Kristine L. Prati has successfully defended a case before the Industrial Commission. At issue was whether the employee was entitled to medical and indemnity benefits as a result of an occupational disease she allegedly sustained at one of her last three employers. On July 17, 2015, the deputy commissioner filed an Opinion and Award, determining that the employee is disabled as a result of her current medical condition; however, her medical condition was not caused by her employment with any of the named employers.
Wilson Ratledge Joins North Carolina Public Risk Management Association
Wilson Ratledge is excited to join the North Carolina Public Risk Management Association as of August 27, 2015. Attorneys Kristine L. Prati and Brian C. Tarr from our workers’ compensation section will be in attendance at the September 2015 PRIMA conference.
Recent North Carolina Workers’ Compensation Case Summaries
The attorneys at Wilson Ratledge stay up to date with the latest North Carolina Workers’ Compensation cases in order to provide you the best possible outcome. Below you will find the some of the most recent North Carolina decisions.
August 5, 2015
Battle v. Meadowbrook Meat Co. (Ordinary duties)
Plaintiff testified that it was normal for delivery drivers, like him, to lean over and maneuver on pallets when making deliveries when pallets could not be moved. Plaintiff felt something in his arm pull loose when reaching down the side of a pallet to pull up a box. The Industrial Commission found that Plaintiff did not suffer a compensable injury because there was no unusual circumstance from the work performed.
Zapata Dominguez v. Francisco Domingez Masonry, Inc. (Self-employed wage earning capacity)
Plaintiff was the owner and a crew leader of Defendant company, and was the primary contact for subcontract work. Plaintiff sustained an injury which would not allow him to perform the physical duties of a brick mason. To determine if a self-employed employee has wage earning capacity, the Commission must look to whether he 1) is actively involved in the day-to-day operation of the business and 2) uses skills which would enable him to be employable in the competitive market place not withstanding his physical limitations, age, education, and experience. In this case, since Plaintiff could work as the crew leader and supervisor, he was not totally disabled, and did have wage earning capacity.
Butler v. Drive Automotive Industries of America, Inc. (Employment law, Joint employment)
In this recent 4th Circuit case, Plaintiff was hired by ResourceMFG to work at Drive. Plaintiff was harassed about her body, was called vulgar nicknames, and was touched by one of her supervisors. Plaintiff reported the behavior to ResourceMFG, but nothing was done. Plaintiff was asked to perform work day and she refused due to being tired from the overtime she was working. Drive’s supervisor cussed at her, and called her a vulgar nickname. When she told the supervisor she did not like the name calling, he told her she was a temp and was expendable. Only a few days later, Drive contacted ResourceMFG about terminating Plaintiff. Drive’s supervisor called Plaintiff and told her he could save her job in exchange for sexual favors. Plaintiff refused and was fired. Plaintiff then filed a Title VII action.
The case was moved to federal court, and the staffing agency was dropped from the lawsuit. Defendants won at a summary judgment hearing, wherein the judge found that Drive did not exercise sufficient control over Plaintiff’s employment to entitle her to a Title VII action. Although Plaintiff wore the uniform of ResourceMFG, Drive determined Plaintiff’s work duties, scheduling and supervision.
The 4th Circuit reviewed tests from other Circuits. The “control” test looks at who has the authority to hire and fire the employee, and set the conditions of employment; who supervises the employee day-to-day; and who controls the payroll, insurance and taxes of employee. The “economic realities” test determines which entity the employee relies on for work, not necessarily who is writing the paychecks.
The 4th Circuit ultimately adopted a hybrid test between the control and economic test, and determined that the joint employment doctrine was the law of the Circuit, and that an employee may have two employers, opening up claims against more employers in the future.
Will you be subject to estate tax?
Many unsuspecting middle class households may be subject to estate tax even though they wouldn’t classify themselves as “rich”, according to a recent MarketWatch study. The current federal estate tax exemption is a generous $5.43 million for estates of individuals who die in 2015, but that can be easily exceeded by individuals with significant life insurance proceeds, a nice home and healthy retirement accounts.
