Archive for the ‘Uncategorized’ Category

Legal Research Software – How to get the most for your firm

Wednesday, March 26th, 2014

Research Software Comparison ChartLegal research software is essential to the successful running of any law firm. For this reason it is extremely important that you chose the right software for your firm. When making the decision on what research software was right for us, CPLS, P.A. created a Legal Research Software Comparison chart to compare features side by side and assist with the selection process. When selecting a research tool you should make sure that your attorneys are trained and comfortable using it in order to get the best results.

Westlaw and Lexis are the two powerhouses when it comes to legal research due to their large databases of information and their advanced citation tools. This is reflected in their high pricing. Bloomberg Law is the next largest legal research provider; and although its sources are not as vast as Lexis or Westlaw, it is considered the best research tool for business/corporate law due to the resources and information it has access to from other Bloomberg services.

If you are a smaller firm or a sole practitioner, you may want to use the legal research software that is associated with your State Bar Association to do the brunt of your research in order to cut down on costs. These types of software are often included with your Bar Membership and have very cheap rates if they are not. Casemaker and Fastcase are the two most popular of these kinds of legal research tools. While they do not have the same database size as Westlaw or the same citation tools as Lexis, they do offer a comparable mix of these types of tools and resources.

When selecting research software for your firm, it is always important to remember that there are plenty of free tools that are available for you to get your research started. Tools such as Google Scholar and Lexis Web can significantly drop the costs associated with your research by being a first stop in the process. While these types of tools are great for starting your legal research, they are not enough to complete it. Regardless of the legal research software that your firm decides to go with, the most cost effective way to do legal research for your firm is to start with the free tools available to you and advance to the higher cost tools only when necessary.

Florida Accountants, are you practicing law without a license?

Wednesday, March 12th, 2014

Accountants who are called upon by their clients for advice must be careful not to give legal advice or provide legal services.  In order to determine whether an activity constitutes the unlicensed practice of law, a two part analysis must be made. First, it must be determined whether the activity is the practice of law. The second question is whether the practice is authorized. If an activity is the practice of law but the activity is authorized, the activity is not the unlicensed practice of law and may be engaged in by a non-lawyer.  The Florida Supreme Court developed the following test to determine whether an activity is the practice of law: “. . .if the giving of [the] advice and performance of [the] services affect important rights of a person under the law, and if the reasonable protection of the rights and property of those advised and served requires that the persons giving such advice possess legal skill and a knowledge of the law greater than that possessed by the average citizen, then the giving of such advice and the performance of such services by one for another as a course of conduct constitute the practice of law.” When applying this test it should be kept in mind that “the single most important concern in the Court’s defining and regulating the practice of law is the protection of the public from incompetent, unethical, or irresponsible representation.”

There are clear practices that accountants may be tempted to engage in which constitutes the unlicensed practice of law, including drafting corporate documents, drafting legal documents for clients (such as non-compete agreements, confidentiality agreements, asset purchase agreements, stock purchase agreements, employment agreements, independent contractor agreements, non-disclosure agreements, real estate contracts, etc…), interpretation of laws and advice regarding a client’s rights and obligations under those laws, advising clients regarding immigration and bankruptcy matters and completing forms filed to obtain benefits under the immigration laws and bankruptcy laws, and representation in certain venues (such as courts and certain administrative agencies).  It also constitutes the unlicensed practice of law for a accountants to hold themselves out as an attorney either expressly or impliedly. This would include using the title Esquire , using the initials J.D. if they are being used to solicit legal services,  using “legal” in the name of their business  or advertisement, using the title “attorney” or “lawyer” or any other title, such as notario publico, which holds the person out as being able to provide legal services. It also constitutes the unlicensed practice of law for an accounting firm to advertise to provide legal services even if the services are being performed by a member of The Florida Bar since a company may not practice law. Furthermore, although an accountant may sell forms and complete the form with information provided in writing by a client, if the accountant is using a form approved by the Supreme Court of Florida, the accountant may engage in limited oral communication to elicit the factual information that goes in the blanks of the form, however, she may not make any changes to the form and may not give advice on possible courses of action. If the accountant uses a form which has not been approved by the Supreme Court of Florida, she may only type the blanks on the form with information obtained from the individual in writing.   Therefore,  accountants may not prepare corporate documents for clients. This includes the articles of incorporation, the corporate charter and related documents.  Likewise,  accountants cannot prepare a warranty deed, quitclaim deed, land trusts, leases and mortgage agreements for clients.

