the importance of a bill of sale:



purchasing items from private sellers on craig's list, or at swap meets or garage sales is so easy!  a written record of a sale is especially important if you are purchasing a vehicle, gun, electronics, any items with a serial number or items of value over $100.00 from a private seller.


no one really knows the history of the items so it is essential that you document when you acquired the item and from whom you acquired it.  that iphone you bought on craig's list might have been stolen from its rightful owner prior to your purchase.  you may find yourself being questioned by the police when it turns out the gun you bought from a friend of a friend was involved in a crime.


a bill of sale is a simple document that identifies the buyer, seller, a description of the specific item, amount paid and the date.  the bill of sale should be signed by the buyer and seller.  you can prepare a bill of sale at home and carry it with you when you are looking to make a purchase from a private seller, or you can handwrite one when you are in a pinch.  always make sure to protect yourself when buying from a private seller.


a form bill of sale is attached for your use.  click on the link at the end of this paragraph to access the form.  feel free to print it out and use it for your sales and purchases. Bill of Sale Form




keeping photographic records for your construction business:


It is important to keep detailed records if your business is in the construction industry. This is true for general contractors to sole proprietors installing carpeting on the weekends.

Many disputes regarding work arise after the construction work is done. If the work you do is covered over by other work such as drywall, carpeting, cabinetry, roofing etc., it will be hard for you to disprove your liability at the outset of a dispute. Photos of your work at the various stages will help eliminate headaches down the road. You should take photos before you begin work, during each stage of your work, and the final result.

For instance if you are an electrician, your work is buried behind many other peoples’ work, from the framers to the dry-wallers, to the painters, to the interior decorators. Taking photos of your work and its exact placement will show that you placed the electrical work in the right area according to the plans. You can easily defeat allegations of incorrect work with your photos. The photos will show that you did the job right and any problem lies with other contractors who did their work after you completed your work.

Taking photos with cell phone cameras is a great idea. Make sure the phone’s camera takes high quality photos. Once the photos are taken, transfer them to a hard drive and sort the photos into files for each job, phase and the date taken.



military veteran benefits:


military veterans are entitled to many benefits that are generally not known to those veterans.  in order for veterans to become eligible for certain benefits, they have a certain maximum amount of asets that are held by them personally.  if their assets are held in a trust, then they can still become eligible for veteran's benefits.  however, the trust needs to be drafted property to make them eligible for certain veteran benefits.


if you or a loved one is a military veteran, it is a wise financial move to set up a trust that meets these requirements.  call the office of Richard L. Klauer, P.C to discuss becoming eligible for these veteran's benefits.




40 hours/week & overtime pay:


The fair labor standards act (flsa) provides that people who are working over 40 hours per week are generally eligible for overtime pay, which is 1 1/2 times the normal hourly rate.  the flsa law is very complicated and not all people are eligible for overtime pay.  congress has made the law very imprecise so employers and employees have a difficult time understanding overtime eligibility.  the terms "exempt" and "non-exempt" are usually used to describe whether or not an employee is covered by the flsa and is eligible for overtime pay.  if you or your business have questions concerning the flsa and the requirement to pay overtime pay, or you think you have been short changed, call the The Law Office of Richard L. Klauer, P.C to discuss this matter.




deed vs. a deed of trust:



when dealing with real estate, you may come across documents entitled Deed, Warranty Deed, Quit claim deed, special warranty deed and disclaimer deed. 


a deed transferes ownership from one party to another.  the various types of deeds have special conditions about the nature of what is tranferred from one party to another. 


  • quit claim deeds merely state that the Grantor, (the party transferring its interest in the property) is making no promises that they own all or some part of the property.  they are only saying that, whatever they own, they transfer to the other party, the grantee.


warranty deeds warant or promise that they hold good title to the property and that they will be reasponsible for matters that show they do not hold full legal title to the property.


special warranty deeds limit the grantor's responsiblity for only the time that they owned the property.


disclaimer deeds are statements that the signer of this deed does not have any legal interest in the property.


deed of trust is another real estate document.  this document is similar to a mortgage in that it informs the public that the beneficiary of the deed of trust is owed money by the property owner.  if the property owner does not pay the money to the beneficiary, then the beneficiary can foreclose on the property, taking title away from the owner through a trustee sale process.


a poorly written deed that does not describe the property correctly can create many problems for both the seller and the buyer in years to come.  a title insurance company may not insure title to your property when the deeds are written in a confusing manner.


Richard L. Klauer, is a real estate attorney and a licensed arizona real estate broker.  we can assist you with matters involving deeds, including the purchase or sale of real estate and preparation and choice of deeds.  call us if we may assist you with a real estate matter.








THERE IS NO SUBSTITUTE FOR THE HUMAN BLOOD THAT IS NEEDED.  Organizations such as United blood services and american red cross accept donations of blood.  the reward that you get for giving blood comes in the feeling of satisfaction of helping another human being.  if you ever need blood in the future, you will appreciate the donor who gives blood so that you might live.  take a few minutes out of your day and call or go online at set up an appointment to donate blood or at  You can be a true life saver!




Prescriptive easements:  Think Twice before you allow you neighbor to cross your land.


An easement is a non-possessory right to use another person’s land in a specified way.  For example, a person may have an easement that allows him to cross his neighbor’s land for the purpose of accessing a public road.  An easement appurtenant involves two adjoining parcels of land.  If an easement is appurtenant, it attaches to the land.  This means that the easement passes down to all future owners.  The land that is benefited by the easement is called the dominant estate, whereas the land that is burdened with the easement is called the servient estate.   There can be express easements and easements implied by law.  An express easement is written, whereas an implied easement arises automatically under certain circumstances.


A prescriptive easement is a type of implied easement.  It arises under law when the following elements are met:


Open and Notorious:  A prescriptive easement arises when one person uses the land of another in an open and notorious manner.  This means that the true owner of the land could discover the neighbor’s use of the land upon reasonable inspection.  In other words, the use must be visible.  For example, if the neighbor sneaks through the owner’s land at night when the owner is sleeping, this element is not met.


Adverse and Hostile:  A prescriptive easement is adverse and hostile when the neighbor behaves as if he has superior title to the land.  For example, if the true owner gave the neighbor permission to cross his land, this element would not be met because, by receiving permission, the neighbor is recognizing and respecting the true owner’s superior claim to the land.  However, if the owner told the neighbor not to cross his land, and the neighbor continued to cross it, this element would be met because the neighbor would be behaving as if he has a superior claim to the land against the true owner. 


Continuous:  A prescriptive easement is continuous when the easement is used on a regular basis given the location and nature of the property.  For example, by crossing the true owner’s land once each year, the neighbor does not meet this element.  However, if the neighbor crosses the land every time he leaves and comes back to his home, this element is met. 


