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Can You Reverse a Wire Transfer?

Legal AssistantBusiness Law, Regulatory Law, Resources

Anytime you’re making a large purchase, it is generally considered good practice to double or even triple check the details of the recipient of the funds in question. But, sometimes, despite your best efforts, you realize afterward that you entered the wrong account number. Now, what?

In other instances, you may wire money to a bank account only to later realize that you’ve just fallen victim to an elaborate scam. Now, you’re a couple of thousand dollars poorer. What do you do in such cases? Can you reverse a wire transfer?

That, dear readers, is the million-dollar question. Here’s everything you need to know.

What Does It Mean to Wire Money

money transfer through wire transfer

First off, let’s cover all the bases. We use that term – “wire money” – all the time, but do you understand what it means?

“Wire” is short for “bank wire transfer.” It generally refers to the electronic transfer of money from one bank to another. Ideally, if you’re dealing with a business or individual and they request you to wire money to them, you need to notify your bank that you want to send a “wire” to another entity. This applies for business to business wire transfer as well.

The bank will then ask for the name of the recipient, the bank, the bank address, the routing numbers, and in some cases, the SWIFT code if you’re trying to wire funds to an international bank. So, in case you were wondering what information is needed to wire money, that’s generally what the bank requires.

How Does a Wire Transfer Work

Once the bank has all these details, it then initiates the transfer of the amount you want to send to the recipient. First, it creates a payment order. If the recipient of the money and the sender of the payment order both happen to have accounts in the same bank, then the wire transfer will be immediate.

All the bank has to do is adjust the ledger entries for each account. That concludes the transfer.

If, on the other hand, the transfer is happening between two different domestic banks, then the process may take one or more days. That’s the time it takes for the payment order originating from the sender’s bank to reach the recipient’s bank.

So, how long does a wire transfer take if the recipient is in a different country altogether? International transfers typically take a couple of days to complete.

money transfer through mobile internet banking

Can You Reverse a Wire Transfer?

Well, it depends on the stage at which the transfer has reached. If the recipient bank has already accepted the order, tough luck, it’s too late to do anything about it at that point.

However, if you notify your bank that you want to cancel the payment transaction, it would send a cancellation notice to the recipient bank. If the latter receives it before the payment order is accepted, then the recipient bank will generally not accept the order. So, as you can see, it is a race against time.

Extenuating Circumstances

Now, if the payment goes through, and the funds get debited from your account and sent to the recipient account, it isn’t standard practice for the wire transfer to be reversed at that point. Nonetheless, there are certain extenuating circumstances where this is possible.

These are:

  1. If the originating bank made a mistake with the account number
  2. If the payment order sent was a duplicate of a previous one
  3. If the amount received by the beneficiary was greater than what they were entitled to receive

If you entered a wrong account number, you might be able to amend it if the transfer is still in the “pending” or “processing” stage. But, if you entered an incorrect routing or account number, the bank will likely reject the transaction.

The issue comes in when you enter, what would be considered “legit” account details belonging to an actual individual or entity, and the beneficiary bank completes the transaction.

If the reason for this doesn’t fall under any of the “extenuating circumstances” listed above, then neither the originating bank nor the recipient bank has access to the beneficiary account in question.

In short, no – you cannot reverse a wire transfer once the funds hit the beneficiary account if no extenuating circumstances surround the erroneous transfer. Banks and other wire transfer institutions generally address the sender’s liability if they provide the wrong account information or end up erroneously wiring money to a scammer.

ACH vs Wire

There are several forms of electronic transfers that exist besides wires. There are P2P (person-to-person) payment tools, money transfer services like Western Union, and bank-to-bank transfers through the Automated Clearing Houses (ACH) network.

transferring money through mobile banking

ACH and wire transfers may look like they work in the same way, but they are quite different. Both are interbank electronic money transfers, except that ACH payments are generally faster, cheaper, and more secure compared to their wire transfer counterparts.

ACH transfers are commonly referred to as direct deposit payments, and, just like wires, reversals are only done under three conditions:

  1. Wrong account number
  2. Wrong dollar amount
  3. Duplicate transaction

Wire Transfer Agreement

A common question we often get is – What happens if a business wires money without a signed contract? Well, let’s just say that there’s a very high likelihood of falling victim to wire fraud. Signing a wire transfer agreement is particularly important for any business to business wire transfer.

It stipulates the specific individuals in a company authorized to initiate transfers or validate the transfer instructions. It also details how the bank should authenticate all transfer requests, including a phone call or email to a specific individual.

Recovery Options

To answer the question – Can you reverse a wire transfer? The short answer is no unless it was the bank’s mistake. So, while it may not be possible to reverse the transfer, you can still explore other options for recovery.

For instance, you can get in touch with the recipient bank and ask them to track down the account holder and request them to reverse the transaction. However, if the funds are no longer in the account, you may not be able to get the money back.

In such instances, you’ll need to contact an attorney to explore your options. Sometimes, lodging a personal lawsuit may be your only hope. If you have any legal questions about wire transfer reversals, you can chat online with a Laws101.com attorney.

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Cryptocurrency and the Law: Emerging Lawsuits

Legal AssistantAdministrative Law, Regulatory Law, Resources

When Satoshi Nakamoto first envisioned a digital currency that would use a decentralized network of computers to keep track of transactions, no one could have ever imagined that his idea would evolve into what it is today.

This was the seed that would later germinate into the cryptocurrency market as we know it. Bitcoin is perhaps the most familiar of them all. The current market value of a single unit is more than $11,000 and rising. The total number of Bitcoin users in the US alone is 6.2 percent of the population, which represents roughly 20 million people.

Cryptocurrency and other digital assets, alongside the technology used to run them, present a convenient and efficient means of transacting online. On the flip side, they also carry an unprecedented amount of risk that stems from manipulation and fraud since the industry isn’t as regulated as conventional capital markets.

With that being said, this article takes a deep dive into the mystical world of cryptocurrency, the legal framework surrounding this market, and the recent lawsuits plaguing the crypto space.

What Is Cryptocurrency?

Cryptocurrency is essentially a digital medium of exchange that uses cryptography to facilitate, secure, and verify financial transactions. It leverages blockchain technology to create a decentralized network of computers for immutability and transparency.

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Blockchain is the “record-keeping” technology that powers the cryptocurrency network. You can think of it as a decentralized and distributed public ledger. Each “block” on the “chain” has three main pieces of digital information.

  1. Transaction details like the date, time, and the amount of the most recent purchase made from a specific website or other digital location.
  1. Details on the individual engaging in the transaction. But rather than use your actual name, the identifying information is a unique digital signature that works a lot like a username.
  1. Information that sets a particular “block” apart from the rest on the “chain.” Each block has a “hash” – which is a unique cryptographic code generated by special algorithms.

