Social Security Benefits to Increase in 2019

man and woman on balcony outside smiling Each year we announce the annual cost-of-living adjustment (COLA). Usually there is an increase in the Social Security and Supplemental Security Income (SSI) benefit amount people receive each month, starting the following January. By law, federal benefits increase when the cost of living rises, as measured by the Department of Labor’s Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

The CPI-W rises when prices increase for the things the average consumer buys. This means that when prices for goods and services we purchase become more expensive, on average, the COLA increases monthly benefit levels and helps you keep up with the changing cost of living.

As a result, more than 67 million Americans will see a 2.8 percent increase in their Social Security and SSI benefits in 2019.

January 2019 marks other changes that will happen based on the increase in the national average wage index. For example, the maximum amount of earnings subject to Social Security payroll tax, as well as the retirement earnings test exempt amount, will change in 2019.

Want to know your new benefit amount as soon as possible? In December 2018, we will post Social Security COLA notices online for retirement, survivors, and disability beneficiaries who have a my Social Security account. You will be able to view and save these COLA notices securely via the Message Center inside mySocial Security.

Be the first to know! Sign up for or log in to your personal my Social Security account today and choose email or text under “Message Center Preferences” to receive courtesy notifications so you won’t miss your electronic COLA notice!

This year, you will still receive your COLA notice by mail. In the future, you will be able to choose whether you receive your notice online instead of on paper. Online notices will not be available to representative payees, individuals with foreign mailing addresses, or those who pay higher Medicare premiums due to their income. We plan to expand the availability of COLA notices to additional online customers in the future.

You can find more information about the 2019 COLA here.

Get Ready for Taxes: Learn how the new tax law affects tax returns next year

WASHINGTON –The Internal Revenue Service today advised taxpayers about steps they can take now to ensure smooth processing of their 2018 tax return and avoid surprises when they file next year.

This is the first in a series of reminders to help taxpayers get ready for the upcoming tax filing season. Additionally, the IRS has recently updated a special page on its website with steps to take now for the 2019 tax filing season.

New IRS Publication 5307 helps individuals understand Tax Cuts and Jobs Act

Major tax reform that affects both individuals and businesses was approved by Congress and signed by the President on Dec. 22, 2017. It’s commonly referred to as the Tax Cuts and Jobs Act, or TCJA, or tax reform. Throughout 2018, the IRS has been working closely with partners in the tax return preparation and tax software industries to implement the new law and ensure taxpayers can count on the IRS, tax professionals and tax software programs when it’s time to file their returns. Now there is a new publication that will help taxpayers learn how tax reform affects their taxes. IRS Publication 5307, Tax Reform Basics for Individuals and Families, is now available on IRS.gov/getready. While the Tax Cuts and Jobs Act law includes tax changes for individuals and businesses, this publication breaks down what’s new for the 2018 federal tax return individual taxpayers will be filing in 2019.

This new publication provides important information about:

  • increasing the standard deduction,
  • suspending personal exemptions,
  • increasing the child tax credit,
  • adding a new credit for other dependents and
  • limiting or discontinuing certain deductions.

Taxpayers can access Publication 5307 at IRS.gov/getready, along with other important information about steps taxpayers can take now to ensure smooth processing of their 2018 tax return and avoid surprises when they file next year.

Because of the many changes in the tax law, refunds may be different than prior years for some taxpayers. Some may even owe an unexpected tax bill when they file their 2018 tax return next year. To avoid these kind of surprises, taxpayers should perform a Paycheck Checkup to help determine if they need to adjust their withholding or make estimated or additional tax payments now.

Gather documents

The IRS urges all taxpayers to file a complete and accurate tax return by making sure they have all the needed documents before they file their return, including their 2017 tax return. This includes year-end Forms W-2 from employers, Forms 1099 from banks and other payers, and Forms 1095-A from the Marketplace for those claiming the Premium Tax Credit. Confirm that each employer, bank or other payer has a current mailing address for you. Typically, these forms start arriving by mail in January. Check them over carefully, and if any of the information shown is inaccurate, contact the payer right away for a correction.

To avoid refund delays, taxpayers should avoid using incomplete records and instead wait to file until they have gathered all year-end income documentation. This will minimize the chances they will need to file an amended return later which is extra work for taxpayers and can take up to 16 weeks to process once the IRS receives it.