For the Statutory Period:  In Arizona, the statutory period is ten years.  This means that the neighbor would have to use the easement open and notoriously, in a way that is adverse and hostile to the true owner’s claim of title, and continuously for ten years in order to acquire the easement by prescription. 


It is important to address any unauthorized uses of your property in order to prevent an adverse possession or prescriptive easement claim.   For experienced attorneys who handle property and real-estate matters, contact Richard L. Klauer and schedule an appointment.



Premises liability:  What duty do you owe your guests?



Premises Liability:  What duty do you owe your guests? 

In Arizona, landowners owe a duty of care to people who enter their property.  The duty of care owed depends on the status of the entrant, and his or her legal status as an invitee, licensee, or trespasser.  A licensee is somebody who comes upon the land for his own pleasure or convenience with the express or implied consent of the landowner.  For this reason, a social guest is considered a licensee. 


A landowner is liable for injuries to a licensee when the following conditions are met:


  • The possessor knows or should know of the condition:  Often times a landowner might not know of a hidden danger in his own home.  For example, a landowner may not notice the railing on the balcony is rotten and therefore unsafe.  However, the landowner has no duty to inspect the premises and discover the unsafe conditions.


  • The possessor should realize that the condition poses an unreasonable risk of harm to the licensee:  In the case of the rotten balcony, a homeowner probably should realize that a rotten balcony would create an unreasonable risk of harm to the licensee.


  • The possessor should expect that the licensee will not discover or appreciate the danger:   This means that the danger must not be obvious.  For example,  if the balcony had no railing, the landowner probably not have to warn his guest about this because his guest would probably discover it on his own.   


  • The possessor fails to take reasonable care to either correct the condition or warn about it:  If a landowner does know about a dangerous, non-obvious condition on his property he must either fix it or warn his guests about it.


  • The licensee neither knows nor has reason to know of the condition and the risk it carries:  If the licensee sees the rot on the railing on the balcony and knows that it is unsafe, the landowner will not be held liable if the licensee attempts to use the railing anyway, and injures himself. 

For experienced attorneys who handle personal injury cases, contact Richard L. Klauer and schedule an appointment now.



Have you ever wondered why startups use quirky names?



According to an article in the Wall Street Journal, quirky names for startups surfaced about 20 years ago in Silicon Valley with the birth of Yahoo and Google. By the early 2000’s, the trend had spread to the Vancouver-based photo-sharing site Flickr and New York based blogging platform Tumblr, just to name a few.  But why do companies use these quirky names?


The main reasons are availability and cost, with the two being interrelated.  Nowadays, virtually every business needs a website and every website needs a domain name.  Ever since people could purchase and register domain names, the most popular, recognizable domain names have been scooped up as valuable internet real estate.  For example, the article mentioned that the domain name sold recently for 2.5 million dollars.  Because the popular recognizable domain names are already taken and would cost a lot of money to purchase, startups often will choose a quirky name and purchase the domain name for dirt cheap.

Another reason to have a quirky domain name is to avoid trademark infringement.  Having company names that are too similar may cause confusion and eventually  lead to a lawsuit.  For example, Amy’s Baking Company’s meltdown of “Kitchen Nightmares” has caused angry Americans to mistakenly call ABC Cake Decorating Supplies, a different Arizona business. 


In an interview in the Phoenix New Times with Pattie Durkin, the manager of ABC Cake Decorating Supplies, stated, “It's hard for us because there were some issues with their name and our name when Amy's Baking Company opened, and they assured us it wouldn't be a problem.”  It is interesting to speculate whether the name Amy’s Baking Company, a restaurant and bakery, is confusingly similar to ABC Cake Decorating Supplies.  Perhaps ABC Cake Decorating Supplies would have liked Amy’s Baking Company to pick a different name. 


It is always wise to do a search of registered trademarks at the State and Federal level to ensure that you will not later be sued for trade name or trademark infringement.  For experienced attorneys who handle business litigation and employment matters, contact Richard L. Klauer and schedule an appointment. 



drugs, alcohol, and work


It comes as no surprise that drinking alcohol and using illegal drugs at work constitutes employee misconduct.  Likewise, coming to work under the influence of drugs and alcohol is considered misconduct.  But is it misconduct when you come in to work after a long night of partying?


Generally, an employee cannot be discharged for intoxication off the job, unless it can be shown that a claimant’s off-duty intoxication is connected with work.  But how can off-duty intoxication affect work?  Perhaps an employee comes into work late or calls in sick.    It could also cause an employee to be tired, sluggish, and not able to perform the job as well as needed. 


However, in these cases, an employee will be discharged under the rules governing absences and tardiness, and inefficiency, and not under a specific rule regarding off-duty intoxication.  Under the rules of absences and tardiness, for example, an employee cannot be absent or late for a capricious reason.  Absences or tardiness caused by off-duty intoxication or its after effects are usually considered to be for capricious reasons.  Additionally, inefficiency caused by the off -duty use of intoxicants may be misconduct, and should be treated the same as any other charge of inefficiency caused by actions within the control of the claimant.


For experienced attorneys who handle unemployment issues, contact Richard L. Klauer and schedule an appointment.


Glendale helps small businesses by expiditing permits.


In an effort to make the process easier for small businesses, Glendale has launched a test program aimed at expediting the issuance of small business tenant improvement permits.


According to the Phoenix Business Journal, the new program is intended for small businesses making improvements to structures of 7,000 square feet or less.  However, these permits are not available to medical offices, restaurants, or businesses in historic districts. 

The program’s goal is to grant these permits within 24 hours of being submitted.  This would be an improvement from the eight working days that city officials estimate it currently takes for such permit approvals.


This is just another example of why Arizona is a great place for small business and one of the reasons that many people choose to buy and sell businesses in Arizona. 


For experienced attorneys who handle business and employment law matters, contact Richard L. Klauer and schedule an appointment.   







Arizona is considered by many to be the best state for gun owners. In Arizona, approximately 33% of the population owns a gun.  Arizona does not regulate ammunition or require background checks for private firearm sales.  Arizona is the most recent “Constitutional Carry” state where no permit is required to carry a pistol openly or concealed.  Arizona also has no restrictions on Class 3/NFA weapon ownership beyond the federal laws. 


For those who have gone through the process of getting a Class 3 permit, they know how difficult the process can be.  This has contributed to the increasingly popular gun trust.  By creating a gun trust, people can obtain these restricted weapons without going through all of the red tape. 


The Gun Writer blog lists the following benefits of a gun trust:


Local Sheriff or Chief Law Enforcement Officer (CLEO) Sign Off Not Required – The Bureau of Alcohol, Tobacco, and Firearms (ATF or BATF) mandate that individuals get the approval of the CLEO of the county where you live does not apply to NFA (National Firearms Act) gun trusts. Many local sheriffs refuse to sign off on the purchase for various reasons which makes buying a NFA weapon almost impossible for an individual. A class 3 NFA trust works around that problem.


