Alerts & Newsletters

Michigan’s Open Meetings Act (“OMA”) was officially amended this past Friday when Governor Whitmer signed SB 1108 (now Public Act 228 of 2020). The new law permits public bodies to conduct electronic meetings under certain circumstances and for a set period of time. With the new amendments in place, public bodies should be sure to conduct electronic meetings—when permitted—in full compliance with the amended OMA requirements. Failure to do so could result in challenges to decisions made by public bodies.

Recent rulings by the Michigan Supreme Court effectively terminated executive orders from Governor Whitmer that enabled municipalities to meet virtually by suspending certain requirements of Michigan’s Open Meetings Act (OMA). In response, the Michigan Legislature swiftly passed SB 1108 that amends the OMA to allow for public bodies to continue meeting electronically under certain circumstances, including statewide or local states of emergency or disaster, through December 31, 2021. The bill will now be enrolled and presented to Governor Whitmer for signature. As a result, while not yet law until signed, it seems that virtual meetings of municipalities may continue for the time being upon the adoption of these new amendments. However, conducting virtual meetings until the bill is signed by the Governor is not without risk.

The Michigan Supreme Court’s October 2, 2020, ruling in In re Certified Questions essentially removed the Governor’s authority to issue any executive orders related to COVID-19 after April 30, 2020. The Court made clear on October 12, 2020, that the orders are “of no continuing legal effect.” Now that the Safe Start orders and Workplace Safety requirements are no longer effective or enforceable, what should a business or public body consider as it moves forward? What restrictions are in place?

On Saturday, September 12, 2020, the Internal Revenue Service (“IRS”) updated a marijuana industry frequently asked questions (“FAQ”) page that provides relief to state-legal cannabis businesses. The FAQ announces that state-legal cannabis businesses can reduce their gross receipts by using an alternative accounting method under Section 471 of the Internal Revenue Code (the “Code”).

On September 2, 2020, we issued an e-alert discussing the deferral of the employee portion of Social Security taxes (“SS Tax Deferral Program”). However, on September 3, 2020, the IRS confirmed that the SS Tax Deferral Program is optional and that employers may, but are not required to, utilize this relief. Thus, the employer, and not the employee, can decide whether or not it will participate in the SS Tax Deferral Program.

On August 13, 2020, President Trump issued a Presidential Memorandum directing the Secretary of the Treasury to use his authority to defer the withholding, deposit and payment of the employee portion of Social Security taxes (“SS Tax Deferral Program”). On August 28, 2020, the Secretary of the Treasury and IRS issued Notice 2020-65 (“Notice”) to implement the SS Tax Deferral Program. This FAQ-style alert addresses the key provisions of the Notice and the many remaining uncertainties about the SS Tax Deferral Program.

On August 27, Michigan Governor Gretchen Whitmer released Executive Order 2020-172, entitled “Protecting workers who stay home, stay safe when they or their close contacts are sick,” which replaces Executive Order 2020-166. The new executive order is nearly identical to the one it replaces, with two important differences. First, the new order recognizes that an employee’s symptoms could be explained by other medical conditions, which should not prevent an employee from reporting to work. Second, the new order recognizes that an employee should not be required to stay home simply because he or she displays one of the more innocuous symptoms of COVID-19 on its own.

Not surprisingly, Dykema's volume of closed deals for the first half of the year slowed from last year’s record pace. What was somewhat surprising is that the volume of transactions in the Dental Services Organization (DSO) space did not seem to miss a beat. All told, we closed 18 DSO deals, including four in the adjacent Medical Services Organization (MSO) space (in this case, all Optometry), slightly ahead of last year’s pace. In addition, we closed deals in the hospitality, cell tower and litigation services sector. Overall, the transactions trended smaller, averaging $16M, down from 2019’s average of $117M.