Any person not licensed or otherwise authorized to practice law in Florida who practices law or holds herself out of the public as qualified to practice law in Florida, or who willfully pretends to be, or willfully takes or uses any name, title, addition, or description implying that he or she is qualified, or recognized by law as qualified, practice law in this state, commits a felony of the third degree, punishable by a term of imprisonment not exceeding 5 years and a fine of up to $5,000.00.  So, if an accountant is guilty of practicing law without a license, she may face stiff criminal penalties.  In addition to criminal penalties, some courts have held that non lawyers who perform legal services may be held to the same standard as lawyers providing those serves. Therefore, if an accountant does provide legal services to her clients and was negligent in doing so, and her negligences causes her clients damages, she may be sued for legal malpractice.

The unlicensed practice of law is a serious issue with serious consequences. Any accountant who has been involved in helping their clients with legal issues needs to be aware of these prohibitions and the potential ramifications that can result if she is deemed to have engaged in the unauthorized practice of law.   If she does not, she can expose herself to stiff criminal and civil liability. If you are unsure of whether or not your actions constitute the unauthorized practice of law, please contact Attorney Persad at 407-647-7887 or email him at  Attorney Persad is a former member and chairman of the Florida Bar’s 9th Circuit Unlicensed Practice of Law Committee.



Monday, January 7th, 2013

With federal tax filing season already here, a lot of potential bankruptcy filers are concerned about the effect the bankruptcy filing will have in their tax refund. Unfortunately, the bankruptcy estate has a right to the tax refund, unless the same can be claimed as exempt by the filer.
One way in which the tax refund is exempt is when the same is a joint tax refund, only one of the spouses filed for bankruptcy, and there are no joint creditors.
The Bankruptcy Code provides that property held as tenancies by the entireties can be claimed as an exemption when only one of the spouses files for bankruptcy and there are no joint creditors. We look to Florida law to determine if property is held as tenancies by the entirety. Florida cases have decided that there is a presumption that joint tax refunds are held as tenancies by the entireties, therefore exempt. A party in interest can object to the claim of exemption, but this party would have to prove that all the elements necessary for the creation of a tenancy by the entirety do not exist.
If you are considering filing for bankruptcy, are married, your spouse is not filing, and you will most likely receive a joint tax refund, you should consult with an attorney in order to protect the joint tax refund.
If you wish to discuss how you can protect yourself and your property, please contact Evelyn J. Pabon Figueroa, Esq. at or (407) 647-7887.


Monday, January 7th, 2013

When a U.S. citizen marries a non-US citizen or non-permanent resident, the U.S. citizen can petition his/her spouse in order for the spouse to become a permanent resident. If the marriage is less than 2 years old at the time the petition is granted, the spouse will be granted conditional permanent residence. In order to remove the conditions, the US citizen spouse and the conditional permanent resident spouse must jointly file a petition within the 90 day period before the second anniversary of obtaining the conditional permanent residence.
If the petition to remove the conditions is not filed, the conditional permanent resident will become out of status and removal proceedings may be commenced. When the spouses are unable to file the petition within the 90 day period before the second anniversary of obtaining conditional permanent residence status, the spouses can still file an untimely petition, however they will have to establish good cause for the late filing.
An untimely filed petition to remove conditions on permanent residence will have to include an explanation as to why the petition is late. Recent policy changes instruct the immigration officer to issue a Request for Evidence asking for the explanation if the same is not submitted with the petition. Prior to this policy change, the immigration officer was instructed to deny the late petition if an explanation for the late filing was not provided. Failure to respond to the Request for Evidence will cause the denial of the petition.
When evaluating an explanation for the late filing, the immigration officer can request additional evidence or schedule an interview of he/she believes this will assist in the determination of whether good cause for the late filing exists.
If you wish to discuss how we can assist you with the filing of the petition to remove conditions on permanent residence, or if you missed the time period to submit the petition and are facing Removal proceedings, please contact Evelyn J. Pabon Figueroa, Esq. at or (407) 647-7887.