Taxpayers should keep a copy of any filed tax return and all supporting documents for a minimum of three years. Having your prior year return will make it easier to fill out your 2018 tax return next year. In addition, taxpayers using a software product for the first time may need the Adjusted Gross Income (AGI) amount from their 2017 return to properly e-file their 2018 return. Learn more about verifying identity and electronically signing a return at Validating Your Electronically Filed Tax Return.

For a faster refund, choose e-file

Electronically filing a tax return is the most accurate way to prepare and file. Errors delay refunds and the easiest way to avoid them is to e-file. Using tax preparation software is the best and simplest way to file a complete and accurate tax return. The software guides taxpayers through the process and does all the math. The IRS is working with the tax community to incorporate the tax law changes and form updates. Nearly 90 percent of all returns are electronically filed.

There are several e-file options:

Use Direct Deposit

Combining Direct Deposit with electronic filing is the fastest way for a taxpayer to get their refund. With Direct Deposit, a refund goes directly into a taxpayer’s bank account. There’s no reason to worry about a lost, stolen or undeliverable refund check. This is the same electronic transfer system now used to deposit nearly 98 percent of all Social Security and Veterans Affairs benefits. Nearly four out of five federal tax refunds are Direct Deposited.

Direct Deposit also saves taxpayer dollars. It costs the nation’s taxpayers more than $1 for every paper refund check issued but only a dime for each Direct Deposit.

Renew expiring ITINs

Some people with an Individual Taxpayer Identification Number (ITIN) may need to renew it before the end of the year. Doing so promptly will avoid a refund delay and possible loss of key tax benefits.

Any ITIN not used on a federal tax return in the past three years will expire on Dec. 31, 2018. Similarly, any ITIN with middle digits 73, 74, 75, 76, 77, 81 or 82 will also expire at the end of the year. Anyone with an expiring ITIN who plans to file a return in 2019 will need to renew it using Form W-7.

Once a completed form is filed, it typically takes about seven weeks to receive an ITIN assignment letter from the IRS. But it can take longer — nine to 11 weeks — if an applicant waits until the peak of the filing season to submit this form or sends it from overseas. Taxpayers should take action now to avoid delays.

Taxpayers who fail to renew an ITIN before filing a tax return next year could face a delayed refund and may be ineligible for certain tax credits. For more information, visit the ITIN information page on IRS.gov.

Refunds held for those claiming EITC or ACTC until mid-February

By law, the IRS cannot issue refunds for people claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) before mid-February. The law requires the IRS to hold the entire refund — even the portion not associated with EITC or ACTC. This law change, which took effect at the beginning of 2017, helps ensure that taxpayers receive the refund they’re due by giving the IRS more time to detect and prevent fraud.

As always, the IRS cautions taxpayers not to rely on getting a refund by a certain date, especially when making major purchases or paying bills. Be aware that some returns may require additional review for a variety of reasons and may take longer. For example, the IRS, along with its partners in the state’s and the nation’s tax industry, continue to strengthen security reviews to help protect against identity theft and refund fraud.

Best Practices for Design Patents

By Debby Winters

The first examination to undertake is to understand what a design patent is and how it differs from a utility patent.

U.S. design patents cover the ornamental design of an object having practical utility. The subject matter claimed is the design embodied in or applied to the article and not the article itself.  In other words, the subject matter of a design patent application may relate to the configuration or shape of an article, to the surface ornamentation applied to an article, or to the combination of configuration and surface ornamentation. In contrast to a utility patent that protects the way an article is used and works,  a design patent protects the way an article looks.

I am often asked whether a client should seek a design or a utility patent. While it depends on the invention, a U.S. design patent provides a number of advantages when compared to a U.S. utility patent. First, design patents have a higher allowance rate. Second, design patents have a faster time to final resolution. Finally, design applications are typically less than half the cost of utility applications due to their expedited prosecution and the limited specification required in design patent applications.

The five areas for our discussion on best practices will focus around the following:

  1. Know the Subject Matter Qualifications
  2. Drawing Quality is Key
  3. Figure Views Should be Consistent
  4. Use of Solid vs. Broken (Phantom) Lines
  5. Include Additional Embodiments

We will discuss each in a separate blog post starting with the first so keep reading!

