Business Courts, Arbitration, and Pre-Suit Mediation

76 Pages·2015·1.84 MB·English

Michigan
The
Business Law
J O U R N A L
CONTENTS
Volume 35 Section Matters
Issue 3 From the Desk of the Chairperson 1
Fall 2015 Officers and Council Members 2
Committees and Directorships 3
Columns
Taking Care of Business: Postsecondary Distance Education and SARA
Julia Dale 5
Tax Matters: Tidbits and Food for Thought—New Filing Dates, Statutes of
Limitations and Maybe a Second Bite at the Apple?
Eric M. Nemeth 8
Technology Corner: The Internet of Things
Michael S. Khoury 10
In-House Insight: The Jump From Law School to In-House Counsel
Leah Essenmacher 12
Articles
Why Would I Want to Go to Mars? UCC Filings and the Model
Administrative Rules
Darrell W. Pierce 13
Business Courts, Arbitration, and Pre-Suit Mediation: A Modest
Proposal for the Strategic Resolution of Business Disputes
Hon. John C. Foster, Richard L. Hurford, and Douglas L. Toering 21
In Need of Repair: Secret Personal Property Liens in Michigan
Thomas R. Morris 31
Cybersecurity Risks, Regulation, and Resources
Shane B. Hansen, Carly A. Zagaroli, and Paul D. Bratt 41
Franchising and Franchise Law: An Introduction
Howard Yale Lederman 46
Case Digests 56
Index of Articles 57
ICLE Resources for Business Lawyers 66
Published by THE BUSINESS LAW SECTION, State Bar of Michigan
The editorial staff of the Michigan Business Law Journal welcomes suggested business law
topics of general interest to the Section members, which may be the subject of future
articles. Proposed business law topics may be submitted through the Publications Director,
D. Richard McDonald, The Michigan Business Law Journal, 39577 Woodward Ave., Ste. 300,
Bloomfield Hills, Michigan 48304, [phone], [email protected], or through
Daniel D. Kopka, ICLE, 1020 Greene Street, Ann Arbor, Michigan, 48109-1444, (734) 936-
3432, [email protected]. General guidelines for the preparation of articles for the Michigan
Business Law Journal can be found on the Section's website at http://michbar.org/busi-
ness/bizlawjournal.cfm.
Each issue of the Michigan Business Law Journal has a different primary, legal theme focused
on articles related to one of the standing committees of the Business Law Section, although
we welcome articles concerning any business law related topic for any issue. The primary
theme of upcoming issues of the Michigan Business Law Journal and the related deadlines for
submitting articles are as follows:
Issue Primary Theme/Committee Article Deadline
Summer 2016 LLC & Partnership Committee March 31, 2016
Fall 2016 Financial Institutions Committee July 31, 2016
Spring 2017 Regulation of Securities Committee November 30, 2016
Summer 2017 In-House Counsel Committee March 31, 2017
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Director, D. Richard McDonald, the Michigan Business Law Journal, 39577 Woodward Ave.,
Ste. 300, Bloomfield Hills, MI 48304, [phone].
MISSION STATEMENT
The mission of the Business Law Section is to foster the highest quality of professionalism and
practice in business law and enhance the legislative and regulatory environment for conducting
business in Michigan.
To fulfill this mission, the Section shall: (1) expand the resources of business lawyers by providing
educational, networking, and mentoring opportunities; (2) review and promote improvements to
Michigan's business legislation and regulations; and (3) provide a forum to facilitate service and
commitment and to promote ethical conduct and collegiality within the practice.
TheMichigan Business Law Journal (ISSN 0899-9651), is published three times per year by the
Business Law Section, State Bar of Michigan, 306 Townsend St., Lansing, Michigan.
Volume XXII, Issue 1, and subsequent issues of the Journal are also available online by accessing
http://www.michbar.org/business/bizlawjournal.cfm
From the Desk of the Chairperson
By Douglas L. Toering
The Business Law Section: tween the BLS and other state bar sections, we
Extend Our Reach—and can learn from them and they can learn from us.
Plans are already in the works for joint semi-
Yours
nars with other sections.