Today, several merchants – both online and offline – accept payment in cryptocurrency. You’ll come across bars, restaurants, local stores, and even airlines that take cryptocurrency.

While many believe it to be the hottest investment vehicle available today, keep in mind that it is a high-risk investment. The market value of cryptocurrencies can fluctuate dramatically overnight. But, as they say – the higher the risk, the higher the return if all factors remain constant.

Where Is Cryptocurrency Stored?

Several different types of cryptocurrency exist. The most common ones you’re likely familiar with include Bitcoin, Litecoin, and Ethereum. These were among the first ones that emerged back when the concept of digital currency was still new.

Since then, however, Ripple, Stellar, NEO, Cardano, and IOTA are some of the others that are quickly gaining traction in the crypto marketplace. Cryptocurrencies are stored in what is referred to as a blockchain wallet. It is essentially an address contained on the blockchain.

Each wallet has a public key and a private key, both of which allow you to access your coins from wherever you are, using an online tool. The problem with these keys is how hard they are to remember.

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Losing or forgetting your private key makes it impossible to recover your crypto assets. Thankfully, third-party custodial services exist to ensure that this doesn’t happen. They also offer cryptocurrency protection against getting hacked and having your digital assets stolen.

Moreover, the US Securities and Exchange Commission (SEC), as part of the Dodd-Frank Act, requires institutional investors holding crypto customer assets worth $150,000 or more to store them with qualified crypto custodian services.

Is Cryptocurrency Legal

At the time of publication, cryptocurrency, more specifically Bitcoin, was legal in most developed countries like the US, UK, Canada, Japan, and several others. In other countries like China, the use of cryptocurrency is a highly regulated affair.

Although its use is technically legal, it is generally categorized as an asset (for tax purposes) as opposed to legal tender. According to the IRS, the cryptocurrency tax laws surrounding Bitcoin, Litecoin, Ethereum, and any other digital asset are the same as those for other forms of property like real estate, stocks, or gold.

So, you’ll need to report your capital gains and/or losses from all the transactions you make using crypto. Failure to comply with these directives amounts to tax fraud in the eyes of the IRS.

Cryptocurrency Lawsuits

Recent years have seen a rising number of class-action suits filed against cryptocurrency firms. One notable one is the AT&T cryptocurrency lawsuit, where the company is accused of being involved in the theft of millions of dollars’ worth of cryptocurrency.

Crypto criminals use a hacking method known as “SIM swapping” to steal unsuspecting users’ phone numbers and use them to access their crypto accounts before proceeding to transfer the assets to themselves.

According to Mr. Michael Terpin – the plaintiff in this particular suit, the telecommunications company allowed hackers to access his SIM card on two separate occasions, leading to the loss of $24 million worth of cryptocurrency. Terpin is suing AT&T for $200 million in punitive damages.

The JPMorgan Chase cryptocurrency lawsuit is yet another example. In 2018, the bank decided to charge higher fees on crypto transactions made using Chase credit cards, classifying them as “cash advances.”

Sixty-two thousand affected customers sued the bank for unlawfully charging them. The bank reached a settlement deal agreeing to refund them about 95 percent of the amount the plaintiffs allege they were unfairly charged in fees.

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Finally, there’s the cryptocurrency class-action lawsuit against Facebook and other internet giants like Twitter and Google. Cryptocurrency business owners are suing the companies for damages amounting to $600 million for the losses they suffered when the tech firms banned cryptocurrency-related ads on their platforms in 2018.

The total amount being sought in damages could rise as more litigants join the class-action suit.

Understand the Legal Implications of Cryptocurrency

As the crypto market continues to expand, state and federal authorities continue to grapple with their regulation since there’s no legal, regulatory framework applicable to them.

For the time being, cryptocurrencies will continue to be classified as digital assets rather than legal tender. So, investors are bound by capital gains tax laws when reporting their crypto profits and expenses on their annual returns to the IRS.

Keep in mind that investing in digital currencies means that you assume all the legal risks involved when trading in them.

If you have any legal questions surrounding cryptocurrency, feel free to chat online with a Laws101.com attorney.

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What Is a Non Compete Agreement and Is It Enforceable?

Legal AssistantBusiness Law, Resources

A non compete agreement serves one primary purpose – to prevent any employee who leaves your company from divulging confidential business information to the competition.

These types of agreements are generally issued to business executives, officials, partners, or any other company employee who is privy to trade secrets and other sensitive information that they are supposed to protect.

You can think of it as a kind of restrictive covenant – a promise, if you will – made by an employee to not work for a competing organization in a specific geographical region for a stipulated period following their exit from the company.

This article explores everything you need to know about non-compete agreements and whether or not they are enforceable.

What Is a Non Compete Agreement?

It is a legally binding agreement between an employee and their former employer that exists to prevent unfair competition if the ex-employee were to join a competing organization. The agreement remains in force for a specific period after the employment relationship is terminated.

In the agreement, the employee in question essentially promises not to work for a competing business within a specific region for a prescribed period following the termination of their employment in the organization they were working in.

Employers use non compete contracts as a security measure to ensure that sensitive company information doesn’t fall into the hands of their competition, that they would otherwise use to gain an unfair advantage over them.

It also prevents exiting employees from “misappropriating goodwill.” This means stealing the existing good relationship the company enjoys with its customers or suppliers. Non competes should also not be so prohibitive that they deny former employees a chance to make a decent living once they leave their respective companies.

How Do Non Competes Work?

Non competes stipulate the type of activity an ex-employee cannot engage in, as well as the geographical scope and duration that the contract will be in force.

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A news correspondent, for instance, working at a television network, may be required to sign a non compete agreement after termination or upon their employment prohibiting them from working in other local news networks, for a specific time following their exit from the station.

The period in question could range anywhere between a couple of months to a maximum of two years.

So, based on that brief overview of how non competes work, the question is – Are non competes enforceable and, to what extent? The answer to this question isn’t so straightforward. Its enforceability all boils down to whether the agreement is “reasonable”.

What Makes Non Compete Agreements “Reasonable”

One thing you need to keep in mind when considering the enforceability of non-competes is the State you live in. Each state has its laws regarding what constitutes a “reasonable” agreement.

