Tuesday, March 31, 2009

Bringing Conciliation Court Cases

Conciliation court was created to allow citizens to bring legal actions for smaller claims that would normally be difficult to bring due to the expense and knowledge needed to bring a suit in district court. Generally, these courts allow individuals to bring claims of up to $7,500 ($4,000 in cases involving commercial consumer credit transaction), or order the return of property. However, these claims may not include claims for title to real estate, libel or slander, class actions or medical malpractice.

Additionally, since these are state courts, they can not hear matters of federal law such as disputes over copyright ownership. They can, however, hear cases involving breach of contract that involves copyrighted material. This means that the conciliation court can not hear a case involving ownership of a copyright, but it can hear a case involving whether a party has paid what they owe for the creation of copyrighted material.

An important thing to remember before you file a conciliation court matter is whether you will be able to collect anything in the event that you win your case. If a person has no money, collecting the judgment may be next to impossible. However, keep in mind that judgments are good for a period of ten years.

In the event you do decide to sue and you win the court will not automatically collect the money from the defendant. In order to collect your money you will be required to get a writ of execution from the court. A writ will not be issued until after the time for the defendant to appeal has passed and until certain documents are provided to the court.

Once the writ has been issued, plaintiffs need to locate property to be seized and inform the sheriff’s office where the property can be found so that they can carry out the writ. Defendants can be forced to disclose assets when a plaintiff files an order for disclosure. This process will take approximately thirty days. In the event that a defendant has been sued by other people, the sheriff will first execute writs on behalf of the prior plaintiffs.

Additional information on the conciliation court process can be obtained from your local county court office and at http://www.mncourts.gov/.

Tuesday, March 24, 2009

Audit & Record Keeping Provisions

Whether you have partners, or are contracting for royalties from another party, one of the most common provisions in any licensing & partnership contracts is one that provides a means and method of keeping financial records of the project or business. The exact language will differ slightly depending on the specifics of your circumstances, but common terms will include what types of books are kept, how and when audits may occur, and a description of what is to happen in the event of a problem with the records.

While there are a variety of record-keeping methods, typical contract provisions regarding record-keeping will simply provide that the books are complete and accurate. In most cases it is understood that the books will be kept in accordance with “generally accepted accounting principles.” Furthermore, in some circumstances, state statutes may regulate how the books are kept.

Once it is decided what and how records are kept, one of the most important elements of a record-keeping provision is one that allows audits of the records. This is useful in keeping everyone on their toes, and it provides a means by which everyone can feel comfortable that everyone is being treated fairly. However, it is important to remember the difference between an audit and the right to inspect the records. While the right of a party to inspect records is often unequivocal and required by statute, the right to audit can be more easily limited. Audit provisions typically address when an audit may occur, who can ask for one, and who will pay for the audit. Often the number of times a party can request an audit during a specific time period is limited and how much notice is needed before an audit can occur also varies. Audit provisions usually provide that the party requesting the audit bear the cost of the audit.

The last element of a record-keeping provision is one that spells out what happens in the event that an audit uncovers a problem. This element should lay-out how corrections will be handled in the event that the audit uncovers either overpayment or underpayment of funds. In addition, the provision can also provide that in the event that there is an underpayment in excess of a certain amount (5-10%), the cost of the audit shifts to the responsible party.

Providing an orderly way to handle potential disputes over money is a great way to resolve disputes before they start.

Wednesday, March 18, 2009

Tax Deductions for Creatives

As Tax day approaches its important to take into account targeted deductions that benefit Creatives. One such deduction is the Domestic Production Activities Deduction (AKA Section 199 deduction) which was meant to encourage U.S. job creation. The deduction was created in 2004 as a part of the American Jobs Creation Act of 2004 and is one of those nice benefits that is targeted at small businesses operating as sole proprietors, partnerships, LLC, or S Corps.

So What?
For many creative based businesses, this deduction may provide a significant deduction on gross income, based on the amount of W-2 wages spent in the production of their work. The deduction specifically singles out wages paid out in the sound recording, software (including websites), and film (excluding porn) industries, as well as producers of personal tangible items (clothing, books, etc.) for an additional tax credit against profits.

What to do?
Simple - if you are engaged in one of these categories, had a profit, and paid W-2 wages, make sure that your tax preparer is aware that you may have this additional 6% deduction available to you, or if you prepare your own taxes, be sure to look though the instructions for Form 8903 .

IRS Circular 230 Notice:
United States Treasury Regulations require me to disclose the following: Any tax advice included in this document is not intended or written to be used, and it cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code.

Tuesday, March 17, 2009

Response Regarding MN Arts Cuts

Recently I sent letters to my state representatives regarding the proposed disproportionate cuts to funding for the MN Arts Board. I was pleased to receive a response from my state senators which reads in part:

    . . . I believe if we cut arts funding proportionately to other areas of state spending, and do not use the dedicated funds to restore these cuts, we would be in keeping with the Constitution. I believe the Governor's proposed cut to the state Arts Board violates this constitutional requirement not to substitute new dedicated funds for traditional funding.

Thank you Senator - your thoughtful response will be remembered during the next election.

Thursday, March 12, 2009

Music Publishing Administrator

I recently had the opportunity to consider whether a US artist with airplay in Europe would be better served to find a publisher or to simply hire an agency to administer his rights overseas. While it is hard for any self-reliant musician to pay an extra percentage for doing something that they do themselves in the US, not considering such an arrangement might be leaving money on the table.

These agencies can provide independent musicians and small publishers with instant international reach, which includes their bookkeeping expertise, use of sub-publishers in other countries, administrative services to register the copyrights and to affiliate with performing rights groups, and options related to their services in shopping the music for other uses.

What to look for

When considering these groups, I recommend that you ask them about the following:
  • Do they have experience with your type of music? (Yes)
  • Will they register the copyright in the songs on your behalf? (Yes)
  • Will they handle the administration of registering you with U.S. rights societies? (Yes)
  • Will they collect mechanicals from foreign labels? (Yes)
  • Do they have affiliates in other countries where your music is popular? (Yes)
  • How often will they send statements (Quarterly)
  • Shopping (don’t expect it, but it can be added)

Foreign Administrative groups can be of great help in dealing with quirks of local/ non-US laws related to how royalties are calculated and paid. Having them work through the process on your behalf has its advantages and likely outweighs the extra percentage.

Wednesday, March 4, 2009

Who Owns What? - Tuesday March 10, 2009

On Tuesday, March 10 at 1 PM, the Twin Cities chapters of the National Writers Union and the Professional Editors Network will hold a free workshop about permissions and copyright and other intellectual property issues concerning writers and editors.

Location: St. Louis Park Library, 3240 Library Lane, St. Louis Park. Two attorneys—Debra Kass Orenstein and Kenneth Kunkle-- will explain copyright and permissions.

Please join us for this FREE event! For more details about the Twin Cities National Writers Union, visit http://www.nwu-tc.org For more details about the Professional Editors Network, visit http://www.pensite.org