Um Resumo do Visto L1

Thursday, January 3rd, 2013

O visto L1 permite  uma organização estrangeira (empresa, corporação, firma, ou outra pessoa jurídica) transferir funcionários qualificados para os Estados Unidos para iniciar negócios. O visto L1 também permite uma organização que opera nos Estados Unidos e no exterior transferir funcionários qualificados do exterior para trabalhar na matriz, filial, ou em uma de suas subsidiárias nos Estados Unidos. Algumas das exigências para adquirir o visto L1 são:

Para a organização:

1)  Entre a organização nos EUA e a organização estrangeira deve existir uma relação *qualificada;

2) A organização deve continuar fazendo negócios nos Estados Unidos e com pelo menos um outro país durante o tempo de permanência do funcionário beneficiário que está empregado nos Estados Unidos.

*Alguns exemplos de relações que qualificam uma organização para adquirir o L1 são:

a) Se for uma organização estrangeira, deve possuir e controlar pelo menos 50% da subsidiária nos EUA;

b) Se for uma organização nos EUA,  deve possuir e controlar pelo menos 50% da subsidiária no exterior;

c) Se for uma organização estrangeira afiliada com uma organização nos Estados Unidos, elas devem ter pelo menos 50% de proprietários em comum;

d) Uma  organização nos EUA com uma subsidiária no exterior também pode se qualificar como uma organização estrangeira com uma divisão nos Estados Unidos, no entanto, deve ser mais que um agente ou representante;

e) Em alguns instantes, uma organização nos EUA que emprega pessoal de vendas no exterior pode se qualificar, mesmo que não tenha sede fora dos Estados Unidos.

O funcionário beneficiário:

1) Deve ter sido empregado pela organização estrangeira pelo menos por um ano dos últimos três anos;

2) Deve ter tido uma posição gerencial ou executiva, ou ter um conhecimento especializado dos procedimentos ou produtos da organização.

O cônjuge e os filhos solteiros menores de 21 anos de idade podem acompanhar o funcionário beneficiário com o visto L2, e podem estudar e solicitar autorização para trabalho.

Na maioria das vezes, o tempo de processamento para o visto L1 é de três à cinco meses, e em alguns casos pode ser aprovado em menos de três semanas.

Para mais informações, entre em contato com Luciane Tavares, advogada de imigração na CPLS, PA Attorney & Mediators at Law, Telefone (407) 647 7887 ou email


Should I pay my home insurance premium fees if I am behind on my mortgage?

Wednesday, December 12th, 2012

Homeowners that fall behind in their mortgage payment wonder whether to continue paying the home insurance premium. The answer to this question is that as long as the property is in your name you should pay the premium. If an event occurs within the property (e.g., someone falls and gets injured), you, as the owner of the property, may be liable for the damages, even if you are not paying the mortgage or living in the property. Therefore, insurance will protect you and should be kept until home ownership is transferred.
Keep in mind that a bankruptcy filing does not transfer ownership of the property, it only discharges pre-petition debts. Therefore, even if you received a bankruptcy discharge, as long as the property is still in your name, you will be liable for damages.
If you wish to discuss how you can protect yourself and your property, please contact Evelyn J. Pabon Figueroa, Esq. at or (407) 647-7887.

Should I pay my HOA fees if I am behind on my mortgage?

Wednesday, December 12th, 2012

Homeowners who fall behind in their mortgage payment often wonder whether it is best to continue paying the HOA fees. The answer to this question is maybe, depending on their circumstances.
If a homeowner wishes to keep the property and is trying to reach an agreement with the lender in order to modify the mortgage terms, the homeowner should continue to pay the HOA fees. If the homeowner fails to pay these fees, the HOA can and will foreclose and the property will be sold in public sale.
If the homeowner is not interested in keeping the property and is in the process of moving out, the homeowner needs to keep in mind that he will continue to be liable for these fees as long as the property remains in his name. A bankruptcy filing will discharge any HOA fees due prior to the filing date, however any fees due after the filing date will continue to be the homeowner’s responsibility as long as the home is in his name. The bankruptcy filing does not transfer ownership of the property, it only discharges the pre-petition debt. So, while it may not be necessary to pay the HOA fees up to the date of the filing of the bankruptcy, it may be necessary to pay the fees after this date.
If you wish to discuss how you can protect yourself and your property, please contact Evelyn J. Pabon Figueroa, Esq. at or (407) 647-7887.

