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5 Small Business Tax Tips for 2012: Start Planning Now for a Prosperous New Year

December 6th, 2011

Posted by our partner RocketLawyer, by Jenny Greenhough

The shiny ball is going to drop…whether you’re ready or not. And with the holiday season in full swing, it’s easy to procrastinate thinking about your business. Rookie mistake! Year-end is the ideal time to make sure you’re doing everything you can to maximize your tax savings before 2012 comes to a close, and to start developing your tax strategy for the new year. We know you’re busy, so we put together 5 tax tips to help you wind down 2011 and get the most tax-benefits in 2012.

1. Incorporate your small business on January 1.

It’s always a good time to incorporate because of potential tax savings and liability protection, but the New Year may be the best time. With a filing date of January 1, you’ll save time when filing a tax return for that year, because the business doesn’t need to file two separate tax returns for the unincorporated entity and one for the new C-Corp, S-Corp, or LLC. You can incorporate your business for free at Rocket Lawyer.

2. Consider both tax savings and liability protection when choosing your business structure.

If you want to incorporate on January 1, start thinking about your business structure now. There are multiple factors to consider when choosing between a C-Corp, S-Corp, or an LLC, and while many business owners decide to incorporate based on potential tax savings alone, it’s also important to consider liability protection. Make sure you speak to an attorney, and not just a CPA - you may find that opinions differ depending on who you talk to. With all the facts you’ll be better equipped to make the right decision for your business and reap the benefits all year long. With a Rocket Lawyer legal plan, you can get a free consultation with a Rocket Lawyer On Call attorney in your area.

3. Be aware of the personal liabilities incurred by individuals you choose to place in positions of authority.

The issue of tax fund recovery penalties is a little-known danger to your business and employees. If your business has failed to pay what it owes to the IRS, this money is held by you, in trust, for the government. In fact, the government will hold any and all parties in positions of authority within the business personally liable and accountable for the repayment of the funds.

Individuals in positions of responsibility, whether it is the business owner, or the signatory, are personally liable for both the unpaid taxes, and the penalties associated with non-payment. So, before you decide to put your children, spouse, or other employees in these positions in your company, make sure you understand the unintended consequences that may arise as a result of this action.

“Choosing signatories wisely can save your business and your family from any unnecessary interaction with the IRS,” emphasized tax attorney James Pratt.

“Most people would like their children to take over the family business, but they should balance their education in the business with protecting them from some of the liabilities,” added Pratt.

4. Before you hire a new worker, choose carefully between classifying the individual as an employee or an independent contractor to avoid an audit.

Worker classification (employee vs independent contractor) will be a hot topic for the IRS this coming year. Companies sometimes try to have it both ways - sending a big red flag to the IRS. A common situation is when a company treats employees as independent contractors in practice (not paying payroll taxes on the workers), but then also claims tax deductions as if the workers were employees.

To prevent this situation, think about the role you want the new worker to fulfill and then put the appropriate relationship in writing with an Independent Contractor Agreement or an Employment Agreement. Then, stick with it, from paying payroll taxes (if applicable) through to the tax credits you claim. Also, it’s best to look at the long term tax consequences of worker classification from the outset, and an attorney’s advice can be extremely helpful for getting the tax savings you deserve while staying in the good grace of the IRS.

5. Keep track of your expenditures over the next year and prepare for rising costs as itemized tax deductions are reduced.

The Joint Taxation Committee has recommended cuts to charitable deductions, mortgage interest deductions and state and local tax deductions. The likely effect of this is higher costs for business and a significant fall-out for the mortgage real-estate and non-profit sector. This, of all years, is one where planning ahead will be crucial.

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Business Agreements from LegalOut

August 17th, 2011

legaldocWhether you freelance or own your own consulting firm its important to protect your business interests. Preparing legal documents is one important step to protecting yourself.

Contract agreements will help you define the terms and conditions of professional services you wish to contract as well as protecting valuable business information.

Check out some important legal documents in this issue or for more information or other legal documents visit LegalOut.

Protect Your Interests

Consulting Agreement

If you’re an independent consultant asking your clients to sign a legal contract can help clarify goals and avoid sticky issues down the line. In the consulting agreement, a consultant or independent contractor agrees to provide professional, consulting or other services for a fee. You want to define the terms and conditions of professional services you are providing to a person or company.

Start your agreement now>>

Protect Confidential Information

Non Disclosure Agreement

Are you in the process of hiring a consultant for your business? Make sure you protect your business information with a Non Disclosure Agreement. In this agreement, a person or organization agrees not to disclose proprietary and confidential information that it receives from another party.

Create your Non Disclosure Agreement in minutes with our easy online interview. Save, share or print your legal document immediately - no waiting!