Generally, non-competes are enforceable if they:

  1. Come with reasonable time restrictions. In most cases, this is generally not more than a year.
  1. Have a limited geographical scope, as opposed to entire states. The contracts should specify specific cities or counties the ex-employee can’t work in once they leave.
  1. Are considered necessary to safeguard certain interests of the former employer, including but not limited to, confidential business information, trade secrets, and protecting the company’s existing relationship with its customers and vendors. This includes its reputation and current market position.
  1. Are supported by a tangible benefit – also referred to as “consideration” – in exchange for their promise not to work for a competing employer. Consideration in this instance could be in the form of lucrative stock options, additional monetary compensation, or the acceleration of the benefits they’re entitled to receive.
  1. Are industry-specific meaning that the restrictions placed on their activities once they exit are limited to the specific industry their former employer operates in. A newspaper writer, for instance, may get barred from working at another local newspaper agency, but not from writing a novel, although both activities make use of the same set of skills.

Example

A non compete clause example that would be considered enforceable can read something like:

“… The Writer, therefore, agrees that during the period they are in employment at ABC news agency, and for a further period of one year after the termination of their employment contract, he/she will not directly or indirectly engage in any business with, render services for, consult with, or participate in activities with any entity that is in competition for the same customer or subscriber base as company ABC …”

Non Solicit Non Compete

A non solicit is generally less restrictive and easier to enforce than a non compete. It is designed to protect the time and money you’ve invested in developing the relationship that your customers have with your brand.

By signing a non compete, a former employee is barred from joining a company that is in direct competition with yours. By signing a non solicit, on the other hand, they essentially agree not to solicit any of your company’s prospective or existing customers.

Although they are easier to enforce, the burden of proof for non solicits is often higher compared to what’s required for non competes. You would have to show that your former employee solicited a customer – existing or prospective – to whom the non solicit applied.

How to Get Out of a Non Compete Agreement

If you are a former employee who signed a non compete agreement with your former employer, breaching its terms carries with it some pretty serious legal ramifications. Violating non compete agreements that are legally valid and enforceable under your State’s law paves the way for your former employer to sue you.

If that happens, you may end up paying a significant amount of money in damages to them if you lose the suit. On the other hand, it all depends on whether or not your former employer wants to enforce the agreement and take legal action against you for violating the terms. If they don’t, then you can thank your lucky stars.

The only way to get out of a non compete agreement would be to:

  1. Prove that your adherence to the contract does not in any way promote your former employer’s business interests
  1. Prove that they are in breach of the contract by failing to fulfill certain conditions like monetary compensation or benefits
  1. Prove that the contract is not enforceable as per your State’s laws
  1. Prove that your former employer’s proprietary or confidential information is widely available
  1. Prove that the terms of the non-compete are not in the public interest

Look Before You Leap

Before you get swept up in the excitement and promise of a new job and end up signing a non compete agreement, ensure that you fully understand what you’re getting into.

It may not seem like a big deal at that moment, but it could greatly hinder your ability to make a smooth transition into a new job. It’s always a good idea to have a lawyer look at it and find the best possible way to mitigate its effects once you leave the company.

On the other hand, if you’re a business owner, having a solid and enforceable non compete could be the difference between the success and fall of your company every time your employees leave. Talk to an experienced attorney to see how best to draw up a contract that protects your business’ interests.

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What’s the Difference Between a Confidentiality Agreement and NDA?

Legal AssistantBusiness Law, Resources

If you thought that Non-Disclosure Agreements, or NDAs as they are popularly called, were reserved for celebrities, well, you thought wrong. They are an essential piece of legal documentation for anyone who wants to keep certain aspects of their professional or personal life private.

Signatories to NDAs have to pay-up hefty amounts in damages if they break the terms of the contract, by disclosing information that should have otherwise remained private.

People often use the terms “NDA” and “confidentiality agreement” interchangeably, but in reality, they are not the same.

So, what is the difference between them? And, what happens if you violate the conditions set out in the contracts? Here’s everything you need to know.

Confidentiality Agreement vs NDA – What’s the Difference?

A Confidential Disclosure Agreement (CDA) (or confidentiality agreement for short) is essentially the same thing as a Non-Disclosure Agreement in terms of what each of them does.

The idea behind their creation is to protect private information from leaking into the public domain. The difference between them comes in the context where they’re used. Let’s explore each of them in more detail.

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What Is a Confidentiality Agreement?

A CDA is a written legal contract that lays out a series of binding conditions that prevent an individual from disclosing confidential information. These types of agreements are commonly used, where a higher degree of secrecy is required.

It’s not enough to simply “not disclose” information; you have to actively ensure that the information in question remains a secret. It may involve activities that revolve around:

  • Placing restrictions on how the information in question can be used
  • Protecting databases
  • Preventing employees from stealing information
  • Ensuring that subcontractors are also bound by the same CDA

… and several other proactive steps.

CDAs are more frequently used in employment situations, particularly where the public disclosure of certain commercially-sensitive information would lead to a monetary loss of some kind.

They can also be used in personal situations where leaked sensitive information could end up damaging an individual’s reputation and public perception.

What Is a Non Disclosure Agreement?

An NDA is also a legally binding agreement that compels signatories to keep specified information a secret. These are more commonly used in business, startup, or third party situations. A third party could be a vendor, supplier, customer, or even a potential investor.

NDAs are generally used to protect trade secrets, patents, inventions, intellectual properties, pricing arrangements, or any other type of financial information.

Non-disclosure agreements are commonly used when the obligation to keep certain information is unilateral (or one-way).

On the other hand, if the exchange of secrets or any other kind of sensitive information is multilateral, then a confidentiality agreement would be more applicable.

Elements of Confidentiality Agreements and NDAs

Although there are subtle differences between confidentiality and non-disclosure agreements, they all function on the same basic principle – to keep certain pieces of information a secret, by never divulging it to third parties.

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Regardless of the type of information these agreements protect, they all have the same basic elements.

1. Definitions and Exclusions

These establish the types and categories of information covered by the agreements in question. This section spells out the subject/rules/consideration of the contract without actually releasing the specific information involved.

So, if you run a boutique that carries exclusive designer-wear, for instance, the agreement would have a clause that reads something along the lines of:

“… The confidential information protected by this agreement includes innovative processes, sales figures, inventory, financial and credit information, and customer lists …”

CDAs and NDAs will also often contain exclusions to information that would not need to be kept a secret. This would encompass information that’s already considered common knowledge at the time of signing the contract.

2. Obligations From Involved Parties

Both confidentiality and non-disclosure agreements explicitly state that the signatory to the contract has to keep the information in question a secret.

It means that you cannot disclose it, encourage other parties to violate the terms of the agreement, nor allow parties not privy to the information to access it through methods that would be deemed improper or unconventional.

All these would be tantamount to a breach of confidentiality – in which case you would be liable for damages.

3. Duration of Contractual Obligation

The final element is the period during which the agreement is in force. In most cases, the agreements are usually binding for a specific number of years, whether or not you’re involved in direct dealings with the parties in question at that time.

