Here’s the itinerary:

Social media tools for your business:

• The Basics -How businesses use social media today (presented by Deb Lawrence of WorkNet);
• How to use LinkedIn, Twitter and Facebook (presented by Deb Lawrence)
• Social Media Policies – does your business need one? (legal & HR issues–presented by me); &
• Recruiting employees with social media (legal & HR issues–presented by me).

1.  In January 2011, the State of Illinois raised the corporate tax rate 45%, from 4.8% to 7%.  This increase of 2.2% could wipe out the profits of many small businesses that operate on tight margins, especially during a recession like this one.  Why can’t Illinois government do less spending instead of raising taxes?

2.  These tax increases forced the Washington-based “Tax Foundation” to move Illinois from the 23rd worst tax environment for business in the country to 36th worst for business.

3.  Indiana, a state that many of us could move to easily ranks 10^th & is reported to have a $1.2 billion tax surplus this year.  What are they doing that we are not?  Should we threaten to move there?

4.  HB 3659, the Main Street Fairness Act was signed in Feb 2011.  This act requires merchants who sell online using local Illinois distributors, but who do not have physical presence in Illinois, to collect & remit sales tax.  Today the tax is owed, but it’s the Illinois resident that is liable if the merchant does not collect & remit the tax.  It supposedly would increase revenues by hundreds of millions of dollars say advocates.  Others say it will only drive the local distribution across state lines, hurting local businesses.  The question would be, what other situations like this exist?

5.  The 22 largest corporation is Illinois paid an average of 2.07% in taxes in 2009, while the average small business is now paying 7%.  Here is a list of the largest & the rates they paid (I think these numbers are in millions; the tax rate is the more important stat):

COMPANY  TAX PAID PRE-TAX INCOME TAX RATE      SECTOR

22. Exelon:  1,454 tax paid millions; 32,057 pre-tax income; 4.54% tax rate; energy sector

21. Walgreens:  1,150 tax paid millions; 27,781 pre tax income; 4.14% tax rate; drugs

20. Tribune(1998-2007):  349; 9,382; 3.72%; Media

19. Fortune Brands:  313; 9,097; 3.44%; Consumer Prods

18. Discover Fincl Svcs:  305; 9,587; 3.18%; Financial Services

17. Kraft Foods:  1,488; 47,469; 3.13%; MFG

16. AON:  275; 10,034; 2.74%; Insurance

15. Illinois Tool Works:  509; 21,129; 2.41%; MFG

14. McDonalds:  1,029; 44,647; 2.30%; Retailer

13. Sears Holdings:  474; 23,910; 1.98%; Retailer

12. Motorola:  258; 13,907; 1.86%; MFG

11. Archer Daniels Midland:   309; 17,567; 1.76%; Agri Prods.

10. Accenture (00-09):  345; 20,724; 1.66%; Consulting

9. Deere:  279; 19,540; 1.43%; MFG

8. Northern Trust:  131; 10,176; 1.29%; Financial Services

7. Wrigley (1998-2007):  75; 6,302; 1.19%; MFG

6. Abbott Labs:  619l 52,542; 1.18%; Drugs

5. Caterpillar:  315; 30,412; 1.04%; MFG

4. Baxter:  161; 18,596; 0.87%; Drugs

3. Sara Lee:  70; 13,083; 0.54%; MFG

1. Old Republic Intl:   0; 4,318; 0.00%; Insurance

1. Allstate:  0; 36,823; 0.00%; Insurance

Total all 22:    9,908 (tax paid);  479,083 (pre-tax income);  2.07% (tax rate)

SIDE NOTE:  I had never heard of Old Republic International until this research was done. Also can any legislator justify 0% for this company & Allstate?  I would love to hear that answer.

ECONOMIC EFFECT IN ILLINOIS (Estimated $25.1 Billion in lost tax revenue in 2009, & Illinois projected budget deficit for 2011 is between $6 billion & $13 billion).  So, if we get one quarter to half of this back, we close the budget gap.  This situation is a clear example of tax spending, & they should justify how these tax expenditures are benefiting the state by $25 billion.

This is also after Governor Blagojevich supposed closed these loopholes in 2007 with this http://tax.illinois.gov/AboutIdor/PressReleases/PR-08-16-08-loopholes.pdf.