Where did 2015 go? If I could answer
3. Outreach to Others: Joint Programming Else-
that question…
where. Whether it be the Michigan Association
By now, most of 2015 is in the rearview
of Certified Public Accountants or the state of
mirror. Thank you to our past chair,
Michigan through the Department of Licensing
Jim Carey. It was my privilege to have worked with him
and Regulatory Affairs, the section has worked
(and learned from him), not only during his tenure as
with a variety of other groups. Let’s continue
Chair of the Business Law Section, but also during his
that.
term as Treasurer. Jim is one of those rare attorneys who
4. Outreach to Judiciary and Legislature. The BLS
can navigate back and forth between his private law
works with the state business court judges and
practice and academia. Perhaps it is because Jim is such
the federal bankruptcy judges on local prac-
an excellent teacher that he has been so patient with me
tice in those courts. (The BLS offers free sec-
as I learn from him. Thank you, Jim.
tion membership to those judges.) And when
And thank you, also, to our Vice Chair, Judy Calton,
it comes to legislative changes that affect busi-
and to our Treasurer, Mark Peters, for all their service to
ness in Michigan, the Business Law Section is
the section during the past year. It has been a pleasure
there. Indeed, over the past few years, the BLS
working with them. I look forward to serving with
has been instrumental in advancing legislation
them and with our new Secretary, Kevin Block, during
in Michigan, such as the business court statute
the upcoming year. It will be my privilege and honor to
and amendments to the business corporation
work with them as I serve you, our members.
Space would fail me to thank our council members, act, the limited liability company act, and the
committee and directorship chairs, section administrator, non-profit corporation act.
and other section members who are dedicated to 5. Outreach to Former BLS Chairpersons. What a
excellence in the practice of business law, whether it be wealth of wisdom and experience our former
transactional matters or litigation. Specifically, please chairs possess. How can we tap into that?
allow me to recognize Laurence S. Schultz of Driggers, 6. Outreach to In-House Counsel. For years, the
Schultz & Herbst, PC in Troy. A former BLS chair, Larry BLS has helped sponsor the Crain’s General and
was honored at the BLS annual meeting in September In-House Counsel Summit. Any other ideas?
with the Steven H. Schulman Outstanding Business 7. Outreach to You. How does this sound to you?
Lawyer Award. Congratulations, Larry! And thank you Check out the new BLS website (http://con-
to previous BLS chairs, Eric Lark and Hugh Makens, nect.michbar.org/businesslaw/home). What
who presented the award. One more thank you—this committees interest you? How can you con-
goes to everyone who helped make the annual meeting tribute to the professionalism of the practice of
and the Business Law Institute a success. business law in Michigan? How can you help
With that, what might 2016 bring? Our theme for the BLS extend our reach while you extend
2016 is “Extending Our Reach—And Yours.” By that, I yours?
mean that as the BLS extends its reach, your practice can Whatever the section does, of course, is built on the
grow, too. How? Here are some ways: foundation of the excellent, hard work done by so many
1. Outreach to Newer Attorneys. New attorneys people—past chairs, past and present council members,
are the future of our section and, in many ways, past and present committee and directorship chairs, and
our state as well. They want to make a differ- the many other BLS members who have combined to
ence. That’s good. Let’s show them how they make this section what it is today.
can do so through the Business Law Section. Will you roll up your sleeves with us? If so, the
If you have ideas, please contact Kevin Block, Business Law Section can extend its outreach while you
whose committee is spearheading this effort, or extend yours. Help us make a difference.
me.

2. Outreach to Other State Bar Sections: Joint Pro-
gramming. No SBM section is an island. The
practice of business law affects many other
practice areas. Through cross-programming be-
1
2015-2016 Officers and Council Members
Business Law Section
Chairperson: DOUGLAS L. TOERING, Toering Law Firm, PLLC