Businesses across the country have wondered how the new Special Inspector General for Pandemic Recovery (SIGPR) will enforce the CARES Act’s loan requirements, especially with the large number of loan and forgiveness applications. Until recently, the answer was unclear. Press releases have announced Memoranda of Understanding (MOU) between SIGPR and three U.S. Attorney’s Offices to collaborate on investigating and prosecuting CARES Act violations. With this strengthened enforcement model being put in place, CARES Act loan recipients need to ensure their eligibility for loan forgiveness and double-check their documentation of that eligibility.

On Monday, August 3, 2020, a New York federal judge issued a decision invalidating portions of the DOL’s regulations implementing the Families First Coronavirus Relief Act (“FFCRA”). The decision’s impact changes the legal landscape employers confronting FFCRA compliance—a landscape that is unstable as the DOL and the courts sort out the legality of the disputed regulations.

On July 29, 2020, Governor Whitmer issued Executive Order Nos. 2020-160 and 2020-161. Executive Order 2020-160 replaces the prior executive orders that address stay home, stay safe restrictions in Michigan. In general, this Order moves the State to a more uniform approach to business operations and restrictions. Northern Michigan will experience the most change under the new Order as Regions 6 and 8 join the rest of Michigan with a 10-person limit on indoor gatherings and the closure of all bars. Executive Order No. 2020-161 addresses workplace safety requirements and replaces Executive Order No. 2020-145.

Eligible dental providers may now apply for Provider Relief Funds, but the deadline to do so, July 24, 2020, is quickly approaching. On July 10, 2020, the U.S. Department of Health and Human Services (“HHS”) announced an additional $4 billion in relief payments to healthcare providers and, notably, opened its provider portal to dental providers.

In order to respond to rising COVID-19 cases in Michigan, Governor Whitmer issued Executive Order No. 2020-147, which imposes new mask requirements on individuals in Michigan as well as on Michigan businesses. Importantly for businesses, the new Executive Order provides that no business that is open to the public may provide service or allow a customer to enter its premises unless that customer is wearing a facial covering. As the Order states, “no shirts, no shoes, no mask—no service.” Businesses that do not comply could risk having their business license to operate temporarily suspended.

The State of Michigan has allocated $100 million of CARES Act funding to implement the Michigan Small Business Restart Program to provide grants to Michigan businesses directly impacted by COVID-19. The grants, up to $20,000 each, will be administered by 15 Economic Development Organizations (EDOs) covering all 83 counties in the state. 47. Funds can be used as working capital to support payroll expenses, rent, mortgage payments, utility expenses or other similar expenses.

In a decision contrary to current Patent and Trademark Office (“PTO”) rules, the United States Supreme Court has found the mark BOOKING.COM as a whole is not generic and that combining a generic term with “.com” does not necessarily result in a composite term that also is generic. While the scope of protection against competitors is likely narrow, the Court’s decision opens the door to registering marks consisting of generic marks with top-level domains. After the Court’s decision, brand owners can expect the PTO to issue further guidance.

On June 30, 2020, the Senate passed an extension of the Paycheck Protection Program (PPP) to keep the program operating until August 8, 2020. On July 1, 2020, the House also approved the extension for the program which was set to end on June 30. The President is expected to sign the extension shortly. The extension permits eligible businesses to continue to apply for PPP loans through August 8, 2020, but does not permit existing PPP borrowers to apply for new loans or increase their borrowings under existing loans.

Once again, the SBA is doling out guidance in small doses, solving some questions, creating new questions and leaving most questions still unanswered. On June 16, 2020, the SBA issued a revised PPP Loan Forgiveness Application, along with related instructions, and new PPP Loan Forgiveness Application Form 3508EZ, also with related instructions. On June 22, 2020, the SBA issued Revisions to Loan Forgiveness Interim Final Rule and SBA Loan Review Procedures Interim Final Rule. The following is a list of our key observations on these latest developments.

The U.S. Copyright Office has issued a final regulation (37 CFR §202.4) permitting a single, “group” registration for “Short Online Literary Works.” To be eligible, each of the works included in the registration “must be published as part of a website or online platform, including online newspapers, social media websites, and social networking platforms.” Further, each covered work must be comprised mainly of text (this requirement distinguishes the category of covered works from the broader definition of “literary works,” which includes words, numbers, symbols). Thus, the registration will cover only copyright rights in the text of each individual work. No other copyrightable aspect will be protected, including as a compilation or collective work.