So, if you divulge a trade secret long after you officially left the company that issued the CDA, before the period that the agreement is in force elapses, your actions would be a violation of confidentiality. You would, in turn, be held liable for the damages that result thereafter.

Violating Non-Disclosure Agreement – Legal Ramifications

A breach of confidentiality opens up a can of worms in claims that could cost you a lot more than you bargained for if you are the offending party. If, on the other hand, someone breached the terms and conditions of an NDA you issued, some of the claims you can file to hold them accountable include:

  • Breach of contract
  • Copyright infringement
  • Trade secret misappropriation
  • Unfair competition

Nonetheless, the burden of proof lies with you to show that the other party violated the agreement and the resulting damages you suffered. The widely-publicized Nick Sandmann lawsuit is the perfect example of what could happen if any of the signatories to a confidentiality agreement violates its terms.

Sandmann, the teenager at the center of a viral video of him in an apparent confrontation with a Native American activist, allegedly received a $250 million settlement from The Washington Post, over its botched coverage that took the entire incident out of context.

The details of the defamation settlement were to remain a secret based on the terms of the confidentiality agreement signed by the parties involved in the suit. However, Brian Stelter, CNN’s chief media correspondent, could now be facing a lawsuit for breaching the network’s CDA when he divulged the settlement figure – whether true or not.

Secrets Are Meant to Be Kept

What’s the difference between a confidentiality agreement and an NDA? Not much. It all boils down to the context in which they are issued and how many parties are involved.

Non-disclosure agreements are used when the obligation to keep information secret is unilateral, while confidentiality agreements are used when multiple parties have to keep the multilateral exchange of secrets confidential.

Keep in mind that a violation of confidentiality carries with it some pretty hefty legal ramifications. So, think twice before you divulge private information to third parties, particularly if you’ve signed an NDA or CDA.

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What Is Capital Gains Tax and How Is It Calculated?

Legal AssistantBusiness Law, Tax Law

If you’re researching capital gains tax, congratulations! It’s likely because your investments are doing well. Or, at the very least, you’re preparing for when they start to yield some major returns. Either way, you’ve come to the right place to find the information you seek.

If you created a low-cost, diversified portfolio, there’s a good chance that the assets you currently hold are worth considerably more than what you had initially paid for them. You might even be thinking of selling some of them to realize those capital gains.

What you also need to be aware of is that any gains you derive are subject to taxation both at a state and federal level. Bummer – but it is what it is.

With that being said, what is capital gains tax, and how is it calculated? This article explores everything you need to know about it.

What Is Capital Gains Tax?

Before we dive into the tax component, let’s define what capital gains are in the first place. Let’s say you bought Amazon Inc. stock a decade ago when each share was valued at $100. Today, however, the current price is a little over $3,000.

So, you decide that now’s as good a time as any to sell some of your stock and take advantage of their increased value. This essentially means that if you had 100 shares and you sold 50 of them, you would make $150,000, compared to your initial investment of $5,000 – for the 50.

You would make a profit of $145,000 from the sale – which would be equivalent to your capital gain. The same concept applies if you sell other assets like real estate.

Now, the IRS taxes these capital gains at a federal level, although some states also do it at a state level. The capital gains tax rate applicable to your profits all depends on the duration of your investment.

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1. Short Term Capital Gains Tax

Short term capital gains tax is levied on assets that you hold for less than a year. These are generally taxed like regular income. So, the capital gains tax brackets are the same as those applied to federal income tax.

2. Long Term Capital Gains Tax

Long term capital gains tax is levied on assets that you hold for one year or more. The applicable tax rates are usually lower compared to those for short term capital gains.

Depending on what your regular income tax brackets are, you might find that your capital gains tax for that particular category of assets is as low as 0 percent. Even income earners who fall in the top income brackets may end up paying almost 50 percent of their income tax rates.

This is the major reason why some extremely wealthy Americans don’t pay as much in taxes as you would expect when compared against their earning capacities.

How Much Is Capital Gains Tax

Below are the current IRS long term capital gains tax rates for 2019-2020.

Filing Status0%15%20%
Single$39,375 and below$39,376 to $434,550Above $434,550
Married but filing jointly$78,750 and below$78,751 to $488,850Above $488,850
Married but filing separately$39,375 and below$39,376 to $244,425Above $244,425
Head of household$52,750 and below$52,751 to $461,700Above $461,700

Keep in mind that the short term capital gains are taxed at the same graduated tax rates that apply to ordinary income.

How to Calculate Capital Gains Tax

Let’s say you are single and have $145,000 in long term gains from selling Amazon Inc. stock after your initial investment 10 years ago. Let’s also say that you incurred a capital loss of $5,000 from the sale of a property you owned out in the countryside.

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When calculating the capital gains, you first need to use your losses to offset your gains. So, in our case, it would be:

$145,000 – $5,000 = $140,000

Next, since you held the stock for 10 years, the gains would qualify as long term capital gains. To calculate how much you would pay in federal capital gains tax, simply look up the amount you’re required to pay against your filing status, and apply the respective percentage. In our case, it would be:

$140,000 x 15% = $21,000

You would, therefore, have to remit $21,000 in capital gains tax to the IRS. Ensure that you also fill out Schedule D when filing your annual tax returns.

How to Avoid Capital Gains Tax

There are several ways to (legally) avoid paying capital gains tax. Here are a few tips you can consider:

  • Match your losses – Harvest your capital losses as they occur and use them to offset current or future gains. If you have any losses left over, you can carry them forward to the forward to the following financial year.
  • Primary residence exclusion – If you sell your primary residence, you can exclude anywhere between $250,000 and $500,000 – if you’re married – in gains from the sale.
  • Renovate your home – Purchase an under-market-value home, and make it your primary residence as you renovate it. Then, flip it for a higher sales price. You won’t pay any taxes, thanks to the primary residence exclusion.
  • Relocate to a lower tax bracket state – Capital tax rates vary depending on the state you’re in. California, for instance, has the highest rates. So, if you’re looking to save, move to a lower gains tax state.
  • Contribute to a 401K – This reduces your taxable income and offsets any capital gains you might trade in your account.

With those savvy techniques at hand, the next question you might ask is – When do you pay capital gains tax? Ideally, you want to pay the tax you owe before the quarterly due dates after the sale is complete. The respective dates are:

  • April 15 for the 1st quarter
  • June 15 for the 2nd quarter
  • September 15 for the 3rd quarter
  • January 15 for the 4th quarter

Maximize Your Gains at All Costs

When your investments perform well, the downside is that they come with a tax bill to match. Naturally, if you’re looking to cut down on your capital gains tax liability, it makes sense to hold your investment for a longer duration – more than a year, at the very least.