Start your non disclosure agreement>>

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IRS to Gay Newlyweds: Not So Fast

August 5th, 2011

From Bloomberg Businessweek
IRS to Gay Newlyweds: Not So Fast
Federal tax benefits of marriage don’t extend to same-sex couples
By Andrew Zajac

bloomberg-businessweek-logoFor all those same-sex newlyweds in New York, Lawrence S. Jacobs has a message: Enjoy the Champagne and the honeymoon, but expect no gifts from the IRS. Jacobs, a lawyer in Washington, specializes in estate planning for same-sex couples-and in delivering the bad news that their unions aren’t legal in the eyes of the IRS, a policy that will cost them time and money during tax season.

Same-sex couples in Washington, which last year legalized gay marriage, must fill out a federal return to make calculations required for their D.C. joint return. But then they must set that work aside and fill out separate federal returns because the IRS doesn’t regard their union as legal, Jacobs says. “You just spent decades getting your marriage recognized, and now the feds say, ‘No, you’re not,’” says Jacobs, who as a partner in a same-sex marriage has firsthand experience of the problem.

This cumbersome process applies to all married same-sex couples in the U.S. It comes courtesy of the Defense of Marriage Act, or DOMA, which defines marriage as “a legal union between a man and a woman as husband and wife.” The Obama Administration, saying DOMA is unconstitutional, has instructed federal agencies to do what they can under existing law to extend benefits to same-sex partnerships. Such rule-stretching doesn’t go far with the IRS, says Brian Moulton, an attorney with the Human Rights Campaign, a Washington gay rights advocacy group. “There’s a relatively small space before you bump up against DOMA,” he says. “I don’t think there’s much they can do.” The IRS declined to comment.

Filling out a “dummy” federal return can add $300 to $400 to a same-sex married couple’s tax preparation bill, according to Larry Rubin, a partner at accounting firm Aronson in Rockville, Md. As a result of DOMA, gay couples must also pay income tax on a portion of employer-provided health insurance, which isn’t taxable for heterosexual married couples.

The costliest potential consequence of the IRS’s treatment of same-sex couples involves the estate tax. A heterosexual husband or wife generally can inherit any amount of money or property from his or her spouse without paying tax. A same-sex spouse inheriting a large estate, by contrast, can face a tax bill of as much as 35 percent on anything above $5 million. That situation spurred a New York widow, Edith Windsor, to sue the government last November seeking to get the IRS to return $363,000 in taxes on an inheritance from her spouse, Thea Spyer. Windsor is working with Senator Kirsten Gillibrand (D-N.Y.) and other lawmakers to repeal DOMA. “It’s a matter of fundamental fairness,” says Rose Saxe, an attorney with the American Civil Liberties Union, which is helping represent Windsor. “The government shouldn’t be excluding one group of married couples from these important protections.”

The bottom line: Even where they can marry, gays face disadvantages such as higher estate taxes and tax-prep fees $300-$400 more than straight couples.

Zajac is a reporter for Bloomberg News.

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New York Allows Same-Sex Marriage, Becoming Largest State to Pass Law

June 25th, 2011

i-heart-ny-marriage-equality-webGreat news for equality.

From the New York Times

June 24, 2011
New York Allows Same-Sex Marriage, Becoming Largest State to Pass Law
By NICHOLAS CONFESSORE and MICHAEL BARBARO
ALBANY - Lawmakers voted late Friday to legalize same-sex marriage, making New York the largest state where gay and lesbian couples will be able to wed and giving the national gay-rights movement new momentum from the state where it was born.

The marriage bill, whose fate was uncertain until moments before the vote, was approved 33 to 29 in a packed but hushed Senate chamber. Four members of the Republican majority joined all but one Democrat in the Senate in supporting the measure after an intense and emotional campaign aimed at the handful of lawmakers wrestling with a decision that divided their friends, their constituents and sometimes their own homes.

With his position still undeclared, Senator Mark J. Grisanti, a Republican from Buffalo who had sought office promising to oppose same-sex marriage, told his colleagues he had agonized for months before concluding he had been wrong.

“I apologize for those who feel offended,” Mr. Grisanti said, adding, “I cannot deny a person, a human being, a taxpayer, a worker, the people of my district and across this state, the State of New York, and those people who make this the great state that it is the same rights that I have with my wife.”

Senate approval was the final hurdle for the same-sex marriage legislation, which was approved last week by the Assembly. Gov. Andrew M. Cuomo signed the measure at 11:55 p.m., and the law will go into effect in 30 days, meaning that same-sex couples could begin marrying in New York by late July.

Passage of same-sex marriage here followed a daunting run of defeats in other states where voters barred same-sex marriage by legislative action, constitutional amendment or referendum. Just five states currently permit same-sex marriage: Connecticut, Iowa, Massachusetts, New Hampshire and Vermont, as well as the District of Columbia.

At around 10:30 p.m., moments after the vote was announced, Mr. Cuomo strode onto the Senate floor to wave at cheering supporters who had crowded into the galleries to watch. Trailed by two of his daughters, the governor greeted lawmakers, and paused to single out those Republicans who had defied the majority of their party to support the marriage bill.