Fingerprint Cards Not Required – For an individual, the BATF requires two sets of fingerprint cards to go with Form 4 transfers. This requirement doesn’t apply to a NFA gun trust.


Owner Photograph Not Required – An individual is required to provide a photograph with the application.  Again, this doesn’t apply to a gun trust.


Continuity of Ownership – As like most trusts, unless the items in the trust are sold by the trustee, the items belongs to the trust as long as the trust exists. Usually, a trust runs about 70 years. A gun trust can set out the division of property just like a will, but the assets remain legally in the trust for generations.


Continuity, Scope, and Mutuality of Class 3 Weapon Possession – A NFA firearm trust can allow various people to possess and use Class 3 weapons owned by the trust. Multiple trustees can be named who have the authority to possess the trust's assets. Those persons and beneficiaries can be designated at the outset of the trust or added or deleted at a later date. Without a trust, the individual owner, and no one else, can possess or use the Class 3 weapon. There is no requirement to transfer the gun trust assets upon the death or legal incapacity of a trustee or beneficiary. You also avoid the need to file a Form 4 transfer and pay the $200 federal tax.


Confidentiality - The gun trust is not filed with any state or municipal government or other law enforcement entity, except the BATF. If a gun trust buys a NFA Class 3 weapon, a copy of the trust itself must be filed with Form 4. But, your trust and your name only show up on the tax rolls of the BATF. Since it is a tax related filing, it is exempt from most subpoenas and public records requests.


No Filing Fees – Since nothing is filed with any government bureaucracy, there are no filing fees to be paid for someone to copy and file it in a government database.


Insurance – As it stands right now, an NFA Class 3 weapons trust is your best protection to buy and later sell or transfer those weapons as assets for generations to come. What laws that may come in the future will probably not affect a gun trust already in existence.


Protection – Not from criminals, but from the government. A gun trust can be written to insulate your loved ones in case they accidentally possess an NFA weapon that is not registered to them personally.


Speed of Registration - A properly written NFA gun trust can speed up the registration process significantly, and allow you to obtain Class 3 items before new laws take effect.


Background Check Not Required- While most Class 3 dealers do it anyway, there is no requirement of a background check when an NFA gun trust is used.


For experienced attorneys who handle wills and trusts, including gun trusts, contact Richard L. Klauer and schedule an appointment. 





In a recent study, it was revealed that 64% of workers visit non-worker related websites every day during working hours.  When asked about what websites they visit at work, most people said that they spend time checking their personal email, visiting news sites, performing Google searches, monitoring social media and shopping online. 


According to the study, Facebook topped the list being visited by 41 percent of respondents. That is followed by LinkedIn at 37 percent, Yahoo at 31 percent, Google+ at 28 percent and with 25 percent.  Twitter ranked near the bottom at a mere 8 percent. And even though Pinterest has been garnering a lot of media attention lately, only 4 percent of our respondents currently use the service.


It is not surprising that many companies have decided to block these sites.  However, while this deals with the problem of productivity, it does not control the problematic ways that employees use Facebook outside of work.  Many employees have been fired for posting bad things about their company, their co-workers, and their boss.  The Huffington Post’s Fired Over Facebook provides several examples of employees being fired over their Facebook posts. 


Not surprisingly, companies have begun to create social networking policies for their employees.  It is suggested that every company social

networking policy should address the following:


1: A clear company philosophy

2: The definition of "social networking"

3: Identifying oneself as an employee of the company

4: Recommending others

5: Referring to clients, customers, or partners

6: Proprietary or confidential information

7: Terms of Service

8: Copyright and other legal issues

9: Productivity impact

10: Disciplinary action


This sample social networking policy provides an idea of what a social networking policy looks like.  For experienced attorneys who handle employment law matters, contact Richard L. Klauer and schedule an appointment today.    


unemployment:  Are you able and available to work?


In order to receive unemployment benefits for a particular week, one must be able to work, and be available to work.   


Availability for work is defined as the readiness of a claimant to accept suitable work when offered.  To fulfill this requirement all the following criteria must be met. 


  •  He must be accessible to a labor market
  • He must be ready to work on a full-time basis
  • His personal circumstances must leave him free to accept and undertake some form of full-time work.
  • He must be actively seeking work or following a course of action reasonably designed to result in his prompt reemployment in full-time work

These rules are designed to ensure that the claimant is genuinely and regularly attached to the labor market.  The idea is simple, if you were offered full-time employment and could not accept it, then you could not claim unemployment benefits for that week.

A claimant’s eligibility is not impaired when he is physically unable to work, or engaged in activities which would prevent his working, provided that:


  • The period involved is not more than one full calendar day, and
  • The inability or activities do not reduce or jeopardize his opportunities for employment
  • .

Only the working days in the claimant’s customary occupation are to

be considered in applying the one day’s inability to work or unavailability for work.  For example, if the customary work days in the claimant’s field of work are Monday through Friday, then it is okay if the claimant is unavailable to work on Saturday or Sunday.  However, if in the claimant’s field of work the customary working days are on the weekends, then the claimant would have to be able and available on Saturday and Sunday.   One day is defined to mean a normal work shift.


Whether a claimant’s activities have reduced or jeopardized his employment opportunities must be determined objectively and in retrospect.  For example, under any of the following situations, a claimant’s activities on the day in question may have reduced or jeopardized his employment opportunities:


  • The claimant refused a job referral;
  • The claimant failed to comply with his union registration or referral regulations;
  • The Job Service or claimant’s union tried to contact the claimant for possible referral, but was unable to do so.

For experienced attorneys who handle issues with unemployment claims, call Richard L. Klauer and schedule an appointment. 







Do you feel like your boss is playing favorites by sticking you with the tough assignments instead of evenly distributing them among your co-workers?  While this might be frustrating, does it give you “good cause” to quit?   


A worker who leaves because of dissatisfaction with working conditions must show that one or more of the conditions are substantially below those prevailing in the area for similar work.  Mere dislike, distaste, or inconvenience created by small variations in working conditions will not establish good cause for leaving work.  But what about when your boss gives you all the hard work?

An employer may reasonably alter or add to the job duties of an employee from time to time.  Unless these changes render the work unsuitable, this is not a good cause for leaving.  Additionally, it is not good cause for leaving if an employer gives more work to one similarly situated employee than another.  However, if the work is unreasonably difficult or the assignment of the work was made on a discriminatory basis, then an employee may leave with good cause. 


It is important how the employment relationship is ended because an employee who leaves his or her job with “good cause” may receive unemployment benefits.  However, if the court determines that the employee left without good cause, he or she will not be eligible for unemployment benefits.  If an employee has already collected unemployment benefits, and it is later discovered that the employee was not eligible for unemployment, he or she may be liable for overpayment. 


