Business Opportunities in
Arizona:
Legal Aspects &Labour Force
Mobility in ArizonaJulie Lessard, L.L.B., Partner,
BCF LLP« Business Opportunities in Defense,
Aerospace, and Information and Communications Technologies Sectors in Arizona », Board of Trade of Metropolitan
Montréal, World Trade Centre Montréal, May 20, 2009
Disclaimer:
This document is based on the information current as of May 20, 2009 and the information contained herein is subject to change without notice.
The information provided in this presentation is of a general nature and may not apply to any particular set of facts or under all circumstances. It should
not be construed as legal advice.
This presentation is solely intended for the use of the attendees and any reproduction thereof is prohibited without prior express consent from BCF
LLP.
U.S. Legal Environment
“Common law” system originating in England (exception: Louisiana Code);
Emphasis on freedom of commercial parties to make agreements;
Uniform Commercial Code and states’ interpretations of UCC;
Litigiousness;
Arbitration as cross-border dispute resolution alternative;
Establishing a Business
Sole Proprietorships
Partnerships
Corporations
Limited Liability Companies
Branches
Joint Ventures
Acquisitions & Mergers
Business Filings in Arizona
Arizona Business Profit Corporation
S-Corporation
Foreign Business Profit Corporation
LP, LLC, LLP, and foreign LP, LLC, LLP
Managing Legal Risks: Compliance Issues
GAAP/Sarbanes-Oxley
Labor Law and Unions
Sources of Financing / Credit Unions
Import and Export Controls
Foreign Exchange Control
Creating Legal Leverage
Patents and Trademarks
Tax planning
Tax Implications of U.S. Expansion
STAGE I: MINIMAL PRESENCE (TRADE PARTNER
STAGE II: INCREASED PRESENCE (BRANCH, OFFICE)
STAGE III: FORMAL PRESENCE (PERMANENT ESTABLISHMENT) (U.S. Corporation)
Federal Taxation under U.S.-Canada Income Tax
Permanent Establishment (PE) as basis for taxation:
Criteria:
Assets: •A place of management•A branch•An office•A factory•A workshop•A mine, an oil or gas well, a quarry•A construction site if more than 12 mo in existence
Agency: A « warm body » (limitation: purchasing goods or merchandise for Can Co.)
NEXUS : Base for State Taxation of Canadian Businesses
- States not party to US-Canada Tax Treaty ;- Sufficient nexus (connection) possible even without PE
by:- Storing inventory in a state- Renting office or warehouse space- Providing installation or implementation services- Performance of warranty or repair services, even by a
third party- Delivering or picking up property in company-owned
trucks- Selling at tradeshows- Soliciting business in a state (mostly Franchise tax and
Sales and Use Tax)
Starting Business Corporation at a Glance
Register the business name and file the Articles of Incorporation
Apply for FEIN
Register online for Sales Tax
Register an Employer with the UID of the State DOL
Arrange for workers compensation through a private insurance fund
Arrange for publication as required by the Corporation Commission
Workforce Mobility: U.S. Options for Canadians
B-1 Business Visitor under NAFTA
TN (Trade NAFTA) Professional
E Treaty Trader / Treaty Investor
L-1 Intra-company Transfer
B-1 Business Visitor & B-1 under NAFTA
Nonimmigrant Intent Permissible activities (meetings, discussions,
negotiations) Productive employment prohibited Expanded list of activities under NAFTA:
Research and design Marketing & sales Distribution After sales services
Trade NAFTA (TN) Work Permit for Canadians
Canadian citizenship Member of listed professions (Appendix 1603D) Bachelor’s or Licenciatura degree – NO Equivalency For certain professions, other credenials appropriate
(Management Consultant, Scientific Technician, Computer Systems Analyst)
Temporary professional services for U.S. company (or pre-arranged agreement between Canadian and U.S. entity) in a position listed in Appendix 1603D
Self-Employment Prohibited Nonimmigrant Intent
Appendix 1603D to Annex 1603 of Trade NAFTA
Accountant Actuary Agriculturist/Agronomist Animal breeder Animal Scientist Apiculturist Architect Astronomer Biochemist Biologist Chemist Computer systems analyst Dairy Scientist Dentist Dietician Disaster Relief Insurance Claims Adjuster Economist Engineer Entomologist Epidemiologist Forester Geneticist Geochemist Geographer Geologist Geophysicist Graphic Designer Horticulturist Hotel Manager Industrial Designer Interior Designer Land Surveyor Landscaping Architect