Following up on Dykema’s alert from June 18, 2020, President Trump signed a Proclamation that extends his April 22, 2020, 60-day ban on immigrant workers entering the United States until December 31, 2020. In addition, it also added those with H-1B, H-2B, L-1 and J-1 visas and any foreign national accompanying them to this ban. The Proclamation states this was done to address, in part, high unemployment levels due to the coronavirus pandemic.

Several reports, including one by the U.S. Chamber of Commerce, indicate President Trump may issue a Proclamation limiting or prohibiting the entry into the United States of foreign nationals holding H-1B, H-2B, L-1 and J-1 visas. The U.S. Chamber has reported the ban could last 120-180 days and that it would be followed by possible new regulations that would affect the staffing of U.S. companies.

Unexpectedly siding with the liberal wing of the Court, Justice Neil Gorsuch penned a 6-3 decision in Bostock v. Clayton County, holding that Title VII’s prohibition on sex-based discrimination also covers sexual orientation and gender identity discrimination. The Court’s decision dealt a historic victory for proponents of expanding gay and trans protections for workers under Title VII of the Civil Rights Act of 1964. It is clear that this decision will have wide reaching implications for employers.

On May 27, 2020, the Internal Revenue Service (“IRS”) issued Notice 2020-41 (“Notice”) providing COVID-19 relief for businesses seeking to qualify for the production tax credit for renewable energy facilities and investment tax credit for energy property. Pursuant to the Notice, the IRS extended Continuity Safe Harbor for qualified energy projects that began construction in calendar year 2016 or 2017 and provided for a Three-and-a-half Months Rule Safe Harbor with respect to services or property paid for by the taxpayer on or after September 16, 2019, and received by October 15, 2020.

In response to the ongoing COVID-19 crisis and its resulting adverse effects on the income levels of Michigan residents, a package of bills was introduced earlier this month to provide additional protections for residential tenants and owner-occupants during a declared state of emergency. The proposed bills would amend existing laws or enact new legislation to restrict the ability of landlords, mortgagees, and taxing authorities to pursue evictions or foreclosures during a declared state of emergency.

On June 4, 2020, the Internal Revenue Service released Notice 2020-39 providing relief for Qualified Opportunity Funds (“QOFs”) and their investors in response to the ongoing COVID-19 pandemic. The Internal Revenue Service also updated its Qualified Opportunity Zone Frequently Asked Questions.

Pursuant to the Paycheck Protection Program Flexibility Act of 2020, which was enacted into law on June 5, 2020, taxpayers who take out a loan under the Paycheck Protection Program of the Coronavirus, Aid, Relief and Economic Security Act (“CARES Act”), all or a portion of which is subsequently forgiven, may now also take advantage of the tax deferral of the employer’s portion of the Social Security taxes under Section 2302 of the CARES Act.

Governor Whitmer issued Executive Order No. 2020-110 on June 1, 2020. With this Executive Order, more businesses can reopen across the State of Michigan. Not all businesses, however, will be able to fully reopen yet. And all businesses are subject to the workplace safety guidelines set forth in Executive Order No. 2020-97.

On May 28, 2020, the Internal Revenue Service issued proposed regulations providing details for companies that may qualify for carbon oxide sequestration tax credits for qualified carbon oxide that has been securely captured, stored or disposed of pursuant to Section 45Q of the Internal Revenue Code.

Under the Bipartisan Budget Act of 2015 (“BBA”), all entities classified as partnerships, including limited liability companies and limited partnerships, became subject to the centralized partnership audit regime for taxable years beginning January 1, 2018, unless otherwise elected (the “BBA Rules”). Whether or not the parties choose to revise their partnership agreements to provide for the application of the BBA Rules, buyers and sellers should negotiate and include in the Membership Interest Purchase Agreement (“MIPA”), or any equivalent sale agreement, express provisions related to the BBA Rules, the push out election and indemnification from any future tax liability arising from a BBA audit.