“How do you feel?” he asked Senator James S. Alesi, a suburban Rochester Republican who voted against the measure in 2009 and was the first to break party ranks this year. “Feels good, doesn’t it?”

The approval of same-sex marriage represented a reversal of fortune for gay-rights advocates, who just two years ago suffered a humiliating defeat when a same-sex marriage bill was easily rejected by the Senate, which was then controlled by Democrats. This year, with the Senate controlled by Republicans, the odds against passage of same-sex marriage appeared long.

But the unexpected victory had a clear champion: Mr. Cuomo, a Democrat who pledged last year to support same-sex marriage but whose early months in office were dominated by intense battles with lawmakers and some labor unions over spending cuts.

Mr. Cuomo made same-sex marriage one of his top priorities for the year and deployed his top aide to coordinate the efforts of a half-dozen local gay-rights organizations whose feuding and disorganization had in part been blamed for the defeat two years ago.

The new coalition of same-sex marriage supporters brought in one of Mr. Cuomo’s trusted campaign operatives to supervise a $3 million television and radio campaign aimed at persuading several Republican and Democratic senators to drop their opposition.

For Senate Republicans, even bringing the measure to the floor was a freighted decision. Most of the Republicans firmly oppose same-sex marriage on moral grounds, and many of them also had political concerns, fearing that allowing same-sex marriage to pass on their watch would embitter conservative voters and cost the Republicans their one-seat majority in the Senate.

Leaders of the state’s Conservative Party, whose support many Republican lawmakers depend on to win election, warned that they would oppose in legislative elections next year any Republican senator who voted for same-sex marriage.

But after days of contentious discussion capped by a marathon nine-hour closed-door debate on Friday, Republicans came to a fateful decision: The full Senate would be allowed to vote on the bill, the majority leader, Dean G. Skelos, said Friday afternoon, and each member would be left to vote according to his or her conscience.

“The days of just bottling up things, and using these as excuses not to have votes - as far as I’m concerned as leader, it’s over with,” said Mr. Skelos, a Long Island Republican who voted against the bill.

Just before the marriage vote, lawmakers in the Senate and Assembly approved a broad package of major legislation that constituted the remainder of their agenda for the year. The bills included a cap on local property tax increases and a strengthening of New York’s rent regulation laws, as well as a five-year tuition increase at the State University of New York and the City University of New York.

But Republican lawmakers spent much of the week negotiating changes to the marriage bill to protect religious institutions, especially those that oppose same-sex weddings. On Friday, the Assembly and the Senate approved those changes. But they were not enough to satisfy the measure’s staunchest opponents. In a joint statement, New York’s Catholic bishops assailed the vote.

“The passage by the Legislature of a bill to alter radically and forever humanity’s historic understanding of marriage leaves us deeply disappointed and troubled,” the bishops said.

Besides Mr. Alesi and Mr. Grisanti, the four Republicans who voted for the measure included Senators Stephen M. Saland from the Hudson Valley area and Roy J. McDonald of the capital region.

Just one lawmaker rose to speak against the bill: Rubén Díaz Sr. of the Bronx, the only Democratic senator to cast a no vote. Mr. Díaz, saying he was offended by the two-minute restrictions set on speeches, repeatedly interrupted the presiding officer who tried to limit the senator’s remarks, shouting, “You don’t want to hear me.”

“God, not Albany, has settled the definition of marriage, a long time ago,” Mr. Díaz said.

The legalization of same-sex marriage in the United States is a relatively recent goal of the gay-rights movement, but over the last few years, gay-rights organizers have placed it at the center of their agenda, steering money and muscle into dozens of state capitals in an often uphill effort to persuade lawmakers.

In New York, passage of the bill reflects rapidly evolving sentiment about same-sex unions. In 2004, according to a Quinnipiac poll, 37 percent of the state’s residents supported allowing same-sex couples to wed. This year, 58 percent of them did. Advocates moved aggressively this year to capitalize on that shift, flooding the district offices of wavering lawmakers with phone calls, e-mails and signed postcards from constituents who favored same-sex marriage, sometimes in bundles that numbered in the thousands.

Dozens more states have laws or constitutional amendments banning same-sex marriage. Many of them were approved in the past few years, as same-sex marriage moved to the front line of the culture war and politicians deployed the issue as a tool for energizing their base.

But New York could be a shift: It is now by far the largest state to grant legal recognition to same-sex weddings, and one that is home to a large, visible and politically influential gay community. Supporters of the measure described the victory in New York as especially symbolic - and poignant - because of its rich place in the history of gay rights: the movement’s foundational moment, in June 1969, was a riot against police inside the Stonewall Inn, a bar in the West Village.

In Albany, there was elation after the vote. But leading up to it, there were moments of tension and frustration. At one point, Senator Kevin S. Parker, a Brooklyn Democrat, erupted when he and other supporters learned they would not be allowed to make a floor speech.

“This is not right,” he yelled, before storming from the chamber.