Florida Courts may review non-compete agreements for reasonableness in time, area and relation to a legitimate business interest of the employer

Wednesday, June 13th, 2012


1. A covenant not to compete which prohibits competition per se violates public policy and is void.

2. A condition precedent to the validity of a covenant not to compete entered into by an agent, independent contractor or employee is the existence of a legitimate business interest of the employer to be protected.

3. It is the employer’s burden to plead and prove the underlying protectable interest.

4. Trade secrets, customer lists, and the right to prevent direct solicitation of existing customers are, per se, legitimate business interests subject to protection.

5. Other business interests, such as, but not limited to, extraordinary training or education, may constitute protectable interests depending upon the proof adduced.

6. Chapter 90-216, section 1, Laws of Florida, shall apply to and control all actions.

7. The right created by section 542.12, and carried forward in section 542.33(2)(a), is applied prospectively.


ABC, Inc. (“ABC”) operates an automobile repair shop. [While employed by ABC, John Doe (i) received no significant training in the installation and repair of automobile air conditioning systems, beyond the knowledge and skill that he possessed when he began work with ABC (ii) he received significant training in the installation of cruise controls and cellular telephones in automobiles, (iii) he had no significant contacts with ABC’s customers and developed no significant relationships with ABC’s customers, and (iv) he acquired no trade secrets or confidential business information of ABC.


Under the common law of England, a contract restricting a person's right to pursue his trade or occupation was deemed void as against public policy. Medieval concepts that a person could not pursue a trade in which he had not been apprenticed made the rule necessary, because prohibiting a person from working under the supervision of one other than his original employer would leave the person in involuntary servitude or unable to provide for himself and his dependents.

With the passage of time, the ancient rules of apprenticeship were abandoned, and it became recognized that in special circumstances limited restraints of competition were both necessary and proper to protect an employer's proprietary rights. Thus evolved the distinction between contracts prohibiting competition per se, which were prima facia invalid, and contracts protecting an employer from unfair competition from a former employee who had obtained trade secrets, or other confidential information, or special relationships with customers during the course of his employment. It is a settled principle of law that no man may, per se, contract with another that the other will not follow a calling by which he may make his livelihood. These basic concepts are embraced in the law of Florida.


Other states which permit employee noncompetition agreements reveals an overwhelming majority requiring, at a minimum, that such contracts be reasonably related to the protection of a "legitimate business interest" or "protectable interest" of the employer. The rule, generally stated, is that an employer may not enforce a post-employment restriction on a former employee simply to eliminate competition per se; the employer must establish its legitimate business interest to be protected. See Bryceland v. Northey, 160 Ariz. 213, 772 P.2d 36 (Ct.App. 1989).

The Supreme Court of Tennessee expressed the rule as follows: " [A]ny competition by a former employee may well injure the business of the employer. An employer, however, cannot by contract restrain ordinary competition. In order for an employer to be entitled to protection, there must be special facts present over and above ordinary competition. These special facts must be such that without the covenant not to compete, the employee would gain an unfair advantage in future competition with the employer.”

The rule is an expression of common sense which both protects the employer from unfair competition and recognizes the right of an individual, in a free and competitive society, to earn an honest living and better his status along the way. In a broader sense, all consumers benefit from the availability of goods and services, the quality and price of which are determined by fair competition, unfettered by artificial monopolistic practices.