The estate value for federal tax purposes includes a number of things, such as proceeds from any life insurance policies, any residences (primary/vacation/etc), retirement accounts, investment accounts, closely held business ownership interests, cars, boats, furniture and more.
To avoid estate tax where life insurance coverage puts you over the limit, you can have an experienced North Carolina estate tax attorney put together an irrevocable life insurance trust to own any policies that you may have, as well as help you determine the best option to proceed with the rest of your estate planning. There are downsides to an irrevocable life insurance trust, though, such as not being able to make changes to the policies after ownership is transferred to the trust.
Even if you don’t have exposure to the federal estate tax due to the generous exemption, you may be subject to state taxes. In North Carolina the legislature repealed the estate tax in July 2013. Florida also has no state estate tax, and has also done away with any inheritance tax.
For any questions about your estate planning or personal tax situation, call one of our estate planning experts at 919-787-7711 or contact us online to schedule a consultation.
Are you liable for the Trust Fund Recovery Penalty?
What are “Trust Fund Taxes”?
“Trust Fund Taxes” refer to any taxes required to be withheld on behalf of an employee by an employer for federal tax purposes. These include income tax withholding, social security, and Medicare taxes. Simply put, as an employer you do not pay your employee all of their wages. Instead, you have a duty to withhold certain federal tax portions from your employees’ paychecks. You hold these funds “in trust” for the federal government.
What is the Trust Fund Recovery Penalty?
The Trust Fund Recovery Penalty (“TFRP”) is penalty on responsible individuals who fail to withhold and/or pay Trust Fund Taxes to the federal government. Many individuals view a business’ tax debts as separate from their personal tax debts. However, some individuals may be personally liable for the tax debt of their business. The key to understanding the TFRP lies in two key terms: “responsible person” and “willful.” The first term identifies who the penalty may be proposed against. The second term broadly defines the actions, or lack of actions, required to be liable for the penalty.
Who is a “Responsible Person”?
The term “Responsible Person” includes only those persons who are responsible for the nonpayment of taxes. In determining who may be a “Responsible Person,” the IRS includes a great number of potential roles within every type of business. However, your title or role within a company is not the actual deciding factor. Rather, your status, duty, and authority within the organization determines your “responsible person” status.
The courts have further identified the following 7 legal factors in deciding the status of an individual:
i. Is the individual an officer or member of the board of directors;
ii. Does an individual own shares or possess an entrepreneurial stake in the company;
iii. Is the individual active in the management of day-to-day affairs of the company;
iv. Does the individual have the ability to hire and fire employees;
v. Does the individual make decisions regarding which, when, and in what order outstanding debts or taxes will be paid;
vi. Does the individual exercise control over daily bank accounts and disbursement records; and
vii. Does the individual have check-signing authority
If an individual is determined to have “responsible person” status, then that individual may be personally liable for the trust fund tax debt of the business.
What does it mean to “willfully” fail to collect, truthfully account for, and pay over Trust Fund Taxes?
In a civil context, in order to determine “willful” failure to collect, truthfully account for, and pay over trust fund taxes, the focus is primarily on your knowledge of your duty to withhold and pay the Trust Fund Taxes and your willing and conscious decision not to pay those taxes. This knowledge element includes not only things you actually knew at the time but also things you should have known undertaking reasonable efforts to determine your tax duties.
How do I avoid the TFRP?
The best way to avoid the TFRP is to be aware of your Trust Fund Tax requirements and to make timely reports and payments to the IRS. If you are uncertain about your reporting or payment requirements, it will be well worth your time and resources to seek out an experienced tax professional. Contact the attorneys at Wilson Ratledge today if you have any questions regarding the Trust Fund Recovery Penalty.
IRS Announces Over 100k Accounts Compromised
On May 26, 2015, the IRS released the following statement:
IRS Statement
The IRS announced today that criminals used taxpayer-specific data acquired from non-IRS sources to gain unauthorized access to information on approximately 100,000 tax accounts through IRS’ “Get Transcript” application. This data included Social Security information, date of birth and street address.