Lawyer Librarian
Management Consultant Mathematician Medical Technologist/Medical Lab Technologist Meteorologist Nurse, Registered Nutritionist Occupational Therapist Oceanographer Pharmacist Pharmacologist Physician (teaching and/or research only)Physicist Physio / Physical Therapist Plant Breeder Plant Pathologist Poultry Scientist PsychologistRange Manager/Range Conservationist Recreational Therapist Research Assistant (in a post-secondary education institution)Social Worker Soil Scientist Statistician Sylviculturist / Forestry SpecialistTeacher (coming to work for college, seminary or university). Technician or Technologist, Scientific. Urban Planner VeterinarianVocational CounselorWriter, Technical Publications Zoologist
E Treaty Investor
The Nationality of the Company Requirement
Concept of “investment” or “in the process of investing ”
Possession and Control of Funds
Investment “at risk”
Funds irrevocably committed
Real and Active Commercial Enterprise
Substantiality and Marginality
E-2 Treaty Trader
Trade as Exchange of Goods or Services
Trade must be International
Trade must be in Existence
Substantiality of Trade
50% of total volume between US and treaty country (Canada)
Measurement of Trade – Branch “part and parcel” of Can Co.
L-1 Intracompany Transferees
Multinational Executive or Manager OR Specialized-Knowledge Employee;
One (1) year of employment abroad the U.S. for parent, branch, subsidiary or affiliate of the prospective U.S. Employer in managerial/executive or specialized-knowledge capacity prior to petition;
Must come to the United States to perform in managerial/executive or specialized knowledge capacity;
Entities in U.S. and abroad must conduct business on regular and continuous basis for at least one (1) year prior to petition;
▶ EXCEPTION: NEW OFFICE SITUATION – INITIAL PETITION VALIDITY LIMITED TO 1 YEAR
Federal Labour and Immigration Law and Compliance Issues The Immigration and Nationality Act (INA), as amended Immigration Reform and Control Act (IRCA) of 1986 Fair Labor Standards Act Fair Employment Laws Wage and Hour Laws and Regulations Federal Unemployment Tax Act (FUTA) Americans with Disabilities Act (ADA) Federal Insurance Contributions Act (FICA) Occupational Safety and Health Administration (OSHA)
regulations
: What’s in a Name?
The Immigration Reform and Control Act of 1986 (IRCA) - “Basic Pilot Program”
Title IV, Subtitle A, of the Illegal Immigration Reform and Immigration Responsibility Act of 1996 (IIRIRA), Pub. L. 104-208, 110 Stat. 3009, as amended. (“E-Verify”)
The effective date of the final rule requiring certain federal contractors and subcontractors to use E-Verify has been delayed until June 30, 2009.
FACTS
66,000+ employers, representing close to 259,000 worksites, currently are signed up to use the E-Verify program;
444 million records in the SSA database, and more than 60 million records in DHS immigration databases.
$11,000 possible penalty for non-compliance in fines (or more) and/or criminal action against employers;
$400 million per year in DHS budget for program expansion;
State Intervention in Labour & Immigration Compliance
Legal Arizona Workers Act, HB 2779 2007
PROVISIONS: Imposition of a business license penalty against any
employer whoknowingly or intentionally hires unauthorized employees
afterJanuary 1, 2008
PENALTIES:
- Suspension of business license (1st time offender)- Permanent Revocation of business license (repeat
offender)
State Intervention in Labour & Immigration Compliance
Legal Arizona Workers Act, HB 2779 2007
PROVISIONS:
The Act requires all employers in Arizona, regardless of size,to verify the legal status of every new employeehired, through the E-verify program administered by the USDHS.
Effective September 30, 2008, prohibition for government entities from awardinga contract to any contractor or subcontractor that fails to use E-Verify;
LEGISLATIVE CHALLENGES: Latest legislative updates (March 09, 2009): The Ninth Circuit continued to rule that HB 2779 is constitutional and Denied the plaintiff’s petition for rehearing.
Conclusion / Contact Information
BCF LLP1100 René-Levesque Blvd. West25th FloorMontréal (Québec) H3B 5C9
Telephone: (514) 397-8500Fax: (514) 397-2260