You can also apply the tips detailed in this guide to avoid paying a substantial portion of gains tax, to maximize your returns. If you have any legal issues concerning your tax obligations, get in touch with a tax lawyer to help.

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What Is a Grand Jury Indictment?

Legal AssistantCriminal Law

Grand juries play a very important role in the US criminal justice system – both at a state and federal level. However, the exact role they play is often shrouded in mystery.

One thing is for sure though – getting indicted by a grand jury is as serious as it sounds. It is, therefore, important to understand the entire process, particularly if you’re currently under investigation for a possible federal charge.

So, what is a grand jury indictment, and how exactly does it work? Here’s everything you need to know about it.

What Is a Grand Jury Indictment – A Brief Overview

A grand jury is essentially a group of regular citizens who regularly convene to decide whether or not indictments should be issued to individuals who are currently under federal investigation.

An “indictment” is another name for a “formal charge.” A grand jury can have as many as 23 members, although they are often fewer.

Grand Jury vs Trial Jury

Keep in mind though that a grand jury doesn’t function in the same way a regular jury does.

Its role isn’t to find you guilty or not guilty of the criminal charges that have been leveled against you. Its role also isn’t to sentence you either if you are indeed guilty of the crime you’re accused of.

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Its function is to decide whether or not federal criminal charges should be brought against you, or, in other words – “indicted.”

Nonetheless, not all defendants have to face a grand jury. In many cases, they are not even used. There are three ways in which criminal charges can be leveled against a suspect.

1. Through the “Information”

The first way is through a legal document referred to as the “information.” It is, to some extent, quite similar to a complaint filed in a civil trial, with the main difference being that it is written by the prosecutor.

Once the preliminary hearing finds probable cause, the prosecutor goes ahead to file the information, describing in detail the criminal actions committed by the defendant. This is done in a series of statements substantiated by police reports and other pieces of evidence derived from the police investigation.

In most states, prosecutors proceed to trial once charges for felony crimes are brought by information. At a federal level, if a grand jury is waived, federal misdemeanor or felony charges can also be brought by information.

2. Through a Grand Jury Indictment

The second method of bringing criminal charges against a suspect is through a grand jury indictment. In such instances, the prosecutor reviews the evidence compiled by law enforcement and presents it to a grand jury.

The members then review the evidence in question and decide on whether or not the case should proceed to trial. Prosecutors may opt to go the grand jury route if they’re not quite sure whether they’ll succeed in a criminal trial.

They use the grand jury proceedings as a sort of test run before investing their time, effort, and resources in a trial. It is an indicator of whether the charges will stick.

3. Through Citation

The third way of bringing charges against a suspect is through citation. This is the easiest of all three and is used to bring infraction charges against an individual.

When a law enforcement officer sees someone committing a minor crime – like littering, jaywalking, or speeding, they write up a ticket, which is also referred to as a “citation.” Infractions are usually for minor crimes that aren’t punishable by prison time.

Grand Jury vs Preliminary Hearing – What’s the Difference?

Although criminal law in all states across the country has a provision that allows for a grand jury, an estimated 50 percent of them don’t use it. Those that don’t, opt for a preliminary hearing instead, particularly in adversarial cases.

So, what is a preliminary hearing, and how is it different from a grand jury?

Well, just like grand juries, the preliminary hearing process is supposed to determine whether the evidence presented is enough to indict. This is referred to as “probable cause.”

Preliminary hearings are usually open to the public, whereas grand jury proceedings are not. They also involve a judge together with the lawyers on both sides. Grand juries, on the other hand, only have the judge and the prosecutor – that’s it.

Perhaps the biggest difference between the two is the fact that a defendant can ask for a preliminary hearing, although a judge may deny that request.

What Happens After a Preliminary Hearing

Once the preliminary hearing process concludes, the prosecutor and defense attorney may decide to do what is known as “submitting a case on the record.” In such instances, the judge determines the defendant’s guilt (or innocence) based on the transcripts of the hearing.

A prosecutor will only agree to go this route if they know they have a weak case that won’t hold up at trial.

The Grand Jury Indictment Process

Although grand jury proceedings are less formal compared to those in a criminal trial, they do share a lot of similarities with a jury trial. For one thing, the court proceedings and witness testimonies are all put on record.

The prosecutor also has to explain the law to the members of the grand jury, present evidence, exhibits, and any other relevant witness testimony, all while adhering to the usual courtroom rules. The grand jury has the power to hear and see anything they would like, to decide whether or not to indict.

Grand juries don’t have to reach a unanimous decision to indict based on the proceedings. It does, however, need to reach a ⅔ or ¾ super-majority vote to indict the suspect.

The next logical question would be – What happens after grand jury indictment?

Well, the case proceeds to trial, and at a much faster rate at that. Without a grand jury indictment, a prosecutor would have the difficult task of demonstrating to a trial judge that they have enough evidence to proceed with litigation at that level.

Understand the Long Road Ahead

If you’re facing a potential grand jury indictment, you need to talk to a criminal defense attorney as soon as possible. Although they won’t be present at the grand jury proceedings, they can help you challenge it if you end up getting indicted before the case proceeds to trial.

Ensure that you get all the information you need beforehand to know what you’re up against.

If you have any legal questions, feel free to chat online with a Laws101.com attorney.

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What Is New York’s “Green Light Law”

Legal AssistantAdministrative Law, Immigration Law

On June 17, 2019, the Driver’s License Access and Privacy Act was signed into law. The Green Light Law, as it is commonly referred to, meant that all residents of New York aged 16 and over, could now apply for a standard, non-commercial, not-for-federal-purposes driver’s license or learner’s permit – regardless of their immigration status or citizenship.

New York effectively became the thirteenth state in the nation that allows any undocumented immigrant to apply for a license after Gov. Andrew Cuomo signed the bill into law.

What is New York’s Green Light Law all about, and what does it mean for you if you’re living in the US without legal status? Here’s what you need to know.

What Is an Undocumented Immigrant?

Here’s what we know so far. If you are an undocumented immigrant, the New York Green Light Law allows you to apply for a driver’s license or learner’s permit and legally drive on any of the state’s roads. The question is – who is an undocumented immigrant?

The straightforward definition would be any foreign-born individual who does not enjoy legal status. This technically means that they do not have the right – from a legal standpoint – to be or remain in the US.

The term “undocumented immigrant” means the same thing as “illegal alien,” although the latter has a negative connotation to it. The immigration law, however, doesn’t refer to these individuals by the derogatory term. Instead, it uses the more widely accepted “undocumented immigrant” or “unauthorized immigrant.”

According to statistics from the Department of Homeland Security (DHS), there are over 12 million unauthorized immigrants currently living in the US. Contrary to popular belief, not all of them gained access to the country by sneaking across the borders.