888 W. Big Beaver, Ste. 750, Troy, MI 48084, [phone]
Vice-Chairperson: JUDY B. CALTON, Honigman Miller Schwartz & Cohn LLP
660 Woodward Ave., Ste. 2290, Detroit, MI 48226, [phone]
Treasurer: MARK W. PETERS, Bodman PLC
201 W. Big Beaver, Ste. 500, Troy, MI 48084, [phone]
Secretary: Kevin T. Block, Kerr, Russell and Weber, PLC
500 Woodward Ave., Ste. 2500, Detroit, MI 48226
TERM EXPIRES 2016: Greensboro, GA 30642
56136 KEVEN T. BLOCK—500 Woodward Ave., Ste. 2500, 31764 DAVID FOLTYN—660 Woodward Ave, Ste. 2290,
Detroit, 48226 Detroit, 48226-3506
38733 JUDY B. CALTON—660 Woodward Ave., Ste. 2290, 13595 RICHARD B. FOSTER, JR.—4990 Country Dr., Okemos, 48864
Detroit, 48226 54750 TANIA E. FULLER—300 Ottawa NW, Ste. 220,
38306 MARK E. KELLOGG—124 W. Allegan, Ste. 1000, Okemos, 49503
Lansing, 48933 13795 CONNIE R. GALE—P.O. Box 327, Addison, 49220
41017 HON. CHRISTOPHER P. YATES—180 Ottawa Ave., NW, 13872 PAUL K. GASTON—2701 Gulf Shore Blvd. N, Apt. 102,
Naples, FL 34103
Ste. 10200B, Grand Rapids, MI, 49503
14590 VERNE C. HAMPTON II—500 Woodward Ave., Ste. 4000,
TERM EXPIRES 2017:
Detroit, 48226
68496 JENNIFER ERIN CONSIGLIO—41000 Woodward Ave., 37883 MARK R. HIGH—500 Woodward Ave., Ste. 4000,
Bloomfield Hills, 48304 Detroit, 48226-5403
34523 SHANE B. HANSEN— 111 Lyon St. NW, Ste. 900, 34413 MICHAEL S. KHOURY—27777 Franklin Rd., Ste. 2500,
Grand Rapids, 49503 Southfield, 48034
43310 DANIEL M. MORLEY— 101 N Park St., Ste. 100, 31619 JUSTIN G. KLIMKO—150 W. Jefferson, Ste. 900,
Traverse City, 49684 Detroit, 48226-4430
34329 DOUGLAS L. TOERING—888 W. Big Beaver, Ste. 750, 45207 ERIC I. LARK—500 Woodward Ave., Ste. 2500,
Troy, 48084 Detroit, 48226-5499
TERM EXPIRES 2018: 37093 TRACY T. LARSEN—171 Monroe Ave., NW, Ste. 1000,
63904 JULIA ANN DALE—7150 Harris Dr., Lansing, 48909 Grand Rapids, 49503
69996 JOHN T. SCHURING—200 Ottawa Ave NW, Ste. 1000, 47172 EDWIN J. LUKAS—1901 St. Antoine St., Ste. 2500,
Grand Rapids, 49503 Detroit, 48226
65481 AARON M. SILVER—30001 Van Dyke Ave., 17009 HUGH H. MAKENS—111 Lyon St. NW, Ste. 900,
Warren, 48093 Grand Rapids, 49503
70033 JAMES R. WAGGONER—151 S Old Woodward, Ste. 200, 17270 CHARLES E. MCCALLUM—111 Lyon St. NW, Ste. 900,
Birmingham, 48009 Grand Rapids, 49503
EX-OFFICIO: 38485 DANIEL H. MINKUS—151 S. Old Woodward Ave., Ste. 200,
Birmingham, 48009
38729 DIANE L. AKERS—1901 St. Antoine St., 6th Fl.,
Detroit, 48226 32241 ALEKSANDRA A. MIZIOLEK—39550 Orchard Hill Place Dr.,
Novi, 48375
29101 JEFFREY S. AMMON—250 Monroe NW, Ste. 800,
Grand Rapids, 49503-2250 18009 CYRIL MOSCOW—660 Woodward Ave., Ste. 2290,
Detroit, 48226
30866 G. ANN BAKER—P.O. Box 30054, Lansing, 48909-7554
33620 HARVEY W. BERMAN—201 S. Division St., 18771 RONALD R. PENTECOST—124 W. Allegan St., Ste. 1000,
Lansing, 48933
Ann Arbor, 48104
10814 BRUCE D. BIRGBAUER—150 W. Jefferson, Ste. 2500, Detroit, 19816 DONALD F. RYMAN—313 W. Front St., Buchanan, 49107
48226-4415 20039 ROBERT E. W. SCHNOOR—6062 Parview Dr. SE,
Grand Rapids, 49546
10958 IRVING I. BOIGON—15211 Dartmouth St., Oak Park, 48237
11103 CONRAD A. BRADSHAW—111 Lyon Street NW, Ste. 900, 20096 LAURENCE S. SCHULTZ—2600 W. Big Beaver Rd., Ste. 550,
Troy, 48084
Grand Rapids, 49503
11325 JAMES C. BRUNO—150 W. Jefferson, Ste. 900, 20741 LAWRENCE K. SNIDER—410 S. Michigan Ave., Ste. 712,
Chicago, IL 60605
Detroit, 48226
34209 JAMES R. CAMBRIDGE—500 Woodward Ave., Ste. 2500, 31856 JOHN R. TRENTACOSTA—500 Woodward Ave., Ste. 2700,
Detroit, 48226
Detroit, 48226
11632 THOMAS D. CARNEY—820 Angelica Circle, 40894 JEFFREY J. VAN WINKLE—200 Ottawa Ave. NW, Ste. 500,
Grand Rapids, 49503
Cary, NC, 27518
67908 JAMES L. CAREY—23781 Point o’ Woods Ct., 59983 ROBERT T. WILSON—41000 Woodward Ave.,
Bloomfield Hills, MI 48304
South Lyon, MI, 48178
41838 TIMOTHY R. DAMSCHRODER—201 S. Division St., COMMISSIONER LIAISON:
Ann Arbor, 48104-1387 27732 GREGORY L. ULRICH—770 Pear Tree Ln.,
25723 ALEX J. DEYONKER—850 76th St., Grosse Pointe Woods, MI 48236-2725
Grand Rapids, 49518
40758 MARGUERITE M. DONAHUE, 2000 Town Center, Ste. 1500
Southfield, MI 48075, [phone]
13039 LEE B. DURHAM, JR.—1021 Dawson Ct.,
2
2015-2016 Committees and Directorships
Business Law Section
Committees
Business Courts Financial Institutions Nonprofit Corporations
Chairperson: Douglas L. Toering Chairperson: D.J. Culkar
Co-Chair: Jane Forbes
Toering Law Firm, PLLC Comerica Inc.