What is the Hatch–Goodlatte Music Modernization Act?

By Debby Winters

The complete name of “the Act” is the Orrin G. Hatch–Bob Goodlatte Music Modernization Act. The intended purpose is to modernize copyright law to account for the digital delivery of content. The bill was signed into law on Oct 11, 2018,  and it aims to revise the Copyright Act (17 U.S.C. § 115) in three major ways. The three titles to the Act will be discussed below.

Title I of the Act -streamlines mechanical royalties for digitally distributed music by allowing streaming services to pay a mechanical licensing collective (“MLC”) for a blanket license to stream copyrighted material. The MLC has a board of directors of 14 voting members and 3 non-voting members, with 10 voting members being representatives of music publishers, while 4 voting members being professional songwriters. The MLC is responsible for a number of activities under the Act, including:

  • the administration of blanket licenses;
  • the collection and distribution of royalties from digital music providers to songwriters and publishers;
  • the identification of copyrighted material embodied in sound recordings, locating the copyright owners of such material, and administration of a process by which copyright owners can claim such ownership; and
  • assisting with setting the royalty rates and terms.

Helpful to copyright holders, the Act provides a mechanism for royalty rates to be raised so that they reflect fair market rates and terms. This allows the rate to account for changes in the market. Helpful to streaming services, the Act protects streaming services from infringement lawsuits for past infringements.

Title II of the Act– attempts to provide owners of pre-1972 sound recordings with copyright protection. Before the Act, pre-1972 sound recordings were not covered under U.S. copyright law. Owners instead needed to rely on state and/or common law for protection. The Act brings pre-1972 sound recordings partially within federal copyright law by (i) providing federal remedies for unauthorized use of pre-1972 sound recordings for 95 or more years after first publication (which time may be extended depending on the year of first publication), (ii) providing a statutory licensing scheme for some digital streaming services, and (iii) providing a means of lawful, fair use of such recordings.

Title III of the Act– provides a means by which music producers can receive a portion of royalties distributed under the statutory license provided under section 114 of the Copyright Act.

What Every Startup Needs To Know: IP Pitfalls- Poorly Written Or No Agreements- Part Nine

By Debby Winters

Using poorly written agreements or no agreements at all can be a disaster for the startup. Not only is the valuation of a startup based on the IP that it owns, but also on the agreements with IP clauses. Examples are not just limited to things you typically think of as IP agreements but can include employment, consulting, funding, collaboration, settlement, licensing, research, and material transfer agreements. Thus, poorly drafted or non-existent IP-related agreements can be problematic for a startup.

Because of a lack of sufficient funding, many startups attempt to save legal expenses by using template IP-related agreements from a variety of non-professional sources, including the internet. However, such agreements can fail to include clauses that adequately protect the startup’s interest and in many cases, can include clauses that jeopardize a startup’s IP. Thus, when using IP-related agreement templates, the startups should have such agreements at the very least vetted by IP professionals. Startups can also do themselves a disservice by using an attorney who is not familiar with the nuances of IP law.

Many IP-related agreements, particularly research agreements, generally include confidentiality, publication, and IP clauses. The startup should review confidentiality and publication clauses to ensure that confidential information, including trade secret information, is protected from disclosure and that the startup has the right to review manuscripts and other materials containing confidential information before publication. With respect to the IP clauses, the startup should make sure the language allows for retaining its own IP and for protecting jointly developed IP.

Furthermore, with respect to patent license agreements involving a third-party licensor, startups need to make sure that the license agreement provides all the rights needed to commercialize the licensed technology, includes future improvements to the technology, and retains the right to sublicense the technology. The agreement should also have a sufficient termination clause in the event the startup needs to opt-out of the agreement.  The agreement should also specify the relevant field of use and possibly other fields for future expansion. Importantly, the startup should review patents to ensure that the commercialized product materials, methods, and tools are properly claimed with patent life remaining. This should be drafted and reviewed by an experienced IP attorney.

In conclusion to the series of blog posts dealing with common IP pitfalls for a startup, the process of bringing a new startup business to life and in launching new products to the marketplace can be an exciting time. However, many startups are so focused on bringing a new product or service to market that they fail to take the necessary steps to protect the associated IP. Failure to put an IP plan in place can cripple valuation and expose the startup to potential third-party infringement risk. In contrast, startups can protect and exploit their IP assets to build value and revenue by developing an IP plan as part of their conception, creating an action plan to protect IP assets including protection of confidential information, securing ownership rights to the IP, conducting freedom-to-operate searches, and ensuring properly drafted IP-related agreements are in place.