During a brief recess during the voting, Senator Shirley L. Huntley, a Queens Democrat who had only recently come out in support of same sex marriage, strode from her seat to the back of the Senate chamber to congratulate Daniel J. O’Donnell, an openly gay Manhattan lawmaker who sponsored the legislation in the Assembly.

They hugged, and Assemblyman O’Donnell, standing with his longtime partner, began to tear up.

“We’re going to invite you to our wedding,” Mr. O’Donnell said. “Now we have to figure out how to pay for one.”

Danny Hakim and Thomas Kaplan contributed reporting from Albany, and Adriane Quinlan from New York.

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When to Update Your Living Will

June 8th, 2011

Be sure to review your Living Will periodically. Living Wills are easily modified to reflect changes in your health, finances, or perspective on end-of-life care. Even if your wishes don’t change, a Living Will should be regularly updated to take into account changes in medical technology. Consider updating your Living Will when you need to:

  • Change or set limits on medical care to meet your ability to pay
  • Respond to changes in medical technology
  • Respond to a change in health care laws
  • Respond to a changes in your health, including: decline, terminal diagnosis, possibility of surgery and hospitalization, or pregnancy
  • Designate a different person to make health care decisions for you
  • Move to a new state
  • Respond to changes in your beliefs and wishes concerning end-of-life care
  • Respond to the death of a loved one or significant other

Remember that new documents will generally supersede old ones - in other words, executing a new Living Will has the effect of revoking a prior Living Will.

Update your Living Will with LegalOut.

Article by RocketLawyer.

Living Will

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Watch San Francisco Giants It Gets Better Anti-Bullying Video

June 3rd, 2011

The San Francisco Giants became the first professional sports team to release an “It Gets Better” video to raise awareness and tolerance for LGBT youth.

As a baseball fan I am happy that the San Francisco Giants created a video for the It Gets Better Project. The Giants hit a home run with this video.

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Protect Your Wishes and Family

March 31st, 2011

Happy Spring. LegalOut wishes you a bountiful & joyous spring!

A new spring brings the traditional spring cleaning, a good time to organize, decide on priorities, and get your home in order. Spring is also an excellent time to review your legal situation and make sure that you have essential legal documents to ensure your wishes and family are protected. Check out some important legal documents below or for more information or other legal documents visit Create Legal Docs>>

Prepare Legal Documents

Last Will and Testament
Protect Your Loved Ones: A Will is a document under which a Will writer states his or her intentions regarding the persons or organizations (”Beneficiaries”) who will receive the Will writer’s property, and the person or organization (”Executor”) who will carry out the Will writer’s wishes. Click here to prepare a Last Will and Testament>>

Living Will/Advance Directive for Healthcare
Protect Your Wishes: A Living Will authorizes an agent of your choosing to communicate your life-support decisions to medical personnel in the event that you are unable to do so. A Living Will spares your family the anguish of making life-support decisions without your input. A Living Will also ensures that your doctor understands your end-of-life wishes and treats you accordingly.Click here to prepare a Living Will/Advance Directive for Healthcare>>

Domestic Partnership Agreement
Protect Your Partnership: A Domestic Partnership Agreement is a document that a couple can enter into to dictate their contractual rights as a couple. It is also used to outline the responsibilities of each partner when a couple decides to form a long-term committed relationship, such as how to share income and pay bills and whether property is meant to be jointly or individually owned. Click here to prepare a Domestic Partnership Agreement>>

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Letter from the Attorney General to Congress on Litigation Involving the Defense of Marriage Act

February 24th, 2011

The Obama Administration announced that it will not defend the discriminatory federal “Defense of Marriage Act” (DOMA) in court.

Department of Justice

Office of Public Affairs

WASHINGTON - The Attorney General sent the following letter today to Congressional leadership to inform them of the Department’s course of action in two lawsuits, Pedersen v. OPMand Windsor v. United States, challenging Section 3 of the Defense of Marriage Act (DOMA), which defines marriage for federal purposes as only between a man and a woman. A copy of the letter is also attached.

The Honorable John A. Boehner
Speaker
U.S. House of Representatives
Washington, DC 20515

Re: Defense of Marriage Act

Dear Mr. Speaker:

After careful consideration, including review of a recommendation from me, the President of the United States has made the determination that Section 3 of the Defense of Marriage Act (”DOMA”), 1 U.S.C. § 7, i as applied to same-sex couples who are legally married under state law, violates the equal protection component of the Fifth Amendment. Pursuant to 28 U.S.C. § 530D, I am writing to advise you of the Executive Branch’s determination and to inform you of the steps the Department will take in two pending DOMA cases to implement that determination.

