic extension two years from the Decedent’s date of death.[2] If the Estate did not file within that two year period, then a Private Letter Ruling from the IRS would be required to submit the late Portability Return as a special case exception.

Now, under Revenue Procedure 2022-32, Estates will have five years from Date of Death to file a Portability Return. This is an opportunity for surviving spouses to file a Portability Return before the Estate Tax and GST Tax Exemption is reduced.

The Decedent must meet the following requirements to file a Portability Return:

(i) Survived by a Spouse

(ii) Passed away after December 31, 2010

(iii) Resident or Citizen of the United States

(iv) Not required to file an Estate Tax Return under IRC Sec. 6018(a)

(v) Decedent’s Estate did not previously file an Estate Tax Return.

An example of the Potential Portability Return Opportunity

I had assisted a surviving spouse with the probate of her husband’s Estate last year (2021). Harry passed away in 2019 with a taxable estate of $4M. Harry’s Will transferred his $4M Estate to Wanda. The Estate  and GST Tax Exemption Amount in 2019 was $11,400,000. There was not a requirement to file an Estate Tax Return because Harry’s taxable estate was less than the Exemption Amount.

Wanda missed the six month deadline to file a Portability Return when we completed the probate matter. However, Wanda should consider filing the Portability Return to “inherit” the unused portion of Harry’s Exemption Amount or $7,400,000 ($11,400,000 – $4M).

If the Estate Tax Exemption is reduced in 2026 when Wanda hypothetically passes away with a Taxable Estate of $9M, her children could be forced to pay $1, 080,000 in Estate Tax. However, if Wanda filed an Estate Tax Return to Elect Portability within five years of Harry’s passing, Wanda’s children could “stack” Harold’s DSUE and Wanda’s Exemption Amount together to avoid paying Estate Tax.

No Portability Return Filed for Harry’s Estate

Wanda’s Potential Taxable  Estate in 2026

$9M

Exemption Amount

$6,300,000

Estate Tax Owed

$1,080,000

($2,700,000 x 40%)

 

Portability Return filed for Harry’s Estate

Wanda’s Potential Taxable  Estate in 2026

$9M

Exemption Amount                                                                            

+ DSUE

$6,300,000

+$7,400,000

Estate Tax Owed

$0


These materials are made available by Stibbs & Co., P.C. for informational purposes only, do not constitute legal or tax advice, and are not a substitute for legal advice from qualified counsel. The laws of other states and nations may be entirely different from what is described. Your use of these materials does not create an attorney-client relationship between you and Stibbs & Co., P.C. The facts and results of each case will vary, and no particular result can be guaranteed. The facts and results of each case will vary, and no particular result can be guaranteed.


 

[1] IRC § 6018(a)

[2] Revenue Procedure 2017-34

[3] See Tax Policy Center – How many people pay the estate tax? | Tax Policy Center

Topic: Probate and Estate Planning