A large number of them initially entered the US legally as tourists, or some other type of temporary non-immigrant visa, but failed to leave once their time in the country was up.

Keep in mind that there are also the individuals who might be considered undocumented, but have what would technically amount to a right to be in the country.

The perfect example of this are asylum-seekers fleeing persecution by their home governments. Most of these individuals are not aware of the fact that they can apply for various forms of immigration relief – including Temporary Protected Status (TPS) or asylum.

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What Rights Do Unauthorized Immigrants Have?

It’s no secret that the Trump administration has a “zero-tolerance” immigration policy.

Nonetheless, under the 14th Amendment to the US Constitution, every single person living in the country – including a non-citizen – is entitled to equal protection under the law. It means that no individual should be deprived of their right to life, property, or liberty without following the due process of the law.

Despite this fact, driving privileges in the majority of states across the country remain a prized reserve of the country’s citizens, or at the very least, individuals who have legal status. For the now 13 states that do issue a driver’s license for undocumented immigrants, the idea behind such legislation is that the roads are safer if everyone on them has passed a driver’s test.

You might ask – Can undocumented immigrants vote? The answer is: No.

If you are an unauthorized immigrant, you will not be able to vote in the upcoming elections slated for later in the year. Non-citizens, including those who have permanent residency status, are not authorized to vote in local, state, or federal elections.

Can Immigration Agencies Use DMV Data to Get You Deported?

The short answer is – no, they can’t. You can apply for a driver’s license or learner’s permit without running the risk of imminent deportation by the immigration authorities. So, if that’s a fear that’s been holding you back, well, you can rest easy knowing that won’t happen.

The New York Green Light Law has a provision that bars federal immigration and border agencies from accessing the New York DMV database. This means that they won’t be able to pull up records on a vehicle owner to determine whether or not they have a criminal history or outstanding warrant for their arrest.

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The law also prohibits the state’s DMV workers from divulging any of its data to immigration enforcement agencies, unless a judge orders it.

Some of the federal agencies that have been completely cut off from accessing the New York DMV database include the US Immigration and Customs Enforcement (ICE) and the US Customs and Border Protection (CBP), which monitors the US-Canada border in the state.

Green Light Law Requirements

First off, you’ll need to provide different documents that prove you are who you say you are. They should have your name, your date of birth, and prove that you are a resident of New York.

You’ll also need to sign an affidavit stating that you have never been issued with a social security card before you can apply for a standard driver’s license. Keep in mind that you don’t need to have a social security number to get a license.

Here’s a list of the additional documents you’ll need to present before you can apply for a driver’s license in the State of New York.

  • A Border Crossing Card
  • A court-issued name change decree
  • A foreign birth certificate
  • A foreign marriage certificate or divorce decree
  • A US Municipal ID Card with a photo
  • A valid consular identification document
  • A valid Employment Authorization Card
  • A valid foreign driver’s license that displays your photo
  • A valid foreign passport issued by the country of your citizenship
  • A valid permanent residency card

The New York Green Light Law doesn’t apply to non-driver identification cards.

Global Entry Lawsuit

In February 2020, the DHS instituted a ban on New York residents from registering or re-registering in the Trusted Traveller Programs, one of which includes Global Entry.

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The Global Entry program allows enrolled members to enjoy expedited re-entry into the US after traveling to Mexico or Canada. This was in apparent retribution due to the state’s so-called “sanctuary policies” barring the federal immigration authorities from accessing data for unauthorized immigrants in the DMV database.

Hundreds of thousands of New Yorkers joined forces to launch a class-action lawsuit against the federal government for its apparent punitive exclusion from the Global Entry program.

In April 2020, however, the ban was lifted after New York amended the law to allow DHS to access the data of any individual looking to enroll in the Trusted Traveller Program.

Driving Privileges Don’t Equate to Citizenship

While New York’s Green Light Law was a welcome move to allow undocumented immigrants to apply for a standard driver’s license or learner’s permit, that’s all it does. You still won’t be able to get a commercial driver’s license, nor will it allow you to vote in the upcoming elections. Your undocumented status will remain as-is.

If you have any legal questions concerning immigration laws, seek out the expert counsel of an immigration attorney.

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What Are Red Flag Laws?

Legal AssistantCriminal Law

According to the FBI crime data, death by firearms in 2018 accounted for more than 72 percent of all the homicides recorded that year. There have been more than 60 incidences of mass shootings over the last four decades.

Gun control continues to be a hot topic of debate. The US alone has the highest rate of gun ownership compared to any other country in the world and by a staggering margin at that.

Currently, only two federal laws that regulate the sales and ownership of firearms exist:

  1. The National Firearms Act of 1934 prohibits civilians from owning hand grenades, short-barreled shotguns, automatic weapons, or any other powerful firearm.
  2. The Gun Control Act of 1968 bars the sale of weapons via mail between direct buyers / sellers and requires that anyone in the business of selling firearms have a federal firearms license (FFL) and keep a permanent ledger of all their sales records (FFL Bound Book).

The 1968 Act also outlaws the sale of firearms to anyone with a prior criminal record or mental health issue and prohibits sales to minors and a few other categories of individuals.

To reduce the high rates of gun violence witnessed across the country, several states have gone ahead to institute red flag laws as a way to curb the rising death tolls brought about by the use of firearms.

So, what are they and how do they work? This article explores everything you need to know about them.

What Are Red Flag Laws – Overview

Red flag laws allow law enforcement officers, family members, or any other specified third party to petition a court to temporarily remove a gun from an individual’s possession if they pose an imminent danger to themselves or others.

Several states have some form of a red flag law in force. In Washington, Vermont, Oregon, and Maryland, they are known as Extreme Risk Protection Orders. In California, they are referred to as Gun Violence Restraining Orders. In Florida, they are called Risk Protection Orders.

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Regardless of what they’re called, they all work the same way.

If a judge finds the causes for removal justifiable, they will issue an order that compels the individual in question to surrender all firearms in their possession to law enforcement, for a specific duration. The individual will not be allowed to purchase or sell arms for the period that the order is in force.

Constitutionality of Red Flag Laws

The next logical question to ask would be – are red flag laws unconstitutional in light of the 2nd Amendment? Well, at first glance, it might appear that way. But, despite this fact, at least three different courts in Florida, Connecticut, and Indiana ruled that red flag laws fall squarely within state governments’ authority to regulate guns.

Although judicial interpretations of the 2nd Amendment may change, legal scholars argue that the idea behind risk protection orders infringing (to some extent) on a citizen’s liberties isn’t anything new. The key thing to recognize is that – the removal of the firearm is only a temporary measure.