While the Department has previously defended DOMA against legal challenges involving legally married same-sex couples, recent lawsuits that challenge the constitutionality of DOMA Section 3 have caused the President and the Department to conduct a new examination of the defense of this provision. In particular, in November 2010, plaintiffs filed two new lawsuits challenging the constitutionality of Section 3 of DOMA in jurisdictions without precedent on whether sexual-orientation classifications are subject to rational basis review or whether they must satisfy some form of heightened scrutiny. Windsor v. United States, No. 1:10-cv-8435 (S.D.N.Y.); Pedersen v. OPM, No. 3:10-cv-1750 (D. Conn.). Previously, the Administration has defended Section 3 in jurisdictions where circuit courts have already held that classifications based on sexual orientation are subject to rational basis review, and it has advanced arguments to defend DOMA Section 3 under the binding standard that has applied in those cases. ii

These new lawsuits, by contrast, will require the Department to take an affirmative position on the level of scrutiny that should be applied to DOMA Section 3 in a circuit without binding precedent on the issue. As described more fully below, the President and I have concluded that classifications based on sexual orientation warrant heightened scrutiny and that, as applied to same-sex couples legally married under state law, Section 3 of DOMA is unconstitutional.

Standard of Review

The Supreme Court has yet to rule on the appropriate level of scrutiny for classifications based on sexual orientation. It has, however, rendered a number of decisions that set forth the criteria that should inform this and any other judgment as to whether heightened scrutiny applies: (1) whether the group in question has suffered a history of discrimination; (2) whether individuals “exhibit obvious, immutable, or distinguishing characteristics that define them as a discrete group”; (3) whether the group is a minority or is politically powerless; and (4) whether the characteristics distinguishing the group have little relation to legitimate policy objectives or to an individual’s “ability to perform or contribute to society.” See Bowen v. Gilliard, 483 U.S. 587, 602-03 (1987); City of Cleburne v. Cleburne Living Ctr., 473 U.S. 432, 441-42 (1985).

Each of these factors counsels in favor of being suspicious of classifications based on sexual orientation. First and most importantly, there is, regrettably, a significant history of purposeful discrimination against gay and lesbian people, by governmental as well as private entities, based on prejudice and stereotypes that continue to have ramifications today. Indeed, until very recently, states have “demean[ed] the[] existence” of gays and lesbians “by making their private sexual conduct a crime.” Lawrence v. Texas, 539 U.S. 558, 578 (2003). iii

Second, while sexual orientation carries no visible badge, a growing scientific consensus accepts that sexual orientation is a characteristic that is immutable, seeRichard A. Posner, Sex and Reason 101 (1992); it is undoubtedly unfair to require sexual orientation to be hidden from view to avoid discrimination, seeDon’t Ask, Don’t Tell Repeal Act of 2010, Pub. L. No. 111-321, 124 Stat. 3515 (2010).

Third, the adoption of laws like those at issue in Romer v. Evans,517 U.S. 620 (1996), and Lawrence, the longstanding ban on gays and lesbians in the military, and the absence of federal protection for employment discrimination on the basis of sexual orientation show the group to have limited political power and “ability to attract the [favorable] attention of the lawmakers.” Cleburne, 473 U.S. at 445. And while the enactment of the Matthew Shepard Act and pending repeal of Don’t Ask, Don’t Tell indicate that the political process is not closed entirelyto gay and lesbian people, that is not the standard by which the Court has judged “political powerlessness.” Indeed, when the Court ruled that gender-based classifications were subject to heightened scrutiny, women already had won major political victories such as the Nineteenth Amendment (right to vote) and protection under Title VII (employment discrimination).

Finally, there is a growing acknowledgment that sexual orientation “bears no relation to ability to perform or contribute to society.” Frontiero v. Richardson, 411 U.S. 677, 686 (1973) (plurality). Recent evolutions in legislation (including the pending repeal of Don’t Ask, Don’t Tell), in community practices and attitudes, in case law (including the Supreme Court’s holdings in Lawrenceand Romer), and in social science regarding sexual orientation all make clear that sexual orientation is not a characteristic that generally bears on legitimate policy objectives. See, e.g.,Statement by the President on the Don’t Ask, Don’t Tell Repeal Act of 2010 (”It is time to recognize that sacrifice, valor and integrity are no more defined by sexual orientation than they are by race or gender, religion or creed.”)

To be sure, there is substantial circuit court authority applying rational basis review to sexual-orientation classifications. We have carefully examined each of those decisions. Many of them reason only that if consensual same-sex sodomy may be criminalized under Bowers v. Hardwick, then it follows that no heightened review is appropriate - a line of reasoning that does not survive the overruling of Bowersin Lawrence v. Texas, 538 U.S. 558 (2003). iv Others rely on claims regarding “procreational responsibility” that the Department has disavowed already in litigation as unreasonable, or claims regarding the immutability of sexual orientation that we do not believe can be reconciled with more recent social science understandings. v And none engages in an examination of all the factors that the Supreme Court has identified as relevant to a decision about the appropriate level of scrutiny. Finally, many of the more recent decisions have relied on the fact that the Supreme Court has not recognized that gays and lesbians constitute a suspect class or the fact that the Court has applied rational basis review in its most recent decisions addressing classifications based on sexual orientation, Lawrenceand Romer. vi But neither of those decisions reached, let alone resolved, the level of scrutiny issue because in both the Court concluded that the laws could not even survive the more deferential rational basis standard.