Before making the decision to leave your job due to the appropriation of work, contact Richard L. Klauer and schedule an appointment to discuss the best course of action for you.








For many people, whether or not they enjoy going to work depends on their relationship with their boss.  A positive relationship can make work fun and enjoyable, whereas a poor relationship can lead to arguments, displeasure, and a desire to quit.  But does this strained relationship with your boss give you good cause to quit?


A worker who leaves because of inharmonious relations with a supervisor leaves with good cause if he has established that the conditions were so unpleasant that remaining at work would create an intolerable work situation for him.  In determining whether a situation is intolerable, the following factors should be considered:


  • Would continued employment create a severe nervous strain or result in a physical altercation with the supervisor?
  • Was the worker subjected to extreme verbal abuse or profanity? 


It is important to note that what is considered extreme verbal abuse or profanity varies in different types of work.  For example, verbal abuse or profanity at a front desk job at a five-star resort would be judged in a different context from the same verbal abuse or profanity at a bar.


However, before a good cause for leaving can be established, a worker usually must have attempted to resolve his grievance.  In other words, if an employee leaves without giving the employer an opportunity to fix the problem, his quitting might not be for good cause.  By leaving without good cause, an employee will not be entitled to unemployment benefits.   


For experienced attorneys who handle employment law matters, contact Richard L. Klauer and schedule an appointment.







Many workers do not realize the consequences of living a public life on Facebook.  Before hiring new employees, many employers search through an applicant’s Facebook account to look at status updates, wall posts, photos, and friends. 

According to an interesting study, almost half of employers have rejected a potential worker after finding incriminating material on their Facebook pages.  The research revealed the following:

  • 10% of applicants were rejected for talking about drinking and drugs online;
  • 13% of applicants were rejected for making racist comments;
  • 9% of applicants were rejected for racy photos; and
  • 38% of applicants were rejected because their qualifications of their resume did not match the qualifications listed on their Facebook page. 

While many probably expected applicants being disqualified because inappropriate comments and pictures, it was surprising to learn that so many applicants misled employers about their qualifications. 

For employers, a quick look through an applicant’s Facebook is an easy and affordable way to get a better picture of a potential employee.  For applicants, it is recommended to be mindful of the fact that Facebook is an indirect way of communicating information about yourself to potential employers.  If an employer visited your Facebook right now, would they happy with what they see? 

For this reason, it is recommended that applicants follow these guidelines:

  •  Take advantage of the opportunity to convey a professional image and highlight your qualifications.  You can do this by selecting a professional photograph as your default picture and listing your qualifications such as your work experience.  However, be sure that the information is consistent with the information of your resume.
  • Remove all inappropriate pictures and comments from your Facebook.  Consider disabling your “wall” to avoid inappropriate comments posted by your friends.  Keep appropriate and positive status updates, or better yet, do not post any status updates.  Make sure that your friends do not “tag” you in any photos you do not want representing you. 
  • Choose your friends wisely. Remember that employers will not only look at you, but your friends as well.  If you have friends with inappropriate content on their Facebook page, consider removing them.

As small business owners, do you use social media to investigate your applicants?  If so, what have you discovered about your applicants that disqualified them? 

For your business and employment law matters, contact Richard L. Klauer and schedule an appointment. 






It is not uncommon every now and then for an employee to show up a little late for work.  But at what point does tardiness constitute employee misconduct? 


Showing up to work on time is either an expressed or implied condition of employment.  Late arrival due to an unavoidable delay in transportation, emergency situations, or causes not within the claimant’s control is not misconduct.  Unnecessary delay in arrival beyond the time that the worker should have been able to get to work after considering his reason for delay may constitute misconduct. 


In addition, an isolated instance of tardiness usually does not constitute misconduct.  We are all probably guilty of being late at least once.  However, misconduct can be found in repetition of tardiness caused the worker’s failure to exercise due care for punctuality.  In addition, employees who have in certain positions are sometimes held to a higher standard.  For example, when an employee has special responsibilities such as opening an establishment, furnishing power and heat for others and the like, his failure to exercise a high degree of concern for punctuality may amount to misconduct. 


For experienced attorneys who handle employment law matters, contact Richard L. Klauer and schedule an appointment today. 





How to select a good tenant


Unfortunately for landlords, there are tenants who make a habit out of taking advantage of unsuspecting landlords.  Tenants who do not pay rent and refuse to leave, know how to drag out the eviction process.  Usually, after not receiving rent for several months, a landlord will seek the help of an attorney and finally get the tenant evicted.  There are very specific rules and requirements that must be followed to successfully and properly evict a tenant.  Often times, a landlord will try to start the eviction process without following all of the proper procedures.  As a result, when an attorney is called to help, the process starts from the beginning.  This is why it is best to contact an attorney as soon as possible. 


At this point, the landlord will have legal bills and months of lost rent.  Although an attorney may be able to obtain a judgment against the tenant, many tenants do a good job of making sure it is not collectable.  The tenant will repeat the process with another landlord.  The landlord is left to think, “What did I do wrong and how can I prevent this from happening again?” 


When selecting a tenant, it is important to do your homework.  A landlord should run a credit check on each prospective tenant. It is also wise to ask the prospective tenant for the contact information of their previous landlord.  You should contact their prior landlord and ask them if the tenant paid their rent and left the premises in good shape.  This will give you a good idea of what type of tenant you are getting.  It is also a good idea to contact their current employer and ask how long they have been working there.  Stable employment indicates that the person is likely to pay their rent.  Additionally, you can ask a prospective tenant for a copy of their bank statement to see if they keep money in their bank account.  Tenants who take advantage of landlords will often keep very little money in their account in order to protect their assets against garnishments. 


For experienced attorneys who handle real estate and property matters, contact Richard L. Klauer and schedule an appointment.   




Arizona exports jump, confirming Status

as One of the best states to start a business.


Recently, Arizona was ranked as the 8th best state to start a business.  A recent article by Mike Sunnucks from the Phoenix Business Journal reported that Arizona exports totaled $9.4 billion dollars for the first half of 2013.  According to the article, that is up from $9.2 billion for the first two quarters of 2012 and the best exports showing for the state since the recession bottomed out trade in 2009.   

Part of that jump can be attributed to the increase of the number of exports to both Mexico and Canada, which are higher than they have been for the past five years.  Additionally, as the biggest producer of copper in the United States, Arizona has experienced a significant rise in its copper exports.  It is interesting to see the percentage of increase in relation to other states in the U.S.  For example, the United States as a whole saw its exports increase by 1%.  However, Arizona more than doubled the national average as its exports increased by 2.1%.  In comparison, Texas’s exports increased by 2.2% and California’s exports decreased by 1.2%. 