In 1953 the Florida legislature enacted section 542.12, Florida Statutes (1953) (renumbered in 1980 as section 542.33), which acknowledged the common law principle that contracts in restraint of trade are void. The statute provides an exception which includes, in general terms, that an employee may agree with his employer, to refrain from carrying on or engaging in a similar business and from soliciting old customers of such employer. The statute is silent on the issue of whether for such contracts to be valid they must relate to the protection of a proprietary interest of the employer. However Florida courts have determined that such requirement is to be implied in the statute. Florida’s supreme court addressed the constitutionality of section 542.12 (the predecessor of 542.33), and in upholding the statute, observed: “[T]he fact that such contracts may be lawfully made and enforced under the statute does not ipso facto make every such contract enforceable as written. The restrictive provisions of such contracts will generally be enforced in such way as to protect the legitimate interests of the employer…”  The same court held “that there was a `reasonable interest’ to be protected by the restraining covenant.” Later, the it explained that section 542.12 “is designed to allow employers to prevent their employees and agents from learning their trade secrets, befriending their customers and then moving into competition with them.”

Most fundamental to these decisions is that “[t]he right to work, earn a living and acquire and possess property from the fruits of one’s labor is an inalienable right.” Implicit in this right is the opportunity to move freely within the labor force in the quest for advancement in position and economic productivity. Certainly the common law of this state recognized and jealously guarded this freedom in condemning and restricting contracts of the kind here considered.

A plain reading of section 542.33(2)(a) dispels any notion that the legislature intended to dispense with the bedrock requirement that covenants of this nature must relate to a legitimate business interest of the employer in order to restrict or impinge upon the right to pursue and earn a living guaranteed by our constitution. Therefore, pursuant to section 542.33(2)(a), the existence of a legitimate interest of the employer to be protected is a threshold condition to the validity of a covenant not to compete.


Generally, three such interests are recognized: (1) trade secrets and confidential business lists, records, and information, (2) customer goodwill, and (3) to a limited degree, extraordinary or specialized training provided by the employer.

Clearly categories (1) and (2), by the expression of the legislature in the 1990 amendment to section 542.33(2)(a), are interests which may be protected. The third category is difficult to define with any degree of precision. Where recognized as a protectable interest, it is generally required that the employer provide more in training than that acquired by simply performing the tasks associated with a job.

In our factual scenario, because John Doe, although thoroughly schooled in the installation and repair of auto air conditioners upon his employment by ABC, did acquire the knowledge and experience necessary to install and repair cruise control units and cellular telephones while in the employ of ABC.

To constitute a protectable interest, however, the providing of training or education must be extraordinary. “Extraordinary” is that which goes beyond what is usual, regular, common, or customary in the industry in which the employee is employed. The rationale is that if an employer dedicates time and money to the extraordinary training and education of an employee, whereby the employee attains a unique skill or an enhanced degree of sophistication in an existing skill, then it is unfair to permit that employee to use those skills to the benefit of a competitor when the employee has contracted not to do so. The precise degree of training or education which rises to the level of a protectable interest will vary from industry to industry and is a factual determination to be made by the trial court. Skills which may be acquired by following the directions in the box or learned by a person of ordinary education by reading a manual do not meet the test.
In our scenario, John Doe extended his air-conditioning installation and repair skills to include cruise control units and cellular telephones. This is not to say that unique training in performing the simplest of tasks cannot be protected when the employer’s methods fall within the category of trade secrets or other confidential information.

In 1990 the Florida legislature enacted chapter 90-216, section 1, Laws of Florida. The impact of this amendment was as follows: first, the presumption of irreparable injury is strictly curtailed; second, a test of reasonableness is injected into the enforcement process because the amendment prohibits the enforcement of an unreasonable covenant. In determining the reasonableness of such an agreement, the courts employ a balancing test to weigh the employer’s interest in preventing the competition against the oppressive effect on the employee. This balancing test has been limited strictly to covenant provisions pertaining to duration and geographic area. The court may not refuse to give effect to a valid noncompetition agreement on the ground that enforcement would have an overly burdensome effect on employee. The only authority the court possesses over the terms of a noncompetition agreement is to determine reasonableness of the time and area limitations. A court is not empowered to refuse to give effect to a covenant not to compete on the basis of finding that the enforcement of the contract’s terms would produce an unjust result by causing an overly burdensome effect upon the employee.