Application to Section 3 of DOMA

In reviewing a legislative classification under heightened scrutiny, the government must establish that the classification is “substantially related to an important government objective.” Clark v. Jeter, 486 U.S. 456, 461 (1988). Under heightened scrutiny, “a tenable justification must describe actual state purposes, not rationalizations for actions in fact differently grounded.” United States v. Virginia, 518 U.S. 515, 535-36 (1996). “The justification must be genuine, not hypothesized or invented post hoc in response to litigation.” Id. at 533.

In other words, under heightened scrutiny, the United States cannot defend Section 3 by advancing hypothetical rationales, independent of the legislative record, as it has done in circuits where precedent mandates application of rational basis review. Instead, the United States can defend Section 3 only by invoking Congress’ actual justifications for the law.

Moreover, the legislative record underlying DOMA’s passage contains discussion and debate that undermines any defense under heightened scrutiny. The record contains numerous expressions reflecting moral disapproval of gays and lesbians and their intimate and family relationships - precisely the kind of stereotype-based thinking and animus the Equal Protection Clause is designed to guard against. vii See Cleburne, 473 U.S. at 448 (”mere negative attitudes, or fear” are not permissible bases for discriminatory treatment); see also Romer, 517 U.S. at 635 (rejecting rationale that law was supported by “the liberties of landlords or employers who have personal or religious objections to homosexuality”); Palmore v. Sidotti, 466 U.S. 429, 433 (1984) (”Private biases may be outside the reach of the law, but the law cannot, directly or indirectly, give them effect.”).

Application to Second Circuit Cases

After careful consideration, including a review of my recommendation, the President has concluded that given a number of factors, including a documented history of discrimination, classifications based on sexual orientation should be subject to a heightened standard of scrutiny. The President has also concluded that Section 3 of DOMA, as applied to legally married same-sex couples, fails to meet that standard and is therefore unconstitutional. Given that conclusion, the President has instructed the Department not to defend the statute in Windsorand Pedersen, now pending in the Southern District of New York and the District of Connecticut. I concur in this determination.

Notwithstanding this determination, the President has informed me that Section 3 will continue to be enforced by the Executive Branch. To that end, the President has instructed Executive agencies to continue to comply with Section 3 of DOMA, consistent with the Executive’s obligation to take care that the laws be faithfully executed, unless and until Congress repeals Section 3 or the judicial branch renders a definitive verdict against the law’s constitutionality. This course of action respects the actions of the prior Congress that enacted DOMA, and it recognizes the judiciary as the final arbiter of the constitutional claims raised.

As you know, the Department has a longstanding practice of defending the constitutionality of duly-enacted statutes if reasonable arguments can be made in their defense, a practice that accords the respect appropriately due to a coequal branch of government. However, the Department in the past has declined to defend statutes despite the availability of professionally responsible arguments, in part because the Department does not consider every plausible argument to be a “reasonable” one. “[D]ifferent cases can raise very different issues with respect to statutes of doubtful constitutional validity,” and thus there are “a variety of factors that bear on whether the Department will defend the constitutionality of a statute.” Letter to Hon. Orrin G. Hatch from Assistant Attorney General Andrew Fois at 7 (Mar. 22, 1996). This is the rare case where the proper course is to forgo the defense of this statute. Moreover, the Department has declined to defend a statute “in cases in which it is manifest that the President has concluded that the statute is unconstitutional,” as is the case here. Seth P. Waxman, Defending Congress, 79 N.C. L.Rev. 1073, 1083 (2001).

In light of the foregoing, I will instruct the Department’s lawyers to immediately inform the district courts in Windsorand Pedersenof the Executive Branch’s view that heightened scrutiny is the appropriate standard of review and that, consistent with that standard, Section 3 of DOMA may not be constitutionally applied to same-sex couples whose marriages are legally recognized under state law. If asked by the district courts in the Second Circuit for the position of the United States in the event those courts determine that the applicable standard is rational basis, the Department will state that, consistent with the position it has taken in prior cases, a reasonable argument for Section 3’s constitutionality may be proffered under that permissive standard. Our attorneys will also notify the courts of our interest in providing Congress a full and fair opportunity to participate in the litigation in those cases. We will remain parties to the case and continue to represent the interests of the United States throughout the litigation.

Furthermore, pursuant to the President’s instructions, and upon further notification to Congress, I will instruct Department attorneys to advise courts in other pending DOMA litigation of the President’s and my conclusions that a heightened standard should apply, that Section 3 is unconstitutional under that standard and that the Department will cease defense of Section 3.

A motion to dismiss in the Windsorand Pedersencases would be due on March 11, 2011. Please do not hesitate to contact us if you have any questions.