This information confirms that Arizona is still one of the best states to start a business.  Of course, if you are looking to purchase a business in Arizona, make sure you read our article about buying and selling businesses in Arizona.  Additionally, if you are a foreign investor looking to gain citizenship, learn how the EB-5 visa program can help. 

About Richard L. Klauer

Richard L. Klauer is a small law firm consisting of two attorneys and a supporting staff.  Our practice areas include business litigation and employment law.  We can assist you with all aspects of your business. Our practice represents a wide variety of clients from large corporations to government agencies to sole proprietors. We are here to educate and guide our clients in corporate and business matters such as formation and incorporation, drafting of business agreements, employment policies, contract disputes, corporate reorganization, fraud, and breach of fiduciary duty. 




Special Needs Trust:  What is a Special needs trust and why is it important?


A Special Needs Trust is a way to provide benefits, assets or inheritance to a disabled beneficiary without risking his or her eligibility for public assistance.  Families with a disabled or special needs loved one often rely on government benefits such as Medicare, AHCCS, ALTCS, and SSI.  These public benefits can be so expensive when paid for privately making them virtually inaccessible.  In order to remain eligible for these benefits, disabled or special needs individuals cannot have more than $2,000.  Therefore, if a disabled beneficiary receives an inheritance directly, it can oftentimes do more harm than good.


By creating a Special Needs Trust, benefits can be passed on to a disabled beneficiary without interfering with his or her public benefits.  A Special Needs Trust must be drafted carefully and include precise language in order effectively protect the disabled beneficiary.  The trust must provide that the beneficiary cannot have control of the trust, and the trust must only be used for non-essentials.  When drafting the trust, it is essential to set forth guidelines to include language that prohibits the trust from being used in any way that overlaps with the disabled beneficiary’s public assistance.


For experienced attorneys who draft Special Needs Trust and can educate you on how to properly manage and administer the trust, contact Richard L. Klauer and schedule an appointment.    



Did You quit your job because of transportation issues?


When a worker quits because of transportation difficulties, it must be determined whether the worker left with or without good cause.   This is usually determined by determining who is responsible for creating the unreasonable commuting distance.  Generally, if a worker elects to relocate his residence beyond a reasonable commuting distance, the worker does not have good cause to quit because of the long commute.  However, if the employer moves the work premise beyond a reasonable commuting distance, the worker can quit with good cause.

To determine whether an employee quit with good cause, the court will consider the following factors:


  • -Availability of transportation, both public and private;
  • -Time, distance, and cost of travel in relation to wages paid;
  • -Customary practice of workers in claimant’s locality;
  • -Customary practice in worker’s trade;
  • -Worker’s past pattern of transportation;
  • -Relocation of work site;
  • -Adverse effect of travel on claimant’s health;
  • -Prospects of obtaining other work without serious transportation problems.

But what is a “beyond reasonable” in terms of commuting distance?  Usually, this is considered on a case by case basis.  However, it is presumed unreasonable when the worker resides more than 30 miles from work, has a one way commuting time of more than 1½ hours, or has commuting expenses equal to 15% or more of a claimant’s gross wage, unless such expenses are customary for workers residing in the same area. 


For experienced attorneys who handle unemployment cases, contact Richard L. Klauer and schedule and appointment. 





Amy's Baking Companay: Employee Contract


Much has been written about our local Amy’s Baking Company (ABC) after its infamous appearance on “Kitchen Nightmares.”  Most recently, a copy of ABC’s employee contract has been obtained prompting some to declare the employee rules “some of the strictest we’ve ever seen.”  The contract provides in part:


  1. 1.  Any type of attitude will result in immediate termination.
  2. 2.  No visiting or unnecessary talking during shifts
  3. 3.  The cost of broken plates or
  4. burned food will be taken from employee's paychecks if they're found negligent.
  5. 4.  Tips are the “property of the house," and don't go to the wait staff. 
  6. 5.  Employees must agree not to work for a competitor within 50 miles of the restaurant for a full year after they leave, or to open a similar business in the same radius. 
  7. 6.  Holidays and weekends are "mandatory," and any no show will result in a $250 fine.


There are several interesting legal issues with this contract.  To start, the contract states that “any” type of attitude will result in an immediate termination.  But can an employee really be fired for “any” type of attitude?  Arizona is what is called an at-will employment state which means that both the employer and the employee can elect to end their employment relationship with each other at any time and for no reason, so long as their contract does not say otherwise and so long as the reason is not discriminatory.  However, depending on whether or not the attitude constitutes misconduct, the employer might be on hook for unemployment. 

According to the Department of Economic Security (DES), an employee’s attitude constitutes misconduct if it adversely affects or could adversely affect the employer’s business interest.  This means that the employer would have to prove that the attitude was not merely personal, but adversely affected the employer’s business interest.  If this is not shown, the termination will be considered to be without good cause, and the employee will be able to collect unemployment benefits.   


Additionally, the contract provides that tips are the “property of the house.”  In the episode of “Kitchen Nightmares,” many were shocked to discover that all the tips go straight to the owners Amy and Sam.  The Fair Labor Standards Act states that tips are the property of the employees and can be pooled among eligible employees, but cannot be taken by the owners.  It looks like Amy and Sam might be violating federal law! 


The contract also has a non-compete clause that restricts employees from working for a competitor within 50 miles of the restaurant for a full year after they leave, or to open a similar business in the area.  The question is whether an Arizona court would even enforce this provision.  In order for a court to enforce a non-compete agreement in Arizona, an employer must establish that the agreement is necessary to protect a legitimate interest, and that its restrictions are reasonable.

The first problem with this provision is it restricts employees from working for “any” competitor, which is extremely vague.  Who is a competitor?    It is one thing to restrict a Pepsi employee to from working for Coke, but is it really reasonable to prevent an Amy’s Baking Company employee from working at any other bakery/restaurant in the Phoenix area?  Probably not.  This clause would likely not be enforced. 


About Richard L. Klauer


Richard L. Klauer is a small law firm consisting of two attorneys and a supporting staff.  Our practice areas include business litigation and employment law.  We can assist you with all aspects of your business. Our practice represents a wide variety of clients from large corporations to government agencies to sole proprietors. We are here to educate and guide our clients in corporate and business matters such as formation and incorporation, drafting of business agreements, employment policies, contract disputes, corporate reorganization, fraud, and breach of fiduciary duty. 




Is Your property management company being audited?


Have you received a notice from the Arizona Department of Real Estate that your property management company is being audited?  Typically this notice will be given at least two weeks in advance, giving you time to get your records in order.   In the article “ADRE Audits & Property Management,” Mike Denious provided the following checklist of the typical items that should be made available to the auditor. 