Dykema
888 W. Big Beaver, Ste. 750 1717 Main St., Ste. 2100
400 Renaissance Center
Troy, MI 48084 Dallas, TX 75201
Detroit, MI 48243-1668
Phone: [phone] Phone: [phone]
Phone: [phone]
E-mail: [email protected] E-mail: [email protected]
E-mail: [email protected]
Commercial Litigation
In-House Counsel Co-Chair: Jennifer M. Oertel
Chairperson: Douglas L. Toering
Co-Chair: Dawn A. Reamer Jaffe Raitt Heuer & Weiss PC
Toering Law Firm, PLLC
Aisin Holdings of America, Inc. 27777 Franklin Rd., Ste. 2500
888 W. Big Beaver, Ste. 750
15300 Centennial Dr. Southfield, MI 48034
Troy, MI 48084
Northville, MI 48168 Phone: [phone]
Phone: [phone]
Phone: [phone] E-mail: [email protected]
E-mail: [email protected]
E-mail: [email protected]
Regulation of Securities
Corporate Laws
Co-Chair: MaryAnn P. Kanary Chairperson: Patrick J. Haddad
Chairperson: Justin G. Klimko
Toyoda Gosei North America Corp. Kerr, Russell and Weber, PLC
Butzel Long
1400 Stephenson Hwy. 500 Woodward Ave., Ste. 2500
150 W. Jefferson, Ste. 900
Troy, MI 48083 Detroit, MI 48226
Detroit, MI 48226-4430
Phone: [phone] Phone: [phone]
Phone: [phone]
E-mail: maryann.kanary@ E-mail: [email protected]
E-mail: [email protected]
toyodagosei.com
Debtor/Creditor Rights Small Business Forum
Co-Chair: Judy B. Calton Law Schools Chairperson: Bruce W. Haffey
Honigman Miller Schwartz & Cohn LLP Chairperson: Mark E. Kellogg Giarmarco Mullins & Horton PC
660 Woodward Ave., Ste. 2290 Fraser Trebilcock Davis & Dunlap 101 W Big Beaver Rd., Fl. 10
Detroit, MI 48226 PC Troy, MI 48084
Phone: [phone] W. Allegan St., Ste. 1000 Phone: [phone]
E-mail: [email protected] Lansing, MI 48933 E-mail: [email protected]
Phone: [phone]
Co-Chair: Judith Greenstone Miller E-mail: [email protected] Uniform Commercial Code
Jaffe Raitt Heuer & Weiss, PC Chairperson: Darrell W. Pierce
27777 Franklin Rd., Ste. 2500 LLC & Partnership Dykema
Southfield, MI 48034-8214 Chairperson: James L. Carey 2723 S State St, Ste 400
Phone [phone] Carey Law Offices PC Ann Arbor, MI 48104
E-mail: [email protected] 23781 Point o’ Woods Ct. Phone: [phone]
South Lyon, MI 48178 E-mail: [email protected]
Phone: [phone]
E-mail: [email protected]
3
Directorships
Communication and Development Legislative Review Publications
Kevin T. Block Eric I. Lark D. Richard McDonald
Kerr, Russell and Weber, PLC Kerr, Russell and Weber, PLC Dykema
500 Woodward Ave., Ste. 2500 500 Woodward Ave., Ste. 2500 39577 Woodward Ave., Ste. 300
Detroit, MI 48226 Detroit, MI 48226-5499 Bloomfield Hills, MI 48304
Phone: [phone] Phone: [phone] Phone: [phone]
[email protected] E-mail: [email protected] E-mail: [email protected]
Nominating
Jennifer E. Consiglio Liaisons
Tania E. (Dee Dee) Fuller
Butzel Long PC
Fuller Law & Counseling, PC
41000 Woodward Ave., ICLE Liaison
300 Ottawa NW, Ste. 220
Stoneridge West Marguerite M. Donahue
Grand Rapids, MI 49503
Bloomfield Hills, MI 48304 Seyburn Kahn Ginn Bess & Serlin PC
Phone [phone]
Phone [phone] Town Center, Ste. 1500
E-mail: [email protected]
E-mail: [email protected] Southfield, MI 48075
Programs Phone: [phone]
Julia A. Dale
Tania E. (Dee Dee) Fuller E-mail: [email protected]
LARA Bureau of Commericial
Fuller Law & Counseling, PC
Services, Corporation Division
300 Ottawa NW, Ste. 220 Probate & Estate Planning Section
PO Box 30054
Grand Rapids, MI 49503 Liaison
Lansing, MI 48909
Phone [phone] John R. Dresser
Phone [phone]
E-mail: [email protected] Dresser, Dresser, Haas
E-mail: [email protected]
& Caywood PC
Mark R. High Eric I. Lark 112 S. Monroe St.