6.  384,000 homes are expected to go into foreclosure in Illinois as a result of the financial meltdown, & this is estimated to cost the Illinois tax payers $7.4 billion.  Why isn’t the state going after AIG, Banks & Rating agencies to help cover the costs of their mismanagement?

7.  The Illinois legislature is allowing a tax break for large corporation called “bonus depreciation corporate tax break.”  This is estimated to cost the state $600 million per year.  Ironically, Illinois is cutting $600 million per year in social services to residents this year.

8.  Large purchasers of natural gas are able to avoid the utility taxes currently if they buy their gas from out-of-state.  Why is this allowed?

9.  According to “Make Wallstreet Pay Illinois,” an advocacy group that believes Wall Street should shoulder its fair share of the currently fiscal crisis, two of the largest banks reduced their lending to small business from 2007 – 2010.  Bank of America reduced their loans by 97% to small businesses in Illinois, & JP Morgan Chase reduced their loans by 70%.  Why are we giving breaks to companies that are not supporting our state?

10. Banks are currently able to borrow money at a half of a percent of interest, & then they charge the state the rates that were in place prior to the government bailout.  Why is the state allowing the banks to make massive profits when these same banks helped cause the state’s financial crisis.  Attorney General Lisa Madigan has been encouraged to follow California, Connecticut & Florida in determining if this practice constitutes fraud.  These same banks regularly charge small businesses 5%-12% for the same money they obtain at a half of a percent.  It would appear they have the money to shoulder their fair share of the expenses, & perhaps this practice also constitutes fraud.

11. The bill HB 1109 which would allow municipal governments to put liens on vacant properties that banks are holding & not maintaining died in committee.  These costs are also being passed onto the people & businesses of Illinois.  Why is the state allowing the banks to skirt this responsibility.  Also, it has been alleged that banks are holding these toxic assets until the market rebounds, & it is estimated that 45% of all vacant homes have mold infestations due to lack of maintenance.  Once again, these costs will ultimately be paid for the people & businesses of Illinois.  Either get the homes on the market & let the prices fall where they may, or pay to maintain them.

12. The following article was from 2007, but it is eye opening to see how many loopholes there were at that time.  http://blogs.chicagotribune.com/news_columnists_ezorn/2007/09/just-what-are-t.html.  Some or all of this may have been addressed by the Blago legislation in 2007 (if it passed) I did not find a more current one that was as well documented.

13. Cook County based businesses are opening offices in small Illinois towns to obtain very low sales tax rates at the county & city level.  This is legal apparently as long as they have an address there.  This is estimated to cost public transportation alone over $260 million a year in lost revenues.  I could not find anything that showed what the statewide affect is.

14.While Illinois passed the Illinois Religious Freedom Protection and Civil Union Act, which provide LGBT’s with broad protection & rights, it did not allow these people to file joint tax returns, & blamed the federal Defense of Marriage Act (DOMA) as their excuse.  Is this right?  I realize that this is not a small business issue, but I found it an shining example of our state governments way of doing business. On the surface they make it sound great, but the details don’t match the spirit of it.

Here are two of my own ideas for the elimination of other unfair tax spending, that I feel should be collected by the state, & would result is large tax spending decreases:

1.  Foreign workers that work in the State of Illinois virtually (think India Call Centers & IT Outsourcers), but live in their own country, are swiping up jobs in this state, & across the country, at unprecedented rates.  Even though they are not physically here, they cost the economy & the government of Illinois enormous sums by avoiding taxation, & heaping unemployment responsibilities onto the small businesses who have to pay SUTA.  These foreign workers are working in Illinois, for Illinois companies, even though they are not physically here.  How do we start taxing these businesses, for hiring these workers that are removing our jobs from the state?  Are we giving tax advantages to companies that engage in these practices, & could we penalize them for doing so by pairing all their tax incentives with job creation criteria that equals their outsourcing activities.  Also, can this strategy be used to level the playing field of Illinois businesses that don’t have the sophistication to maintain a business relationship on the other side of the planet, & can it do the same for residents whose jobs have been sent overseas by large corporations?