Through the recently issued Paycheck Protection Program (PPP) Loan Forgiveness Application and Interim Final Rule on Loan Forgiveness, the Small Business Association (SBA) has once again demonstrated that the contours and requirements of the PPP program are constantly evolving. The SBA’s recent Interim Final Rule on SBA Loan Review Procedures provides some insights on how the SBA will enforce PPP qualification and forgiveness requirements. More agencies are getting involved in enforcement, as shown by the Securities and Exchange Commission (SEC) now reviewing quarterly disclosures to see if they align with representations made in applying for PPP loans. These ever-evolving standards, plus the possibility of Congress extending the time frame in which the PPP funds must be spent, all underscore the importance of effective PPP compliance programs. Given the increased risk of whistleblower complaints related to COVID-19, especially those alleging an improper PPP necessity certification, now is the time for companies to review and, where necessary, reinforce their compliance programs and anti-retaliation policies.

In a move that will improve the time for obtaining application approvals, the U.S. Citizenship and Immigration Service (USCIS) announced today it plans on resuming premium processing for Form I-129 (non-immigrant worker) and Form I-140 (immigrant worker) petitions in phases throughout June.

On May 13, 2020, the Department of the Treasury and the Internal Revenue Service (“IRS”) issued final regulations under Section 385 of the Internal Revenue Code (“Final Regulations”), which address the classification of certain related party debt as stock or equity for U.S. Federal income tax purposes. The Final Regulations adopt, without any substantive changes, the 2016 proposed regulations, while leaving open issues related to distribution regulations to be addressed in future IRS guidance.

The 2020 appeal season is moving and changing quickly, so be sure to not miss any filing deadlines. The deadline for filing petitions with the Michigan Tax Tribunal is set by statute as May 31. On May 14, 2020, Michigan Governor Gretchen Whitmer issued Executive Order 2020-87 (the “Order”), to extend the deadline to protest 2020 property tax assessments to grant some amount of relief to individuals and businesses amid the coronavirus/COVID-19 crisis.

Dykema’s Labor & Employment Practice Group created a Q&A overview addressing best practices for employers to consider when businesses return to work. The document discusses frequently asked questions concerning employer recalls, pay and benefits, medical documentation, personal protective equipment (PPE) requirements, and more.

The USCIS on Friday, May 15, sent a request to Congress for $1.2 billion in emergency funding, proposing to pay it back with a 10% surcharge on application filing fees. This surcharge, if adopted, will entail greater expense for employers and applicants along with the expectation of further-decreased processing times.

With Executive Order No. 2020-92, Governor Whitmer continues reopening Michigan’s economy, with phased reopening of retail, restaurants, and offices in the Upper Peninsula and certain counties in the Northern Lower Peninsula. As part of this trend, Governor Whitmer has issued Executive Order No. 2020-91, which details the compliance measures that businesses must follow as they reopen. She also issued Executive Directive No. 2020-6, which is aimed at fostering compliance with the requirements set out in EO 2020-91 by directing state departments and agencies to monitor for compliance with the requirements in Executive Order No. 2020-91 and to bring enforcement actions as necessary. Executive Directive No. 2020-6 also provides that a Director of COVID-19 Workplace Safety will be appointed to coordinate the state’s efforts to monitor and enforce workplace safeguards. Is your business compliant with EO 2020-91?

Following Governor Whitmer’s issuance of Executive Order 2020-77, additional sectors of Michigan’s economy may reopen in-person operations, including all manufacturing businesses. Business, however, will not be as usual. There are important changes and requirements that all businesses will be required to put in place before reopening not only to comply with the relevant executive orders but also to limit potential liability. Is your business ready to comply with all of the new regulatory requirements amid COVID-19?

As Michigan employers begin to think about how many employees to bring back to work, one option to consider is Michigan’s Work Share program, whereby total work hours are spread across a large group of employees as opposed to having fewer employees return to work on a full-time basis. But what are the benefits and drawbacks of work share? And how can employers set a plan up?