Dickinson Wright, PLLC Kerr, Russell and Weber, PLC Sturgis, MI 49091
500 Woodward Ave., Ste. 4000 500 Woodward Ave., Ste. 2500 Phone: [phone]
Detroit, MI 48226-5403 Detroit, MI 48226-5499 E-mail: [email protected]
Phone [phone]
Phone [phone]
E-mail: [email protected]
E-mail: [email protected]
Daniel H. Minkus
Edwin J. Lukas
Clark Hill, PLC
Bodman PLC
151 S. Old Woodward, Ste. 200
1901 St. Antoine St., 6th Fl.,
Birmingham, MI 48009
Detroit, MI 48226
Phone: [phone]
Phone [phone]
E-mail: [email protected]
E-mail: [email protected]
Mark W. Peters
Justin Peruski Bodman PLC
Honigman Miller Schwartz & 201 W. Big Beaver Rd., Ste. 500
Cohn, LLP Troy, MI 48084
660 Woodward Ave., Ste. 2290, Phone: [phone]
Detroit, MI 48226-3506 E-mail: [email protected]
Phone [phone]
E-mail: [email protected] John T. Schuring
Dickinson Wright, PLLC
200 Ottawa Ave. NW, Ste. 1000
Grand Rapids, MI 49503
Phone [phone]
E-mail: jschuring@dickinsonwright.
com
4
T C B
AKING ARE OF USINESS By Julia Dale
Postsecondary Distance Education and SARA
What is SARA and Why Does state authorization on their own.”3 last year due to authorization
It Matter? Centralizing the authorization pro- issues.
cess allows an institution to obtain • Colleges that operate in mul-
The State Authorization Reciprocity
approval in their “home state,” pro- tiple jurisdictions typically
Agreement1 (SARA) represents a vol-
vided the home state is a SARA state, serve students in about 30
untary approach to state oversight of
and then offer distance education in states.
distance education. The purpose is
any other SARA member state.4 • The average compliance
to facilitate access to distance educa-
A survey conducted in early 2014 costs were $7,750 (median)
tion courses to students across state
(through a partnership between the and $28,833 (mean).
lines by easing the regulatory process
University Professional & Continu- • The range of compliance
on colleges and universities through
ing Education Association; Coop- costs is vast—the minimum
uniform requirements while reduc-
erative for Education Technologies, cost incurred was $10 for
ing the cost of regulation, therefore
a division of the Western Interstate a small community col-
increasing institutional compliance.
Commission for Higher Education, lege and the maximum was
Prior to this, colleges and universities
and the Midwestern State Authori- $400,000 for a large, public,
were required to seek out and comply
zation Reciprocity Agreement) high- 4-year institution.
with requirements state-by-state.
lights the significance of SARA in • A total of 193 respondents
“The State of Michigan is pleased
promoting both the availability and provided the names of one
to join the SARA initiative as it will
accessibility of postsecondary educa- or more states in which they
expand and enhance educational
tion. The survey focused on the prog- will not serve students.