2.  At the federal & state level, corporations are allowed to offshore profits to avoid taxation.  The federal government is considering a “Tax Holiday” for these companies that would enable them to bring all those profits back onshore for a 5% tax rate, which is something like a 75%+ break on what they owe.  This also occurred in 2004, & appears to be an established practice.  I suggest that the state charge the full rate, interest & penalties to all businesses that are here, & who off-shored these profits.

8 – 8:30am            Breakfast and Networking
8:30 – 8:35am       Panelist Introductions
8:35 – 9:45am       Panelists Presentations
9:45 – 10:15am     Open Q&A Between Audience and Panelists
10:15 – 10:45am   Coffee and Networking

Panelists Include:

Joseph DeMarco – DeMarco Sciaccotta, LLP
Jacqueline Camacho-Ruiz – JJR Marketing
Me – Labor & Employment Law & Human Resources Counseling
Susan Smith – Sandler Training, Selloquent
Brian Marshall – Alliance For Strategic Advantage

This free forum will be held at 20 South Clark, Chicago, IL on the 14th floor. Please RSVP with Blanca Campos at blanca@sbacil.org, or at (847) 990-7909.

It appears that our mid-term election results will probably have little impact for small-to-medium sized businesses in the immediate future (the remainder of 2010 into the first quarter of 2011).

More specifically, there doesn’t appear to be any clear message sent to our politicians when it comes to our treatment of small-to-medium sized businesses. Overall, perhaps the clearest message sent was that Congress needs reform (nothing new there), and that the meaning and impact of President Obama’s health care bill is still a mystery.

However, in the long run, for the remainder of President Obama’s term, and should he win a second term, these elections will likely have greater significance to the business community.  The election results should send a clear signal to government that the public wants increased efforts by Congress and regulatory agencies to amicably prevent and resolve issues at a lower cost to businesses.  Yesterday’s results also signal the further erosion of the strength of the partnership between the Democratic Party and labor unions.  Consequently, there appears to be little chance for any significant pro-union legislation such as the Employee Free Choice Act (AKA “Card Check”).

In the employment law (i.e.,civil rights and wage and hour spectrums), it appears that the message is to reduce oversight of small-to-medium sized businesses so that they can create jobs and impact the economy.  Or, in other words, it’s not the government alone that innovates and creates jobs (unless we’re truly migrating to a socialized and civil service economy), it’s the business community, along with respectful oversight and enforcement from government, that creates jobs and innovates.

One festering concern for the business community is the underfunding of pension plans, and other deferred compensation plans (e.g., college savings plans).  It’s no secret that many of these plans are underfunded and mismanaged.  This, in conjunction with Social Security, Medicare, etc., poses a significant problem for government and the private sector.  Hopefully, in the long term, yesterday’s election results mean these issues won’t disproportionately impact small-to-medium sized businesses, and that government needs the business community’s cooperation to fix this issue.

A PRACTITIONER’S PERSPECTIVE: RESPONDING TO REGULATORY AGENCY COMPLAINTS

For business owners, one of the most troubling aspects of management is receiving an employment related complaint from a governmental regulatory agency. Such agencies include the Equal Employment Opportunity Commission, the National Labor Relations Board, the U.S. Department of Labor, the Federal Trade Commission or any of the similar state, local and municipal equivalents to these agencies.

Preparing a response is an onerous task. The process leaves a business wondering who is really in charge; what exactly are our tax dollars paying for, and why would we ever want to employ someone again?

Since America’s inception, business owners and government entities have engaged in a balancing act of regulation and free enterprise. Lately, due to increasing government intervention in private sector business operations, and due to our economy’s shortcomings, this balancing act seems swayed in government’s and big business’ favor. Big business has an advantage because small to medium-sized businesses usually do not have the same resources (money, manpower, time, energy) to devote to responding to these complaints and charges. Consequently, some of the most important questions for smaller business owners and managers include:

• Are we judged guilty before being proven innocent?
• How do we respond to a regulatory agency complaint?; and
• What information is necessary to give them without jeopardizing our operations or finances?

When a business receives a complaint, it must first determine whether the complaint is official, i.e., real. Many complaints are unofficial threatening letters or allegations, not sent by the controlling agency, but sent by the actual employee or his/her representative. If the complaint is not sent from the actual agency, it may not be official; therefore, a response may be unnecessary. Often, these unofficial complaints are “shakedowns” because it’s evident that the complainant, or representative, is just looking for some easy money (these unofficial complaints are similar to nuisance lawsuits).