This restriction upon the court’s powers of review flows from the terms of section 542.33(2)(a) that an “employee may agree with his employer, to refrain from carrying on or engaging in a similar business … within a reasonably limited time and area.” Judicial interpretation construed this language as an implied limit upon the court’s authority because it granted no power to extend the test of reasonableness beyond that area specifically defined. This language remains unchanged in the statute as amended. Added, however, is the specific authority to deny injunctive relief as to an “unreasonable covenant.” In this regard, the intent of the legislature to be to authorize the courts to apply traditional equitable principle in cases of this nature to avoid unfair and unjust results.

The legislature has specifically identified and segregated for special treatment covenants which protect trade secrets and customer lists and prohibit solicitation of existing customers, all of which are universally identified as legitimate business interests which may be protected. In such cases, the proof of such an interest to be protected provides the threshold for a presumption of irreparable harm on breach of the contract. All covenants not to compete, however, must be founded on an interest, determined by law, to be the proper subject of protection. That is, the proof of a protectable interest is the threshold to enforcement of such covenants; it is only the degree of proof thereafter which varies depending on the class of interest to be protected.

The right created by section 542.12, and carried forward in section 542.33(2)(a), is applied prospectively.

To learn more about non-compete agreements and other agreements which can protect your business please call attorney Persad at 407-647-7887 or email him at

World citizens investing in the United States of America…Living the American Dream

Tuesday, March 20th, 2012

The United States of America is a very popular vacation destination for many people from around the world and a country many people see as the land of opportunity.

 We all have the idea of living the American Dream. In 1931, James Truslow Adams was the first to express the American Dream as the “dream of a land in which life should be better, richer and fuller for every man, with opportunity for each according to ability or achievement.” According to the Dream, coming to the United States includes the promise of prosperity for the people willing to take the giant leap.

While I truly believe that everything is possible in this country, investing in the United States also means complying with a strict procedure with various authorities. It is very important to apply for the appropriate visa before coming to the United States of America.

There is a wide range of non-immigrant visas frequently used for global mobility assignments. The E-visa category is the most commonly used by Jamaican investors. The E-visa category, also known as Investment visas is designed for business owners, managers, and employees who need to remain in the United States for extended periods of time in order to oversee or work in an enterprise engaged in trade between the United States and their home country or that represents a major investment in the United States.

E-visa status is available to individual investors with a majority ownership interest, as well as to the employees coming to work in either a supervisory role or a position involving skills essentials to the venture.

There are three basics elements required for the E-visa category to be used.

(1) A treaty must exist between the United States and the Country. Such a treaty exists between another country and the United States conferring E-visa to Investors.

(2) At least 50% ownership or control of the investing or trading company must be held by nationals of other countries.

(3) Home country citizenship must be held by each employee or principal of the company who seeks E-visa status under the treaty.
If the E-visa is used for purposes of conducting trade between the United States and the country of majority ownership of the company, it will be an E-1 visa. However, if the investor wishes to oversee investment in the United States then, he/she will apply for an E-2 visa.

The E-1 visa for traders requires proof of substantial trading activity between the United States and the treaty country. Therefore there are special requirements in addition to the three basics elements of the E-visa category. The trader seeking for an E-1 visa status will have to prove that:

(1) The trading company is engaged in trade. Trade should be understood in a broad sense. The trade can involve the exchange, purchase, or sale of goods or services.

(2) The trade is substantial. The level of trade can be measured by volume, value and frequency.

(3) The trade is principally between the United States and the home country.

(4) The employee or principal serves the company in a specified capacity: either managerial or involving “essential skills.” The skill must be essential to the company’s operation which means that the employee seeking for E-1 visa should be highly trained technician familiar with the company’s products or performing the manufacturing, maintenance or repair of the product.

The E-2 visa requires proof of substantial capital investment that has either already been made or that is in the process of being made when the visa is requested. Therefore there are special requirements in addition to the three basics elements of the E-visa category. The investor seeking for an E-2 visa status will have to prove that:

(1) He/she is making an irrevocable and active investment. The investment must be made in a real operating enterprise. The investment cannot be only speculative.

(2) The investment is substantial. No minimum value threshold is set for the investment. The amount is measured in relation to the total cost of the US business.

(3) The investment will lead to job creation in the United States. It is not enough that the investment will only help the investor to support his/her family.