  • All property management agreements;
  • All non-residential leases and transaction files (if any);
  • All closed sale and lease transaction files ;
  • Chronological log, if applicable;
  • Bank statements and canceled (or bank provided) items for business
  • All trust account records; including but not limited to:
    • Bank statements, cancelled or imaged checks, monthly bank reconciliation reports, voided checks, copies of deposit slips, receipts and disbursement journals, client ledgers, copies of bank signature cards, and the next – unused/blank – check.
  • Real Estate licenses and employment records;
  • Broker supervision & Control Policy Manual.


In addition, the ADRE Auditor will need to retain the following items:


  • A property management agreement or sample form;
  • The most recent bank statement on each trust account;
  • The most recent reconciliation reports on each trust account;
  • The next –unused/blank – check on each trust account. 

It is best to start getting your records together early to determine whether you are at risk and to identify your liabilities.  For advice on property management regulations, please contact Richard L. Klauer and schedule and appointment.  Additionally, for frequently asked questions about this process, visit the Auditing Division of Arizona Department of Real Estate.





Unemployed? What's your next step?


A recent article in the Atlantic reported on a study that found that employers consider how long an applicant has been out of work over industry experience and applicants who have not moved between jobs much.  Indeed, it is critical to find another job as soon as possible.  But where do you start?


You can start by taking advantage of local job training resources like Goodwill of Central Arizona or Maricopa Workforce Connection.  Both of these organizations offer tremendous job search support.  For example, Goodwill offers a two-week training program developed specifically to develop the skills that employers are looking for such as communication, organization, customer service, judgment, and computer skills.  There are also specialized job training programs targeted at helping disabled job searchers, senior job searchers, and youth.


In fact, in a recent Back to Work 50+ program put on by the AARP, attendee Debbie Ahrlich, attempting to re-enter the workforce at 54, got help updating her resume and creating something she had never of before, a “30-second elevator speech.”  She was instructed to memorize this in order to impress a potential employer in case they shared an elevator ride. 


At Maricopa Workforce Connection, job searchers can take advantage of their services, such as resume development and review, career counseling, job readiness workshops, labor market information, extensive resource library, and skill and aptitude assessments.  For some people, simply stressing certain skills that were honed through volunteering or a hobby could be all it takes. 


Indeed, it is crucial to take advantage of this time to prepare for the next step.  For experienced attorneys who handle employment law matters, contact Richard L. Klauer and schedule an appointment. 





Arizona worker's compensation: How Much Are Your Limbs Worth?


Employees who are injured in the course of employment may be entitled to worker’s compensation.  The exact amount of compensation is based on an employee’s monthly salary and the type of injury sustained. 


According to the U.S. Bureau of Labor Statistics, employees in the Phoenix area make an average of $44,950 a year.  This amounts to about $3, 746.83 per month.  The next step in computing the amount of compensation is to determine the exact injury suffered.  Arizona statutes list specific injuries and the corresponding compensation in terms of months of a percentage of an employee’s monthly salary.  For permanent partial injuries, employees can collect 55% of their monthly salary for the specified number of months.  Arizona statutes provide:


  • For the loss of a thumb, fifteen months.
  • For the loss of a first finger, commonly called the index finger, nine months.
  • For the loss of a great toe, seven months.
  • For the loss of a foot, forty months.
  • For the loss of a leg, fifty months.
  • For the loss of an eye by enucleation, thirty months.

Many people are shocked to discover the true value of their limbs.  For an example, if an employee, who makes an average salary in Phoenix, loses his thumb at work, he will collect 55% of his salary for 15-months.  This equates to about $2,060.76 a month for a total of $30,0911.35.  However, for an index finger, an employee will only recover a total of $18, 546.84.  For a more serious injury like the loss of a leg, an employee could recover a total of $103,038.00.  What do you think?  Is that fair compensation for you?


An injury at work is a very serious matter and it is important to contact an attorney who understands and can advocate for your rights.  For experienced attorneys who handle employment law and personal injury matters, contact Richard L. Klauer and schedule an appointment.




buying and selling businesses in az


In a study published in a recent article, Arizona was ranked as the 8th overall best state for starting a business.  The study measured five aspects of policy including exports and international trade, entrepreneurship and innovation, business climate, talent pipeline, and infrastructure.  According to the study, Arizona ranked high in Innovation and Entrepreneurship, Business Climate, and Infrastructure.


 However, before buying or selling a business in Arizona, you should consult with an attorney who has experience with these types of transactions.  In Arizona, most business brokers are concerned with closing the deal and getting their commission.  They typically use standard purchase/sale forms that do not provide you with adequate protection.  They fail to adequately investigate the information that you need to know.  Who am I dealing with? What is their track record? Why is the owner selling his business?  What do the financial statements really indicate?  What am I really purchasing?  How do I protect my personal assets?  What liabilities will I assume?  Do we have a covenant not to compete in place? Is there anything the seller isn’t telling us?  And for the seller, is there a non-disclosure agreement in place to prevent the use and disclosure of confidential information?  These are all things that an experienced attorney can help you with.


Another benefit of investing in Arizona is that it can be used as a springboard for gaining U.S. Citizenship.  Under the EB-5 visa program, a person can get on the path for U.S. Citizenship by either creating a new business or buying an existing one.  This citizenship can extend to your spouse and your unmarried children.  Typically, the investment must be somewhere between $500,000 to $1,000,000 and it must create at least 10 full time jobs.


For more details on investor visas, contact the law Office of Richard L. Klauer to speak with an experienced attorney who can help you through the process of buying or creating a business. 



How does the supreme courts rulings on doma and prop 8 affect you?


Recently, the Supreme Court issued its ruling on two same sex marriage cases concerning the Defense of Marriage Act (DOMA) and California’s Proposition 8. 


In one case, two females entered into a lawful same-sex marriage in New York.  A problem arose when one died and transferred her estate to her partner.  In a traditional marriage, the transfer of an estate to a surviving spouse is not subject to federal income tax.   States have the right to define marriage as they please, but in 1996, DOMA declared “for federal tax purposes, a marriage means only a legal union between a man and a woman as husband and wife, and the word ‘spouse’ means a person of the opposite sex who is a husband or a wife.”  The purpose of DOMA was to ensure a uniform federal tax policy.


The issue before the Supreme Court was whether DOMA infringed upon a state’s right to define marriage.  In a 5-4 opinion, the Court held that DOMA is unconstitutional because it deprived individuals of equal protection under the Fifth Amendment.  The opinion stated, “DOMA’s principal effect is to identify and make unequal a subset of state-sanctioned marriages.”  In other words, the DOMA did not equally recognize state definitions of marriage.     


So what does all of this mean?  The ruling represents a win for state’s rights by holding that the federal government must respect each individual state’s definition of marriage.  However, Arizona does not recognize same-sex marriages, so this ruling does not affect anyone in Arizona now.  However, if Arizona does recognize same-sex marriages sometime in the future, the federal government would have to respect this definition of marriage and would not be able to collect federal income taxes on estate transfers between same-sex spouses. 