opportunities for our citizens,” said
ress colleges had made in obtaining • Due to compliance hurdles,
Michigan Department of Licensing
authorization in other states.5 This the states from which the
and Regulatory Affairs (LARA) Chief
survey had been conducted biannu- greatest number of institu-
Deputy Director Shelly Edgerton. “It
ally in 2011 and 2013. Of the survey tions will not accept students
will enable all of our postsecondary
institutions to focus on providing respondents, 36 percent represented are Arkansas, Minnesota,
quality and affordable education- public, 4-year institutions; 30 per- Massachusetts, Alabama,
al opportunities.” Prior to joining cent represented private, nonprofit and Maryland, all named by
M-SARA, LARA had received more 4-years institutions; and, 25 percent at least one-third of respon-
than 1,100 inquiries from out-of-state represented community colleges. dents.6
institutions requesting approval or The remaining groups were com- A system in which each state con-
exemption to offer distance education bined into “other.” The results of the tinues to maintain their own require-
to Michigan residents. survey revealed the following: ments and approval process for dis-
The National Council for State • 31 percent of responding col- tance education impacts not only the
Authorization Reciprocity Agree- leges have yet to apply to a institutions but the students as well.
ments (NC-SARA) is the national single state. As noted in the above survey results,
organization responsible for coordi- • Approximately 72 percent the differences in requirements, fees,
nating the efforts of the four regional of respondents decided not and approval processes pose a signif-
education compacts. Administration to admit students in some icant obstacle to compliance and the
of SARA occurs via “the four regional states. availability of educational programs.
education compacts (Midwestern • Approximately 25 percent
Michigan: The Tenth
Higher Education Compact, New of institutions have applied
England Board of Higher Education, and/or received approval M-SARA State
Southern Regional Education Board, from all states of interest, up The Higher Education Authorization
and the Western Interstate Commis- from 5 percent in 2011 and 15 and Distance Education Reciprocal
sion for Higher Education), which are percent in 2013. Exchange Act (2015 PA 45) was signed
now accepting applications for partic- • Of the institutions that have by Gov. Snyder on June 8, 2015, and
ipation from states in their regions.”2 not applied to one or more became effective June 9, 2015.7 Upon
States that have obtained SARA state, 55 percent indicate application, Michigan was approved
membership (by joining their region- that it is due to the high cost as the 10th M-SARA state on August
al compact) allow approved post- and 50 percent are waiting 30, 2015, joining the ranks of the fol-
secondary institutions to “apply for to hear about the reciprocity lowing jurisdictions:
blanket approval to offer distance agreement. 1. Indiana approved on
education to students in the other • About 40 percnet of schools February 2, 2014;
member states or continue to handle had to turn away students 2. North Dakota approved on
5
6 THE MICHIGAN BUSINESS LAW JOURNAL — SUMMER 2015
April 3, 2014; Licensing Bureau (CSCL) is respon- which were received and processed
3. Nebraska approved on sible for administering the act, which the same day.
August 9, 2014; includes responding to formal com- Out-of-state schools that are not
4. Kansas approved on plaints against authorized public, SARA members do not need to be
November 16, 2014; independent nonprofit, and propri- sent to NC-SARA and are authorized
5. Missouri approved on etary institutions of higher education by CSCL to provide distance educa-
November 16, 2014; providing distance education from
tion to Michigan residents.
6. Minnesota approved on Michigan, or out-of-state institutions
If a student has a complaint
January 26, 2015; of higher education providing dis-
regarding a participating institution,
7. Ohio approved on March 2, tance education in Michigan, pursu-
those complaints should be first rout-
2015; ant to 2015 PA 45. The Bureau also
ed through the institution’s existing
8. Iowa approved on June 1, investigates complaints against any
student grievance process. If a stu-
2015; and other licensed or authorized postsec-
dent is not satisfied at the conclusion
9. Illinois approved on July 31, ondary school that it regulates.
of that process, they may then bring
2015. NC-SARA has established a clear
a complaint to the portal agency in
The Higher Education Authoriza- and simple institutional participation
the institution’s home state; however,
tion and Distance Education Recipro- process. Once a jurisdiction has been
this does not preclude the student’s
cal Exchange Act authorizes LARA to approved as a SARA member, the
enter into reciprocal distance learning identified portal agency then notifies state of residence from participating
compacts; ensure that distance learn- institutions of the member status. In in the resolution process. The portal
ing providers meet standards of prac- Michigan, both the in-state applica- agency is ultimately responsible for
tice; promulgate rules necessary to tion and approval form for institu- conducting the investigation and res-
implement, administer, and enforce tional participation in SARA and the olution process.12
the act; set annual fees; protect stu- out-of-state institution Distance Edu-
Important Reminders and
dent records; and, establish a student cation Authorization forms are cur-
complaint system.8 In-state schools rently available online at the CSCL Other News
that choose to participate as part website. On submission, the in-state • Following a Request for Pro-
of a national reciprocity agreement application must be accompanied by posal, the LARA, Corpora-
are authorized to provide distance a $2,000 application fee and a $2,000 tions Division engaged the
education in other member states. annual authorization fee. The out- services of CW Professional
Out-of-state schools located in states of-state application fees are slightly
Services LLC (Lochbridge)
that are not a member of a national higher with a $5,000 application fee
to implement the new Cor-
reciprocity agreement may seek and a $5,000 annual authorization
porations Online Filing Sys-
authorization under this act to pro- fee.9 CSCL staff reviews the appli-
tem. At this time the Division
vide distance education to Michigan cation and notifies NC-SARA when
anticipates launching the
residents. To be eligible to apply and approved and provides the institu-
new system in Spring 2016.