(4) He/she has a key role in the enterprise. He/she is a qualified manager or specially trained and highly qualified employee necessary for the development of the investment.

The E-visa is granted for an initial period of two (2) years. However, this period can be extended almost indefinitely.

When the immigration process may seem to set obstacles along the way, discouraging investors from making their dreams come true and despite the current economic situation, the United States still represent the biggest market in the world and many areas such as biotechnologies, communications and aerospace should be very attractive to investors. Investing in the United States is a great way to live and achieve your dreams with open eyes.

Husband and Wife can Benefit from Qualified Joint Ventures

Monday, March 19th, 2012

An unincorporated business jointly owned by a married couple is generally classified as a partnership for federal tax purposes. Previously, married individuals in a business together were considered partners and required to file an annual Form 1065, as well as Form 1040.

For tax years beginning after December 31, 2006, the Small Business and Work Opportunity Tax Act of 2007 (Public Law 110-28) provides that a “qualified joint venture,” whose only members are a husband and a wife filing a joint return, can elect not to be treated as a partnership for federal tax purposes.

A qualified joint venture conducts a trade or business where:

  1. the only members of the joint venture are a husband and wife who file a joint return
  2. both spouses materially participate in the trade or business (mere joint ownership of property is not enough)
  3. both spouses elect not to be treated as a partnership, and
  4. the business is co-owned by both spouses (and not in the name of a state law entity, such as a partnership or LLC)
    The QJV option simplifies the filing requirements by allowing husband and wife businesses to be treated as sole proprietorships and file a Form 1040 federal tax return rather than partnerships for tax purposes. It eliminates filing a Form 1065 tax return for qualified joint ventures. The option also helps to ensure each spouse gets proper Social Security credit.

Spouses electing qualified joint venture status are treated as sole proprietors for federal tax purposes. An Employer Identification Number (EIN) is not required for a sole proprietorship unless the sole proprietorship is required to file excise, employment, alcohol, tobacco, or firearms returns when using the rules for sole proprietors. If the spouses previously had an EIN for their partnership, that EIN can only be used if the spouses do not elect qualified joint venture status.

Making the election to be treated as a qualified joint venture

Spouses make the election on a jointly filed Form 1040 by dividing all items of income, gain, loss, deduction, and credit between them in accordance with each spouse’s respective interest in the joint venture, and each spouse filing with the Form 1040 a separate Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship) or Schedule F (Form 1040), Profit of Loss From Farming, and, if otherwise required, a separate Schedule SE (Form 1040), Self-Employment Tax.

To make the qualified joint venture election for 2009, jointly file your 2009 Form 1040, with the required schedules. This generally does not increase the total tax on the return, but it does give each spouse credit for social security earnings on which retirement benefits are based, provided neither spouse exceeds the Social Security tax limitation.

Earning Social Security benefits

For purposes of determining net earnings from self-employment, each spouse’s share of income or loss from a qualified joint venture is taken into account just as it is for federal income tax purposes under the provision, in accordance with their respective interests in the venture.
A spouse is considered an employee if there is an employer/employee type of relationship. (i.e., the first spouse substantially controls the business in terms of management decisions and the second spouse is under the direction and control of the first spouse.) If such a relationship exists, then the second spouse is an employee subject to income tax and FICA, Social Security and Medicare withholding.

If your spouse is your employee, and not your partner, you must pay Social Security and Medicare taxes for him or her. The wages for the services of an individual who works for his or her spouse in a trade or business are subject to income tax withholding and Social Security and Medicare taxes, but not to FUTA tax.

Reporting Federal income tax as a qualified joint venture including self-employment tax

Spouses electing qualified joint venture status are treated as sole proprietors for federal tax purposes. The spouses must share the income, gain, loss, deduction, and credit of the business.

If the business has employees, either of the sole proprietor spouses may report and pay the employment taxes due on wages paid to the employees, using the EIN of that spouse’s sole proprietorship. If the business already filed Forms 941 or deposited or paid taxes for part of the year under the partnership’s EIN, the spouse may be considered the “successor employer” of the employee for purposes of determining whether the wages have reached the social security and Federal unemployment wage base limits.
For more information on this topic, please contact Attorney Persad at 407-647-7887 or email him at