However, the Court’s ruling on Proposition 8 is much narrower in scope than the ruling regarding DOMA.  The Supreme Court merely stated that the group did not have the legal right to step in and defend the lawsuit when California government officials declined to do so.  The Court’s decision upholds the federal district courts ruling that Proposition 8 was unconstitutional and makes same-sex marriages legal again in California.    



Disclaimers in emails


Email disclaimers, those wordy notices at the end of emails from lawyers, bankers, analysts, consultants, publicists, tax advisers and even government employees, have become ubiquitous—so much so that many recipients, and even senders, are questioning their purpose.


We have all received emails with disclaimer signatures, like "This email was intended for the recipients only" or "Our company accepts no liability for this email's content.”  Not only are these not legally enforceable but few people even read them.  For example, James Sinclair, 28, who recently graduated from law school and opened his own civil practice, wrote a 636-word satirical one for the humor website McSweeney's.


Part of that version appears at the end of emails he sends.

"IMPORTANT DISCLAIMER: This email does not create an attorney-client relationship. Probably. If it does, it will have said it does…because the law is tricky like that," the disclaimer begins. "The sender also concedes that he is very, very stupid, and obviously should not be operating an electronic-mail machine without supervision."

Most people, he said, haven't noticed.


However, many practitioners are required by regulations to include these types of disclaimers in their emails.  For example, the new rules under IRS Circular 230 require tax practitioners to add certain standard language to many of our letters, memos, e-mails, and other correspondence concerning federal tax matters. 


You have probably already seen similar language on written communications from your own professional legal or tax advisers. Although the specific wording may vary depending on the circumstances, you can expect to see notices similar to the following:

IRS CIRCULAR 230 NOTICE: To the extent that this message or any attachment concerns tax matters, it is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law.

The new rules require such notices to be "prominently disclosed," i.e., "readily apparent" to the reader. The notice must be in a separate section (but not in a footnote) of the correspondence. Also, "fine-print" notices won't work. The typeface used must be at least the same size as the typeface used in any discussion of facts or law.

A practitioner who fails to satisfy the requirement of the new rules risks censure, disbarment and substantial penalties




Good Contracts Make Good Partners


Every year, tourists flock to the Grand Canyon for a chance to see its stunning views.  Perhaps no view is better than from the vantage point of the Skywalk, a horseshoe-shaped walkway with a glass-bottom that protrudes 70 feet over the edge of the Grand Canyon and hovers over 4,000 feet above the Colorado River.

The Skywalk was developed by David Jin, who recently passed away after a four-year battle with cancer.  Mr. Jin began construction of the Skywalk in 2003 and finished in 2007 at an estimated cost of $30 million.  In exchange for completing the project, Jin’s company, Grand Canyon Skywalk Development, was to receive management fees and half of the Skywalk’s revenue in order to recoup his $30 million dollar investment and eventually turn a profit.  However, in 2008 the Hualapai Tribal Council issued a stop work order and demanded that Mr. Jin sign a new management agreement.  Mr. Jin refused to sign, and since then he has not received any money.


In 2012, Mr. Jin went to arbitration and was awarded $28.5 million. The arbitrator also demanded that the tribe pay him his management fees from 2008 through 2011.  To this date, the Hualapai Tribe has not paid a dime. 


Unfortunately for Mr. Jin, he spent the last several years litigating this matter, before eventually passing away a few weeks ago.  This serves as a reminder of the importance of good contracts in creating positive and lasting agreements.


For legal assistance in drafting or reviewing agreements or contracts, please call Richard L. Klauer to schedule an appointment. 


Age Discrimination

According to federal and state law, it is illegal to discriminate against an employee based on his or her age.  However, sometimes it is difficult to distinguish between a lawful termination versus an unlawful termination based on age.


In order to prove a case of age discrimination, the plaintiff employee must show that he or she (1) belongs to the protected class; (2) was qualified for his or her position; (3) was terminated, and (4) was replaced by a younger person.   Under federal and state law, people 40 years old or older are a protected class.


After the plaintiff has established those elements, the defendant employer then has the burden of presenting evidence that the plaintiff's discharge was the result [10] of some legitimate, nondiscriminatory reason.  If the defendant can show this, the burden shifts back to the plaintiff to prove that the reasons offered by the employer for the discharge were merely a pretext for discrimination.

However, it is often difficult to prove that an employer’s action or policy discriminates based on age.  For example, in Arizona, three teachers filed a claim for age-discrimination when their school’s policy stipulated that teachers who reached the age of 65 would receive a decrease in pay.  However, because this was part of a retirement incentive plan aimed at dealing with the budget cuts, the court held this was not age discrimination. 


Furthermore, Arizona law expressly provides that there is no unlawful age discrimination where the employer's action is based on a reasonable factor other than age.  Rather, the employee must prove that age was a determinative factor in his or her termination.  

If you feel that you are a victim of age discrimination, call employment law attorneys Richard L. Klauer to schedule an appointment to discuss your case. 



My Dog Bit You!


Dog bites can be scary, painful, and result in expensive medical bills, permanent scaring, and in extreme cases, death. 


Some state courts apply what is called “The One Free Bite Rule.”  Under this rule, the owner is not liable for injuries caused by a dog bite so long as the owner had no reason to believe that the dog was dangerous.  In other words, if an owner had a friendly dog that showed no dangerous propensity, it would be allowed one free bite.  However, once a dog has bitten someone, the owner is then put on notice that his dog has a dangerous propensity, and the next bite is not free. 


However, in Arizona, dog owners are held strictly liable for the injuries caused by their dogs.  This means that if a dog owner has a friendly dog with no history of dangerousness, and for some reason the dog bites someone, the owner will be held liable for the injuries it caused.  This could include past, present, and future medical bills, lost wages, and pain and suffering.


However, dog owners have some protection when their dog bites somebody unlawfully on their property like a trespasser.  A.R.S. 11-1025 states:


“The owner of a dog which bites a person when the person is in or on a public place or lawfully in or on a private place, including the property of the owner of the dog, is liable for damages suffered by the person bitten, regardless of the former viciousness of the dog or the owner's knowledge of its viciousness.”


In addition, dog owners can avoid liability if they can prove the dog bite occurred because the victim provoked the dog.  A.R.S. 11-1027 provides:    


“Proof of provocation of the attack by the person injured shall be a defense to the action for damages. The issue of provocation shall be determined by whether a reasonable person would expect that the conduct or circumstances would be likely to provoke a dog.


The best thing dog owners can do is to make sure that their dogs are well trained and well socialized.  The price of quality dog training is trivial compared to the potential liability of your dog harming another person or even a family member. 