If the continued possession of the weapon puts the life of the individual or that of others at risk, one might also argue that it infringes on their constitutional right to life, if the individual in question ends up using the firearm to harm others.

Gun laws, in general, exist to reduce the potential for gun-related violence that could end up in a homicide. Gun confiscation is one way to do this, particularly if the individual is despondent and at a higher risk of suicide.

What States Have Red Flag Laws?

Below is a list of red flag law states that have passed gun confiscation laws so far:

  • Washington
  • Virginia
  • Vermont
  • Rhode Island
  • Oregon
  • New York
  • New Mexico
  • New Jersey
  • Nevada
  • Massachusetts
  • Maryland
  • Indiana
  • Illinois
  • Hawaii
  • Florida
  • District of Columbia
  • Delaware
  • Connecticut
  • Colorado
  • California
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Keep in mind that this area of the law changes frequently. Several other states have pending legislation that might pass soon.

How Do Red Flag Laws Work?

In most states with gun confiscation laws in place, law enforcement officers, family, or household members can file a petition with the court for Extreme Risk Protection Orders (ERPOs), or the respective firearm removal order in their state. This can only be done if they believe that an individual is a threat to themselves or the people around them.

Some states also allow community members to petition the court. School administrators in the State of New York, for instance, can file for such orders. In other states like Florida and Indiana, only police officers can petition the court. Either way, you can still go to law enforcement and ask them to file a petition.

When filing with the courts, you need to show that:

  • Threats or acts of violence by the respondent to themselves or others have occurred within the six months leading up to the date of filing
  • The respondent has violated an emergency protective order that is still in effect at the date of filing
  • The respondent has violated a domestic violence protective order that is still in effect within the six months leading up to the date of filing
  • The respondent has previously been convicted of a crime that prohibits them from owning a firearm
  • The respondent has exhibited a pattern of violent acts over the last 12 months

The Oregon gun confiscation law, in particular, has what can only be termed as an unusually high standard of proof before ex parte orders for confiscation can be issued. These orders, however, become permanent if the respondent fails to challenge it in court.

The Extreme Risk Protection Order and Violence Prevention Act of 2019, was introduced in the Senate, to legislate red flag laws at a federal level. The bill is yet to be passed.

Don’t Wait Until It’s Too Late

More often than not, red flag laws are used to remove guns from people who pose potential threats to themselves, their families, or members of their household. This is generally the case if they suffer from illnesses like alcoholism, drug addiction, dementia, despondency, or any other ailment that could potentially impair their judgment.

Research the red flag laws in your state to learn what you need to do to file a petition for removal if your life or that of other family members is at risk.

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Are Curfews Legal? Legal Consequences of Breaking Curfew

Legal AssistantCriminal Law

One of the things that make the United States the greatest nation on earth is the Constitution. It protects the fundamental rights and liberties of the citizens.

This fact could be the reason why several people have a problem with curfews since it feels like an infringement on their constitutional right to freedom of movement.

As part of the several measures taken to slow the spread of COVID-19, many states have imposed a curfew on businesses and establishments where people may gather in large numbers. The coronavirus curfew, however, doesn’t apply to the essential service providers.

It begs the question – Are curfews legal? And, if so, what are the legal consequences of breaking curfew? Here’s everything you need to know.

Are Curfews Legal?

First off, a curfew is a law that bans or limits your right to be out in public areas at specific times.

More often than not, these laws target businesses, requiring them to close operations between certain hours of the day or night. Other types of curfews target juveniles limiting the times when they can be out in public without adult supervision.

As for the question of the legality of curfews, the short answer is – yes, they are indeed legal. Both local and state governments alike have the power to set curfews and other movement restrictions in certain extraneous circumstances.

This is because the burden of the responsibility to safeguard public health and safety falls squarely on the shoulders of local and state governments – to a much larger extent than the federal government.

It is important to keep in mind though that “mandatory curfew” applies only to public property. So, while you might live in a city with curfew laws in force, you’re free to roam around your driveway, backyard, porch, patio, or deck. Nonetheless, specific city ordinances such as “quiet hours” may also apply.

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Types of Curfew Laws

There are three types of curfew laws that exist in the US. These are detailed below.

1. Emergency Curfew Laws

These are generally temporary directives issued by local, state, or federal governments in response to particular crises including:

  • Natural disasters like explosions, forest fires, or hurricanes
  • Persistent civil disturbances including terrorist threats, violent protests, or riots
  • Public health disasters like a pandemic, outbreak of a highly contagious disease, or quarantine

In March 2020, for instance, several states declared a state of emergency. This gave their respective governments the authority to impose an emergency curfew to slow the spread of the coronavirus for the duration of the global pandemic.

Going further back to August 2008, New Orleans instituted a “dusk-to-dawn” curfew due to the impending threat of Hurricane Gustav as it approached the Gulf Coast.

An emergency curfew may impose the following measures:

  • Prohibiting pedestrians from biking, walking, sitting, or standing
  • Prohibiting the movement or parking of motor vehicles in specific places
  • Prohibiting the operation of businesses between certain hours
  • Allowing for the movement of healthcare workers for emergency calls, utility service providers, and patients
  • Allowing the operation of designated essential services including hospital, police, and fire services

Emergency Curfew Violation Consequences

Breaking emergency curfew laws is punishable by fines, jail time, or probation. The nature and severity of the punishments vary from one state to another.

2. Business Curfew Laws

Curfews imposed on businesses are designed to maintain and promote public health and safety in times of crisis. These types of curfews are usually placed on businesses that operate in heavily populated areas where people are likely to gather in large numbers – which would fuel the spread of diseases like coronavirus.

They are also imposed on businesses that operate in places that have a higher-than-average crime rate, forcing them to remain closed during late-night hours. Business curfew laws usually target restaurants, bars, and popular stores. Pharmacies, however, are the exception since they are deemed to be an essential service.

Business curfew violation carries with it some hefty penalties for any entity found flouting the rules. The severity of the fines ultimately depends on the government agency charged with enforcing that particular curfew law.

3. Juvenile Curfew Laws

This type of curfew law is normally enacted at the local or state level. It usually prohibits individuals of a certain age – usually those under 18, from being out in public at certain times when not accompanied by an adult, or from accessing certain businesses between specific times.

Juvenile curfew hours are typically between 11 p.m. and 6 a.m., with the goal being to prevent juvenile crime and maintain social order. In the year 2008 in Birmingham, Alabama, minors aged 17 and below were prohibited from being out on the streets past 9 p.m. during weekdays and 11 p.m. on the weekends.

Any child found violating those rules would be slapped with a $500 fine that the parents would usually have to pay. In other states, the penalties may require that the child complete a specific number of hours of community service if they break curfew.