participate, a school must be degree- tion with the link to pay the filing fee
• The 2015 Annual Reports for
granting and accredited. Michigan to WICHE/NC-SARA. The fees are
nonprofit corporations were
institutions offering distance educa- as follows:
due to the Corporations
tion to residents of other states are • $2,000/year for institutions
Division by October 1, 2015.
no longer faced with the challenges with fewer than 2,500 full
• For assumed names that
of gaining approval or registering in time enrolled (FTE) students
expire on December 31, 2015,
those other SARA member states. A • $4,000/year for institutions
a Certificate of Renewal of
reduction in the number of indepen- with fewer than 2,500—9,999
Assumed name must be
dent approvals a Michigan institution FTE students
must seek will have a positive impact • $6,000/year for institutions received by the Corporations
Division by December 31,
on the amount of fees incurred and with 10,000 or more FTE
staff resources expended. students10 2015.
The Michigan Department of After NC-SARA confirms pay- • For name registrations that
Licensing and Regulatory Affairs ment, welcome materials are sent to expire on December 31, 2015,
(LARA) has statutory powers, the institution, and the institution is a Certificate of Renewal of
duties, functions, and responsibili- listed on the NC-SARA website. The Name Registration and Cer-
ties regarding the establishment and institution is responsible for renew- tificate of Good Standing
approval of non-public institutions ing annually to maintain their partici- from its jurisdiction of incor-
incorporating private colleges and pation status.11 Within days of receiv- poration must be received by
universities. Within LARA, the Cor- ing M-SARA approval, Michigan the Corporations Division by
porations, Securities & Commercial received its first in-state applications, December 31, 2015.
TAKING CARE OF BUSINESS 7
NOTES Julia Dale is the Act-
1. SARA was developed with input ing Director of the
from a broad array of associations, state Corporations, Secu-
administrators, the U.S. Department of rities & Commercial
Education and institutional leaders from
Licensing Bureau for
all areas of higher education. It became
operational in January 2014. the State of Michi-
2. SHEEO.org, Projects, http://www. gan; Department of
sheeo.org/projects/state-authorization- Licensing and Regulatory Affairs.
postsecondary-education (last visited She is a member of the State Bar
September 17, 2015).
of Michigan and serves on the
3. Carl Straumsheim, Sustaining SARA,
Business Law Section Council.
Inside Higher Ed (Dec 18, 2014), https://
www.insidehighered.com/news/2014/12/18/
state-authorization-reciprocity-effort-passes-
tipping-point-supporters-say.
4. NC-SARA.org, Documents, SARA
Policies and Standards, State Authorization
Reciprocity Agreements Policies and
Standards printable pdf file, http://nc-sara.
org/files/docs/SARA-FAQs.pdf.
5. “The sample was created by combining
membership and email lists from WCET and
UPCEA institutions and removing duplicate
responses, as well as using a list from the
Higher Education Directory. Overall, 577
individuals started and 498 qualified. The
qualifier question: Does your institution
currently offer online or correspondence
courses to students in other U.S. states? Of
those responding institutions, 86% replied
“Yes”, 13% replied “No”, and 1% did not
respond. The number of qualified respondents
was more that double the number from the
2011 survey.” WCET.EICHE.edu, What are
Institutions Doing (or Not Doing) About
State Authorization? (May 2014), http://
wcet.wiche.edu/wcet/docs/stateapproval/
titutionsDoingAboutStateAuthorization2014.
pdf.
6. Id.
7. The Act would sunset and be repealed
on September 30, 2017.
8. MCL 390.1693 (3)-(6).
9. MCL 390.1694 4(1)(d) and 4(3)(c).
10. NC-SARA.org, Documents, SARA
Policies and Standards, State Authorization
Reciprocity Agreements Policies and
Standards printable pdf file, (July 10, 2015),
http://nc-sara.org/content/sara-policies-and-
standards.