Sincerely yours,

Eric H. Holder, Jr.
Attorney General

______________________________________

iDOMA Section 3 states: “In determining the meaning of any Act of Congress, or of any ruling, regulation, or interpretation of the various administrative bureaus and agencies of the United States, the word ‘marriage’ means only a legal union between one man and one woman as husband and wife, and the word ‘spouse’ refers only to a person of the opposite sex who is a husband or a wife.”

ii See, e.g., Dragovich v. U.S. Department of the Treasury, 2011 WL 175502 (N.D. Cal. Jan. 18, 2011); Gill v. Office of Personnel Management, 699 F. Supp. 2d 374 (D. Mass. 2010); Smelt v. County of Orange, 374 F. Supp. 2d 861, 880 (C.D. Cal.,2005); Wilson v. Ake, 354 F.Supp.2d 1298, 1308 (M.D. Fla. 2005); In re Kandu, 315 B.R. 123, 145 (Bkrtcy. W.D. Wash. 2004); In re Levenson, 587 F.3d 925, 931 (9th Cir. E.D.R. Plan Administrative Ruling 2009).

iiiWhile significant, that history of discrimination is different in some respects from the discrimination that burdened African-Americans and women. See Adarand Constructors, Inc. v. Pena, 515 U.S. 200, 216 (1995) (classifications based on race “must be viewed in light of the historical fact that the central purpose of the Fourteenth Amendment was to eliminate racial discrimination emanating from official sources in the States,” and “[t]his strong policy renders racial classifications ‘constitutionally suspect.’”); United States v. Virginia, 518 U.S. 515, 531 (1996) (observing that “‘our Nation has had a long and unfortunate history of sex discrimination’” and pointing out the denial of the right to vote to women until 1920). In the case of sexual orientation, some of the discrimination has been based on the incorrect belief that sexual orientation is a behavioral characteristic that can be changed or subject to moral approbation. Cf. Cleburne, 473 U.S. at 441 (heightened scrutiny may be warranted for characteristics “beyond the individual’s control” and that “very likely reflect outmoded notions of the relative capabilities of” the group at issue); Boy Scouts of America v. Dale, 530 U.S. 640 (2000) (Stevens, J., dissenting) (”Unfavorable opinions about homosexuals ‘have ancient roots.’” (quoting Bowers, 478 U.S. at 192)).

iv See Equality Foundation v. City of Cincinnati, 54 F.3d 261, 266-67 & n. 2. (6th Cir. 1995); Steffan v. Perry, 41 F.3d 677, 685 (D.C. Cir. 1994); Woodward v. United States, 871 F.2d 1068, 1076 (Fed. Cir. 1989); Ben-Shalom v. Marsh, 881 F.2d 454, 464 (7th Cir. 1989); Padula v. Webster, 822 F.2d 97, 103 (D.C. Cir. 1987).

v See, e.g., Lofton v. Secretary of the Dep’t of Children & Family Servs., 358 F.3d 804, 818 (11th Cir. 2004) (discussing child-rearing rationale ); High Tech Gays v. Defense Indust. Sec. Clearance Office, 895 F.2d 563, 571 (9th Cir. 1990) (discussing immutability). As noted, this Administration has already disavowed in litigation the argument that DOMA serves a governmental interest in “responsible procreation and child-rearing.” H.R. Rep. No. 104-664, at 13. As the Department has explained in numerous filings, since the enactment of DOMA, many leading medical, psychological, and social welfare organizations have concluded, based on numerous studies, that children raised by gay and lesbian parents are as likely to be well-adjusted as children raised by heterosexual parents.

vi See Cook v. Gates, 528 F.3d 42, 61 (1st Cir. 2008); Citizens for Equal Prot. v. Bruning, 455 F.3d 859, 866 (8th Cir. 2006); Johnson v. Johnson, 385 F.3d 503, 532 (5th Cir. 2004); Veney v. Wyche, 293 F.3d 726, 732 (4th Cir. 2002); Equality Foundation of Greater Cincinnati, Inc. v. City of Cincinnati, 128 F.3d 289, 292-94 (6th Cir. 1997).

vii See, e.g.,H.R. Rep. at 15-16 (judgment [opposing same-sex marriage] entails both moral disapproval of homosexuality and a moral conviction that heterosexuality better comports with traditional (especially Judeo-Christian) morality”); id. at 16 (same-sex marriage “legitimates a public union, a legal status that most people . . . feel ought to be illegitimate” and “put[s] a stamp of approval . . . on a union that many people . . . think is immoral”); id. at 15 (”Civil laws that permit only heterosexual marriage reflect and honor a collective moral judgment about human sexuality”); id. (reasons behind heterosexual marriage-procreation and child-rearing-are “in accord with nature and hence have a moral component”); id. at 31 (favorably citing the holding in Bowersthat an “anti-sodomy law served the rational purpose of expressing the presumed belief . . . that homosexual sodomy is immoral and unacceptable”); id. at 17 n.56 (favorably citing statement in dissenting opinion in Romerthat “[t]his Court has no business . . . pronouncing that ‘animosity’ toward homosexuality is evil”).