Is a Curfew Violation a Criminal Offense

A frequently asked question is – What happens if you break curfew? Well, for starters, breaking curfew is a crime. So, a violation of the same is punishable by jail time, fines, probation, or in the case of juvenile curfew – community service.

The severity of the punishment all boils down to the government agency charged with enforcing the law. Violating a state curfew directive would carry much stiffer penalties than violating a local one.

Keep in mind though that direct orders from law enforcement or public safety officers override curfew laws. So, if you disobey a direct police order to “get down,” “get out,” or “go inside” within or outside of curfew hours, you will be arrested and charged.

Talk to a Criminal Lawyer

Bottom line: Are curfews legal? Yes, they are. Curfew laws are usually passed in times when the health, safety, and wellbeing of the general public are at risk. This could be during natural calamities, persistent civil disturbances, or public health disasters.

Breaking these laws carries with it some very real legal consequences. So, if you’ve been arrested for violating curfew orders in your city or state, ensure that you get a competent criminal attorney to help you fight those charges.

If you have any legal questions, feel free to chat online with a Laws101.com attorney.

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Is Martial Law Legal in the US?

Legal AssistantAdministrative Law, Constitutional Law

Flashback to December 1941 when the Japanese launched a surprise attack on Pearl Harbor – a US naval base that was located near Honolulu, Hawaii. Within hours, the then civilian territorial governor handed control of the Hawaiian Islands over to the US commander of the armed forces.

The new military governor immediately ordered a shutdown of schools and courts, imposed a ban on the sale of alcohol, decreed a blackout and curfew, imposed censorship of all media including civilian mail, suspended labor contracts, froze wages, and took several other extreme measures, all synonymous with martial law.

The situation remained in force for nearly three years, even though there was no looming threat of another Japanese invasion after the 1942 Battle of Midway. This is perhaps one of the most notable martial law examples witnessed in American history.

So, what is martial law anyway, and can the president declare it in the wake of the coronavirus pandemic or any other devastating natural disaster? Here’s everything you need to know about it.

Martial Law Definition

Martial law in the US refers to a situation where military forces take over the administrative functions and authority of the civilian government. While this has been commonly witnessed in several other countries like Pakistan and Thailand, there has never been a nationwide imposition of martial law in the US.

The next thing you might ask is – Is martial law legal? Yes, it is. The US Constitution has this provision, although it is not explicitly mentioned.

However, federal law prohibits the military from seizing power in any area within the US borders except for what it terms as “extreme circumstances.” These include situations where state or local civilian systems degenerate, and the existing courts stop functioning, or if there is widespread rebellion against federal authority.

Nonetheless, there are instances where the military does intervene to help deal with civil disturbances such as rioting – although this is generally in a supporting role to help law enforcement agents quell the situation. They may also intervene in times of public health emergencies and natural disasters.

Martial Law Hurricane Katrina – What Really Happened

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When Hurricane Katrina ravaged southeast Louisiana in August 2005, there were reports in some media that martial law had been declared in parts of the state. Violence, disorder, and confusion erupted in the wake of the disaster, which left the government with no choice but to enforce lockdown to restore order.

The presence of police, military vehicles, checkpoints, and roadblocks had become a common sight. However, this scenario was not an imposition of martial law, but rather a declaration of a state of emergency.

Louisiana’s Homeland Security and Emergency Assistance and Disaster Act of 1993, gives the governor the authority to:

  • Utilize or commandeer private property if deemed necessary to deal with an emergency
  • Suspend or override any piece of legislation related to the way official business is conducted if its compliance impedes or delays the necessary action required to mitigate the emergency
  • Compel evacuations and facilitate the use and availability of temporary emergency housing
  • Suspend the sale of alcohol and weapons

The National Guard soldiers were there in a supporting role to law enforcement agencies on site.

What Is Habeas Corpus

To reiterate, the US Constitution provides for martial law, although it doesn’t explicitly mention it. Article 1, § 8 mentions the activation of military action in times of invasion or rebellion, whereas Article 1, § 9 talks of the suspension of habeas corpus.

Habeas Corpus is a concept in the law that prevents the government from detaining an individual without a valid reason. A writ of Habeas Corpus compels government agencies to bring the individual in question before a court of law and provide reasonable cause why they are detaining them.

Its suspension is often equated to the activation of martial law, therefore allowing government agencies to detain individuals without charging them with anything.

Now, some may argue that only Congress has the power to declare martial law in the US since it is the only branch of government that has the power and authority to suspend the writ.

Other factions argue that since the President is the commander-in-chief of the US armed forces, i.e., the military, they can decide to declare martial law.

Posse Comitatus Act

§ 8 and § 9 of Article 1 could potentially set in motion a power tug-of-war between Congress and the Executive arm of the government – one which only the courts can resolve. The Posse Comitatus Act (PCA) attempts to strike a balance between the two.

It prohibits the use of the military to execute civilian law except in extreme circumstances and with the express approval of Congress. Nonetheless, there are several Posse Comitatus Act exceptions to the use of the military that don’t violate the statute. These include when:

  1. Congress passes a law that authorizes the use of the military to enforce federal law
  2. Military activities don’t involve the “execution of the law” but rather support civilian law enforcement
  3. Military activities assist in crimes that involve nuclear materials
  4. The activities involve weapons of mass destruction
  5. Assisting in countering transnational organized and drug-related crimes

Posse Comitatus Act and National Guard

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The PCA doesn’t apply to the National Guard or the US Coast Guard in the following scenarios:

  1. If the National Guard forces are operating under state authority as provided for in Title 32
  2. When the President calls for federal National Guard troops to quell domestic violence
  3. When military personnel conduct aerial visual search and surveillance operations

Martial Law Examples

Aside from the Japanese attack on Pearl Harbor, which resulted in Hawaii being placed under martial law, there have been several other instances of the use of the armed forces within the US borders.

The Whiskey Rebellion of 1794 was the first instance when the US government resulted in using the military to enforce federal authority, to quell the uprising in western Pennsylvania protesting the imposition of liquor tax.

Another example of the application of martial law was in the Great Chicago Fire of 1871 that left more than 100,000 city residents homeless and another 300 dead. Martial law was declared in the city to guard the relief warehouses against looting and prevent violence from erupting.

When Civilian Systems Fail, Martial Law Kicks In

It’s important to note that the deployment of troops within the country doesn’t necessarily equate to martial law.

The President or State Governor – both of whom function as the commander-in-chief of the federal and state National Guard forces respectively – can call on them for non-military use within the borders. This is especially the case in emergency and relief operations.

On the other hand, if civil law falls apart, then a declaration of martial law would be the next logical step, but only after all other avenues to quell the uprising have failed.

So, is martial law legal in the US? Absolutely; but, only for very rare circumstances.