If you need help with your IP or with protecting it, let me know.

What Every Startup Needs To Know: IP Pitfalls- Failure to Identify Third-Party Rights- Part Eight

By Debby Winters

Next in this series, we will discuss the failure of the startup to recognize thrid-party rights. When we think about third-party rights in the IP, we are thinking about competitors who may have a patent for a technology within a product. Every startup should be cognizant that its company commercialization may be blocked by this type of third-party right. Accordingly, startups, at an early stage, should consider a “freedom to operate” (FTO) search or clearance to assess litigation risks. A FTO is performed to make sure that commercial products, marketing and use of the product, process or service do not infringe the IP rights of third-parties.

An FTO analysis begins by searching issued patents or pending applications and obtaining a legal opinion from a licensed patent attorney knowledgeable in that field as to whether the product, process, or service may be considered to infringe one or more patents owned by others. Patents that limit the startup’s FTO can be addressed by buying or licensing the underlying technology or patent, by cross-licensing the technology or patent, or by creatively “inventing around” the patented invention by altering the startup product or process, thus avoiding infringement.

An example of how to “invent around” would be in software development, where a startup chooses to incorporate open source software into its code. However, open source licenses also need to be carefully reviewed to ensure compliance with license terms. In some instances, the use of open source code in a startup product may transform the startup’s proprietary code into open source software resulting in public disclosure of the proprietary code. It is always best to consult a licensed patent attorney.

A startup will sometimes use third-party photographs, images, or text in marketing or product support materials. In such cases, the startup should investigate if permission is required to use the material, identify the rights needed, and contact the owner for permission or a license. Startups should make sure the copyright permission or license agreement is in writing.

Comprehensive trademark searches should be conducted early in the business planning process to make sure that the desired business, product, or service name does not conflict with a registered trademark. A startup that fails to conduct a proper trademark search risks receiving a cease and desist letter or even being sued.  This may necessity a need to rebrand after launch and incur the tangible and intangible costs associated with rebranding.

Businesses need broad awareness when hiring new employees, especially those that may have knowledge of competitor’s trade secrets. This is another way to infringe on a third-party’s IP rights.  New employee agreements should include clauses that prohibit employees from transferring or using proprietary information or materials from previous employers. The startup should also verify that the new hire is not subject to any binding non-compete agreements from former employers.

In dealing with third-party rights, startups are well-advised to consider their options at an early stage. In some cases, minor product or service changes, payment of a small licensing fee to the patent or copyright owner, and/or changing potentially problematic trademarks early on and implementing careful employee hiring practices may be sufficient to avoid future disputes and can improve a startup’s chances of attracting business partners and investors to support its business development plans.

In our next blog we will discuss the pitfalls of using poorly drafted agreements to cover IP, and the danger of not using a written agreement at all.

Failure To Establish Clear IP Ownership-What Every Startup Needs To Know Part 7

By Debby Winters

In the last post we examined how independent contractors could try to claim IP rights. In this post we will look at IP rights as it relates to employees of the startup.

The startup eventually will have employees and it is wise to have these employees enter into work-for-hire-type agreements that explicitly confer rights in the works to the startup. That can be accomplished through an employment agreement or through separate agreements.

Additionally, startups should have employees sign confidentiality and invention assignment agreements with clauses that clearly state the obligation of the employee is to assign all developed IP to the startup. Failure to include such assignment clauses can create ownership problems for the startup, especially if the employee leaves the company to work for a competitor or cannot be subsequently located

The agreements should also state that the startup’s confidential information is only for use for the benefit of the startup; require disclosure of ideas, inventions and discoveries related to the agreement or employment; and include a statement of ownership rights over ideas, inventions and discoveries. Recordable assignment of IP rights should be required to show clear ownership of inventions and other IP developed by its contractors and employees.

It is often advisable to get help from an experienced IP attorney in the drafting of such agreements.

We have talked about establishing clear lines of ownership for the startup IP, next we will look at the failure to identify third-party rights.