If you have an aggressive dog, it is not too late to find a trainer to help you resolve these issues.  It is always better to call a trainer before, not after, an incident occurs. 


The Law Offices of Richard L. Klauer have experience in handling dog bite cases.  Please call Richard L. Klauer and schedule an appointment to review your dog bite case. 





Do you have a senior discount?


There are senior discounts almost everywhere you go these days.  From restaurants, to movies, to retailers, people over 65 (or younger) are usually offered special discounts.  But do these discounts amount to discrimination based on age?

In Kahn v. Thompson, a Tucson man filed two age discrimination complaints. The first alleged unlawful discrimination by a city tennis facility in charging adults over 18 and under 60 years old fees of $ 1.50 while charging seniors and juniors only $ 1.00. The second complaint alleged that grocery store discriminated by offering a 10% discount every Tuesday to customers age 60 and over.

When the City of Tucson’s Civil Division declined to pursue the claims, Kahn filed a suit against the City. The purpose of the ordinance was to eliminate "prejudice and discrimination" in places of public accommodation, employment and housing. The subsection prohibiting discrimination in public places provided that no "facility or service shall be refused or restricted because of race, color, religion, ancestry, sex, age, physical handicap, national origin, sexual or affectional preference, or marital status," nor shall these factors result in any person being "unwelcome, objectionable, unacceptable, undesirable or not solicited."

To determine whether the ordinance was discriminatory, the court applied the rational-basis test, the lowest form of judicial scrutiny.  Under the rational-basis test, the proponent of a law only needs to prove that the law, on its face, could be rationally related to a legitimate public interest.  If it passes this test, the law is said to be non-discriminatory. 

When applying this test, the court reasoned that providing discounts to children and the elderly was rationally related to the legitimate public policy of encouraging and enabling citizens who have a diminished earning capacity to enjoy life and the benefits of society.

Indeed, our society has long maintained, and even institutionalized, traditions of providing benefits to older citizens.  This is seen our tax system, social security system, and housing laws to name a few.   Therefore, the court concluded that the age-based discounts complained of by Kahn had a sufficiently rational basis and therefore did not deny Kahn the equal protection of the laws.

If you have any employment law questions or feel you are being discriminated against because of your age, call employment law attorneys Richard L. Klauer to schedule an appointment. 



Few insurers join obamacare exchange


According to an article by Politico, few insurers have opted to join the new Small Business Health Option Program exchanges to sell their plans.  In fact, in some states, just one insurer has signed up.  The purpose of the SHOP exchanges was to create competition between insurers to provide more options for small businesses and drive down prices.  However, some health law advocates believe administration health officials have put a greater emphasis on setting up the individual exchanges, where they hope premium tax credits will be a big draw for millions to sign up for coverage next year, and less on the small business exchanges.  For example, in Washington state, just one insurer will sell plans to small businesses in 2014, whereas nine signed up for the state’s individual exchange.


Under the Affordable Care Act (also known as “Obamacare”), businesses with 50 or less employees will have the option to purchase insurance with no penalties if they elect not to.  However, businesses with 25 or less employees will have the option to purchase insurance and will receive tax benefits if they do. 


For legal questions regarding your small business, contact Richard L. Klauer and schedule an appointment. 




Dangers of Abusive Tax Shelters


Abusive tax schemes cost the state of Arizona several million dollars each year. The Department of Revenue has taken an aggressive approach against not only big corporations, but small businesses that are using abusive tax shelters.  Investing in an abusive tax shelter can lead to severe penalties.  If your return is examined by the IRS and a tax deficiency is determined, you may be faced with payment of more tax, interest on the underpayment, possibly a 20%, 30%, or even 40% accuracy-related penalty, or a 75% civil fraud penalty. 


To determine whether an offering is an abusive tax shelter, the IRS recommends asking the following questions, which might provide a clue to the abusive nature of the plan:  


  • -Do the tax benefits far outweigh the economic benefits?


  • -Is this a transaction you would seriously consider, apart from the tax benefits, if you hoped to make a profit?


  • -Do shelter assets really exist and, if so, are they insured for less than their purchase price?


  • -Is there a nontax justification for the way profits and losses are allocated to partners?


  • -Do the facts and supporting documents make economic sense? In that connection, are there sales and resales of the tax shelter property at ever increasing prices?


  • -Does the investment plan involve a gimmick, device, or sham to hide the economic reality of the transaction?


  • -Does the promoter offer to backdate documents after the close of the year? Are you instructed to backdate checks covering your investment?


  • -Is your debt a real debt or are you assured by the promoter that you will never have to pay it?


  • -Does this transaction involve laundering United States source income through foreign corporations incorporated in a tax haven and owned by United States shareholders?


In an effort to curb abusive tax shelters, the Treasury Department and the Internal Revenue Service have issued final regulations under IRS Circular 230 which aim to restore, promote, and maintain the public’s confidence in those individuals and firms who act as tax advisors.  The IRS Circular 230 limits those who can legally give tax advice and requires practitioners to follow certain procedural rules in giving the advice.    


For legal advice for your small business, contact Richard L. Klauer and schedule an appointment. 




Amy's baking company may be In VIOLATION of the fair Labor Standard Act


Baking DesertsMany have heard about the infamous Kitchen Nightmares episode of our Local Amy’s Baking Company located in Scottsdale, AZ.  For the first time ever, Chef Ramsay was forced to walk out after realizing that he was in over his head and the dysfunction of the restaurant was beyond repair.


During the episode, many were shocked to discover that the waiters were paid hourly and all of their tips went straight to the owner.  While most agree that this is no way to treat an employee, does it go so far as to be illegal?


According to a spokesman from the Department of Labor, “regulations make clear that under the Fair Labor Standards Act tips are the property of the employee whether or not the employer has taken a tip credit.”  The language of the regulation states specifically, “employees must be allowed to retain all tips (individually or through a pooling arrangement and regardless of whether or not the employer elects to take credit for tips received.” 

The Department of Labor would not comment on whether or not it is investigating these allegations.


For Attorneys that handle employment law cases, contact Richard L. Klauer and schedule an appointment



Real Estate Records Scam


Graphic of real estate scam

There is a scam letter being sent out that you need to be aware of.  It comes in an official looking envelope that leads you to believe the sender is a governement agency.  It appears to be a bill for $89.00.  The sender is "local records office" located in phoenix, arizona.

my concern about this "service" for $89.00 is that you can get the same real estate document for free from the county recorder.  The recorded document that they mention in their letter is the deed or deed of trust that was recently recorded concerning your property.  the "deed" is your title to your property.  save your money and don't respond to this rip-off!


the county recorder has copies of all deeds available on-line, for free.  this is a public service that anyone can use.  You can usually search for your property records by name on your local county recorders office website.  There is no need to pay anyone $89.00 for a public record.


richard l. klauer, attorney at law