These third parties gained sufficient information from an outside source before trying to access the IRS site, which allowed them to clear a multi-step authentication process, including several personal verification questions that typically are only known by the taxpayer. The matter is under review by the Treasury Inspector General for Tax Administration as well as the IRS’ Criminal Investigation unit, and the “Get Transcript” application has been shut down temporarily. The IRS will provide free credit monitoring services for the approximately 100,000 taxpayers whose accounts were accessed. In total, the IRS has identified 200,000 total attempts to access data and will be notifying all of these taxpayers about the incident.
As always, the IRS takes the security of taxpayer data extremely seriously, and we are working aggressively to protect affected taxpayers and continue to strengthen our protocols.
Additional information
The IRS announced today it will be notifying taxpayers after third parties gained unauthorized access to information on about 100,000 accounts through the “Get Transcript” online application.
The IRS determined late last week that unusual activity had taken place on the application, which indicates that unauthorized third parties had access to some accounts on the transcript application. Following an initial review, it appears that access was gained to more than 100,000 accounts through the Get Transcript application.
In this sophisticated effort, third parties succeeded in clearing a multi-step authentication process that required prior personal knowledge about the taxpayer, including Social Security information, date of birth, tax filing status and street address before accessing IRS systems. The multi-layer process also requires an additional step, where applicants must correctly answer several personal identity verification questions that typically are only known by the taxpayer.
The IRS temporarily shut down the Get Transcript application last week after an initial assessment identified questionable attempts were detected on the system in mid-May. The online application will remain disabled until the IRS makes modifications and further strengthens security for it.
The matter is under continuing review by the Treasury Inspector General for Tax Administration and IRS offices, including Criminal Investigation.
The IRS notes this issue does not involve its main computer system that handles tax filing submission; that system remains secure.
On the Get Transcript application, a further review by the IRS identified that these attempts were quite complex in nature and appear to have started in February and ran through mid-May. In all, about 200,000 attempts were made from questionable email domains, with more than 100,000 of those attempts successfully clearing authentication hurdles. During this filing season, taxpayers successfully and safely downloaded a total of approximately 23 million transcripts.
In addition, to disabling the Get Transcript application, the IRS has taken a number of immediate steps to protect taxpayers, including:
*Sending a letter to all of the approximately 200,000 taxpayers whose accounts had attempted unauthorized accesses, notifying them that third parties appear to have had access to taxpayer Social Security numbers and additional personal financial information from a non-IRS source before attempting to access the IRS transcript application. Although half of this group did not actually have their transcript account accessed because the third parties failed the authentication tests, the IRS is still taking an additional protective step to alert taxpayers. That’s because malicious actors acquired sensitive financial information from a source outside the IRS about these households that led to the attempts to access the transcript application.
*Offering free credit monitoring for the approximately 100,000 taxpayers whose Get Transcript accounts were accessed to ensure this information isn’t being used through other financial avenues.
Taxpayers will receive specific instructions so they can sign up for the credit monitoring. The IRS emphasizes these outreach letters will not request any personal identification information from taxpayers. In addition, the IRS is marking the underlying taxpayer accounts on our core processing system to flag for potential identity theft to protect taxpayers going forward – both right now and in 2016.
These letters will be mailed out starting later this week and will include additional details for taxpayers about the credit monitoring and other steps. At this time, no action is needed by taxpayers outside these affected groups.
The IRS is continuing to conduct further reviews on those instances where the transcript application was accessed, including how many of these households filed taxes in 2015. It’s possible that some of these transcript accesses were made with an eye toward using them for identity theft for next year’s tax season.
The IRS emphasizes this incident involves one application involving transcripts – it does not involve other IRS systems, such as our core taxpayer accounts or other applications, such as Where’s My Refund.
The IRS will be working aggressively to protect affected taxpayers and strengthen our protocols even further going forward.