Once it confirms that the complaint is official, the business owner must ascertain the nature of the allegation. That is, what law or regulation is cited in the complaint? Also, what is the potential punishment or the amount of damages that can be awarded if the company loses the investigation? Once this has been determined, it will be easier for the company to figure out how to respond and what evidence should be included with the response.

A third factor to consider is the deadline for response. Obviously, a company does not want to miss a deadline, but if pressed for time, some agencies (not all) permit additional time for a response. Note that a request for additional time has to be made by the company — it is never implied or otherwise understood that the company needs additional time to respond.

Generally, the company’s response is an informal statement of the company’s position on the allegation (often called a “position statement” or a “statement of position”). The statement is informal because it is usually not written in a legalistic or official format similar to court filings. However, this does not mean that the business should be casual about its response. In a very detailed and organized fashion, the company should explain the what, why, when, who, where and how of what transpired.

Regarding the position statement: in addition to providing a written narrative of what occurred, the company should include any documents, recordings and files (i.e., exhibits) that support its contentions. All exhibits should be referred to in the statement. If there are more than a few exhibits, or if exhibits have numerous pages or subparts, it is helpful to include some sort of index or table of contents. Essentially, anything that helps an average reader understand the position statement, and anything that clearly and completely explains the company’s position, should be included or referred to in the statement. It is acceptable to remove any privileged or confidential information such as attorney-client communications, social security numbers and birth dates. However, it is essential not to appear as if you are hiding something. Consequently, the reasons for redacting information should be explained if they are not obvious (e.g., why the redacted information is protected or proprietary business information, personal employee information, patented or trademarked information).

In addition, sending a very detailed response is better than sending a general and bureaucratic sounding response. With recent advances in communications and technology, transparency (i.e., openness, honesty, forthrightness) is a hot topic and an important consideration when responding to an agency. The less it looks as if you are trying to hide something, and the more you appear to be taking a sincere, problem solving approach to the matter, without admitting guilt or being overly aggressive, the better the chance that the agency will rule in your favor. Otherwise, the agency or decision-maker, at this first level of dispute resolution, will summarily kick the complaint to the next level or rule against your business.

How much to disclose and what to disclose are key considerations. This brief article cannot summarize all of the factors to consider in determining what to reveal in the position statement. Sound business judgment and common sense might help to resolve these concerns. Competent legal or business counsel can also help. As a general rule, stick with the facts,  i.e., what can be proven with sufficient and reasonable evidence, and what can be disclosed without compromising any business secrets and other confidential information.

The position statement is used by the agency to decide whether or not to investigate the charges further or whether to pursue some other form of dispute resolution such as mediation, settlement discussions — or even whether to file a more formal complaint or lawsuit against the company.

The agency representative making the decision is usually an appointed official, who may be an attorney. In many instances, the agency official is an experienced and competent official who is able to comprehend nuanced information. However, there are exceptions; not all decision-makers are experienced or competent. Moreover, the decision-maker may not be making a decision based on all the facts. The decision is usually based either on whatever information is available, or on the decision-maker’s perception of the response and evidence.

Often, at the investigatory stage of dispute resolution, the agency may request additional information, beyond that which is indicated in the position statement. Or sometimes, after the submission of the position statement, new information surfaces. In either instance, the company should not hesitate to send additional information to the agency. Think of it as engaging in an ongoing dialogue with the agency about the circumstances surrounding your case. Just make sure that whatever additional information is sent does not contradict anything stated in the position statement and is easily integrated into the statement.

Once the position statement has been ruled upon, the complaint will either be dismissed or will proceed ahead to some sort of trial or other dispute resolution procedure (e.g., mediation or arbitration).

As a general rule, it is not always necessary for a responding company to utilize legal or business counsel for the response. However, if the responding company is not attuned to the specific regulatory agency’s style, or if the company doesn’t have a grasp of the alleged violations, it could adversely affect its chance of receiving a favorable response. It is not wise to use the position statement as a means to test how whether you are adept at dealing with agency complaints. This is not the time for experimentation or chance because it could cost your business plenty.