On April 29, 2020, the Internal Revenue Service issued updated guidance in the form of 94 Frequently Asked Questions (“FAQs”) in connection with the employee retention credits (“ERC” or “credits”) which are available to eligible employers pursuant to Section 2301 of the Coronavirus Aid, Relief and Economic Recovery Act (“CARES Act”). Although the FAQs do not constitute binding legal authority for purposes of claiming the credits, they help clarify the Internal Revenue Service’s position in interpreting and implementing the ERC program under the CARES Act and provide further guidance for businesses exploring ERCs in unique employment situations.

With the 2020 tax appeal season in process, we are prepared to file clients' tax appeals in both Michigan and Illinois. We can assist with analyzing your assessment (no fee for this preliminary work), preparing your appeal, meeting filing requirements and deadlines, and obtaining the best possible tax relief with a fair and equitable assessment. Dykema also happily offers flexible fee arrangements for tax assessment work, including hourly and contingency fee arrangements.

As borrowers use their loan proceeds from the Paycheck Protection Program (PPP) to continue or restore payroll and call back laid-off employees, they may encounter reluctance or refusal by employees to return to work, which could impede borrower’s ability to obtain full forgiveness on their PPP loan. Borrowers looking toward full forgiveness of the loan amount must maintain a staffing level during the eight-week period following the funding of the loan at the level maintained during a comparative period preceding the loan, as described in Section 1106(d)(2) of the CARES Act.

Michigan Governor Whitmer signed Executive Order 2020-77 today, permitting manufacturing workers to resume work as part of the MI Safe Start Plan. Manufacturing workers, including workers in the automotive industry, are allowed to resume work on May 11, 2020, one week ahead of the planned restart date of certain Michigan automakers. However, this resumption of work is subject to stringent precautionary measures and safeguards identified in the Order.

On April 30, 2020, in response to public input, the Federal Reserve Board announced it was expanding the loan options available to businesses under the Main Street Lending Program and published a related FAQ. This announcement, which follows the Federal Reserve’s initial April 9, 2020, announcement, increased the maximum size of eligible businesses, created a new third loan option, lowered the minimum loan size for certain loans to $500,000, and expanded the pool of eligible businesses.

On April 30, 2020, the Internal Revenue Service issued a Notice providing guidance on the deductibility of certain expenses incurred pursuant to the Paycheck Protection Program (“PPP”) of the Coronavirus Aid, Relief and Economic Security Act. The IRS held that if a taxpayer receives a PPP loan, uses the loan proceeds to pay for qualified trade or business expenses, and a portion of the loan is subsequently forgiven, no deduction would be allowed for such otherwise deductible expenses paid with the forgiven portion of the covered loan.

The fight against COVID-19 has had a serious impact on businesses across Michigan and the nation, and the construction industry is no exception. May 1, 2020, marked a step toward a new normal as Michigan Governor Gretchen Whitmer signed Executive Order 2020-70 easing restrictions on construction projects. The Governor’s office also issued a press release explaining how the Order applies to work on construction projects. Although these guidelines require increased diligence at construction sites, re-engaging the economy, particularly in the construction sector, marks a step forward on the road to recovery.

The Coronavirus Aid, Relief, and Economic Security Act amended Section 172 of the Internal Revenue Code of 1986 with respect to net operating losses (“NOL”) arising in 2018, 2019 and 2020 by restoring some of the favorable provisions applicable to NOLs prior to the enactment of the Tax Cuts and Jobs Act of 2017. The modified rules were designed to assist struggling taxpayers in the wake of the COVID-19 pandemic and provide them with liquidity in the form of tax refunds and reduced income tax liability in current and future years. The Internal Revenue Service issued additional guidance implementing and clarifying some of the NOL provisions of the CARES Act.

Dykema would like to remind U.S. employers that they must use the October 21, 2019, version of the I-9 Employment Eligibility Verification form beginning May 1, 2020. Since January 31, 2020, employers were allowed to use either the July 17, 2017, or October 21, 2019, version of the form. The Form I-9 is used to confirm the identity and employment authorization of people hired as employees by U.S. employers.