11. MCL 390.1964 4(2) and 4(4).
12. Id.
T M
AX ATTERS
By Eric M. Nemeth
Tidbits and Food for Thought—New Filing Dates, Statutes of
Limitations and Maybe a Second Bite at the Apple?
In early October, the Michigan number, and assessment number (if civil fraud, and thus no SOL, or six
Department of Treasury officials told applicable). years for a 25 percent or more omis-
lawmakers that refunds for taxes Practitioner’s Note: It is still advis- sion of income.
improperly collected on more than able to remind clients, in writing, to The Act legislatively overrules
76,000 accounts due to a “computer forward any and all notices that they the U.S. Supreme Court decision in
glitch” would take at least 12 more may receive from the Department to
United States v Home Concrete & Sup-
weeks to process, depending on other their representative. When reviewing
ply, LLC,4 wherein the Supreme Court
priorities. previous matters where an appeal
ruled that overstating basis (a com-
In a recent notice, the Michigan may be appropriate, confirm with
mon tax shelter ploy) was not the
Department of Treasury (“Depart- the representative whether they got
same as omitting income. The Act
ment”) issued an important an- the communication from the Depart-
provides for a six year SOL for tax
nouncement. If a taxpayer had filed a ment. A new appellate opportunity
returns filed after July 31, 2015 and
written request with the Department may present itself.
previously filed tax returns with open
that all copies of all letters and notices Michigan’s Offer in Compromise
regarding a dispute be sent to the tax- Program is up and running. Long- SOL.5 It is also important to note that
payer’s representative, the Depart- overdue taxpayers that settle tax unfiled tax returns have no SOL.
ment must send a copy of all letters or debts with the IRS or otherwise have Check the signature line before fil-
notices sent to the taxpayer regarding unpaid state tax liabilities may qual- ing your tax return. The US Tax Court
that specific dispute. See MCL 205.8. ify for relief. The Department web- inReifler v Commissioner6 recently held
The Department did not always site1 presents the program in a simple that a timely filed joint tax return in-
honor that request, resulting in the manner, including criteria, required advertently not signed by a taxpayer
taxpayer thinking the representative forms, attachments, and a checklist. wife was not a valid tax return and
had a time-sensitive correspondence The three criteria for relief are: imposed the failure-to-file penalty.
when, in fact, the representative did 1. Doubt as to liability; The court specifically rejected the tac-
not have the correspondence. The re- 2. Doubt as to collectability;
it consent and substantial compliance
sult is predictable—some deadlines 3. A Federal compromise has
arguments of the petitioners.
to the Court of Claims or the Tax Tri- been given for the same tax
The IRS has started sharing indi-
bunal for requesting an informal con- year(s).
vidual financial account information
ference or appeal submission were The program is available to individu-
with certain foreign countries. The
missed. als and businesses.
automatic digital sharing was devel-
The Department now takes the po- As referenced in an earlier col-
oped under the Foreign Account Tax
sition that the time period to request umn, the Surface Transportation and
Compliance Act or FATCA. Since
an informal conference begins when Veterans Care Choice Improvement
other countries are sharing informa-
the Department (or IRS) furnishes the Act of 20152 (the “Act”) contained im-
taxpayer’s representative, by certified portant practical tax and information- tion with the United States, turnabout
mail or personal service, a copy of the al reporting changes effective for tax is fair play. The agreements to share
Bill for Taxes Due (Intent to Assess). yearsstarting after December 31, 2015. data is authorized under bilateral
The time period to file an appeal in The highlights: agreements.
the Court of Claims or the Tax Tribu- • Partnership tax returns will
nal begins when the Department fur- be due March 15 for calendar
nishes the taxpayer’s representative, year partnerships;
NOTES
by certified mail or personal service, • S corporations remain due
a copy of the Final Bill for Taxes Due March 15;
(Final Assessment). • C corporations will be due 1. http://michigan.gov/taxes/0,4676,7-
238-68920---,00.html
If you have a client that you be- April 15;
2. Pub L No. 114-41, 129 Stat 443.
lieve may have missed one of these • FBAR due dates change from
3. Id. at 2006.
deadlines, and the representative at June 30 to April 15.3
4. 200 US 321 (2012).
the time did not receive notice as out- Another important change con- 5. IRC 6501(e)(1)(B).
lined above, such a taxpayer can have tained in the Act concerns statute of 6. TC Memo 2015-199.
his or her appeal rights reinstated by limitations (“SOL”). The SOL is gen-
requesting an informal conference erally three years from the due date
and providing the Department with or filing date, whichever is later. Two
the taxpayer’s name, identification important exceptions are a finding of
8