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Why a Living Will is Important

February 4th, 2011

Recently, The South Florida Gay News.com posted a significant article, “Beyond Living Well is a Living Will” by Jarret Terrill about the importance of preparing a living will. This article highlights the challenges people may face without a living will, a form of an Advance Care Directive.

Advance medical directives pertain to treatment preferences and allow you to appoint someone you trust (a family member, close friend, or partner) - to make health care decisions for you if you lose the ability to make decisions yourself.

A living will is a written document that specifies what types of medical treatment are desired. A health care proxy names a specific person to make health care decisions for you when you can’t make them for yourself.

Here is an excerpt from the article:

“Many gay men and women are faced with anti-gay family members that they would not entrust an “end of life” decision to. Without a living will issuing advance directives, Florida hospitals would be bound by law to follow the directives of distant family members over a lover’s wishes.

A living will, also known as an Advance Care Directive, is a document that tells doctors, attorneys and law enforcement which person in your life is responsible for executing decisions you’ve made about your healthcare if you are unable to speak for yourself.

Says Daniel W. Humbert, a Fort Lauderdale Attorney who has developed a specialty in estate planning,  “a General Power of Attorney is very broad in scope and tends to give the Attorney-In-Fact (the person you designate) the power to do virtually anything. A living will is quite different.”

Humbert says that a living will is “where you can express your wishes for what they call extraordinary life-saving measures. This would be particularly important for a person who becomes incompetent or goes into a coma or something like that.”

“A living will is essential for everybody, but it’s particularly important to the gay community,” says Humbert.  Laws and regulations concerning those extraordinary circumstances and the decision-making process favor family members. Since the legal definition of a family member varies from state to state, this can pose a problem if you don’t have a living will.”

Click here to read the entire article>>

Without legal documents you are at risk of not having your wishes carried out in the event that something unexpected occurs. If you are in a committed relationship, you may want your significant other to be able to make medical and legal decisions for you, should you unable to make them yourself.  You would like to plan for the future of your family to ensure they are taken care of when you are gone. Even if you are not in a committed relationship, you want to make decisions about your own life and future without unwanted intrusions from others.

Prepare Legal DocumentsLegalOut’s online resource center provides the LGBT community with affordable legal document solutions.  We provide easy-to-use tools for customizing your documents online, in the privacy of your own home, at your own pace and provides hundreds of do-it-yourself legal documents including living wills, domestic partnership agreements, power of attorney documents, last will and testament, and many others.

By planning now you can feel comfortable that you, your family and your future are taken care of exactly the way you envision.

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New Federal Hospital Visitation Regulations for LGBT go into Effect on Jan. 18, 2011

January 15th, 2011

medicalOn January 18, 2011, new hospital visitation regulations go into effect that require all hospitals participating in Medicaid and Medicare programs to permit patients to designate visitors of their choosing and prohibit discrimination in visitation based on a number of factors, including sexual orientation and gender identity.

The new regulations are a result from President Obama’s presidential memorandum in April 2010 directing the Department of Health and Human Services to develop regulations protecting hospital visitation rights.

Regulations require hospitals (from HRC’s Hospital Visitation Guide):

  • to inform each patient of his or her right to receive visitors whom he or she designates, including a domestic partner
  • to not restrict or limit visitation rights based on sexual orientation and gender identity, among other factors
  • must ensure that all visitors have full and equal visitation rights, consistent with a patient’s wishes.

To learn more visit the Human Rights Campaign Hospital Visitation Guide for LGBT Families>>

While these new federal regulations are a great step forward for LGBT hospital visitation equality it’s important to note there are other medical decision making areas that are not protected unless an individual has prepared the necessary legal documents.

Many state laws governing medical decision making defaults to biological family members or marital laws. Since there is marriage inequality in most of the U.S. LGBT individuals are not protected. Even if you are not in a committed relationship, you want to make decisions about your own life and future without unwanted intrusions from others. By planning now you can feel comfortable that you, your family and your future are taken care of exactly the way you envision.

If you want to designate a person to make health care decisions for you if you are unable to do so or state your wishes regarding the withholding or withdrawal of life-sustaining procedures under certain circumstances you will need to prepare an Advance Directive for Healthcare or Living Will.

Not planning, means letting someone else plan for you. LGBT individuals need to be proactive to ensure that their plans for the future reflect their own wishes and are not dictated by laws that do not fit your life and relationships or individuals who are not involved in your life and relationships.

Do not put off preparing legal documents as we never know what can happen. LegalOut can help you avoid putting off creating legal documents. LegalOut’s online resource center provides the LGBT community with affordable legal document solutions.  We provide easy-to-use tools for customizing your documents online, in the privacy of your own home, at your own pace and provides hundreds of do-it-yourself legal documents including living wills, domestic partnership agreements, power of attorney documents, last will and testament, and many others.

By planning now you can feel comfortable that you, your family and your future are taken care of exactly the way you envision.

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