MNC Tax Overhaul on Government’s Agenda

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The White House and top lawmakers are discussing an overhaul for taxation of multinational corporations, according to the Wall Street Journal. The tax reform talks are happening as part of an effort to find funding for the highway bill and address various issues that have developed as US businesses earn cash overseas.

Overseas cash has become an increasing problem as corporations earnings are sitting offshore. If the businesses repatriate the cash into the United States, it will be taxed at a higher tax rate. Hundreds of billions are reportedly parked offshore to avoid paying U.S. taxes.

Additionally, cross-border reverse mergers during major acquisitions have become more popular in order to lower the tax rate of the resulting entity. They received the nickname corporate inversion. Until the IRS changed the rules to make them tougher and less profitable, they were going like gangbusters.

An overhaul of the system could allow the government to fund spending on highway transportation by imposing a one time tax on the repatriation of overseas cash. Among the other proposals discussed are the elimination of corporate taxes for earnings outside the United States.

If you have questions about this or another aspect of the IRS whistleblower program, feel free to contact one of our tax whistleblower attorneys via our contact form or by calling 1-800-590-4116.

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Senate Considering Antitrust Whistleblower Protections Again

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The bipartisan bill promoting whistleblower protections for individuals reporting antitrust violations, the Criminal Antitrust Anti-Retaliation Act (“CAARA”), is back in the Senate.

Grassley Reintroduces Legislation for Antitrust Whistleblower Protection

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Senators Chuck Grassley and Patrick Leahy reintroduced the Criminal Antitrust Anti-Retaliation Act into the Senate. CAARA prohibits employer retaliation against employees providing information to the Department of Justice about conduct violating criminal antitrust law.

The legislation as currently written does not provide for rewards for antitrust whistleblowers. The Government has expressed concern that it will be more difficult to make their case under the criminal law with a higher burden of proof than civil cases if their star witness of the conspiracy will receive a reward. The United States already provides limited immunity to certain individuals or companies that come forward first with evidence of their participation in an antitrust conspiracy.

Internationally, several countries do provide monetary awards in this area. The United Kingdom, South Korea, Hungary and Pakistan all pay for information about price fixing cartels. A Government Acountability Office report in July 2011 found support for rewards in the United States mixed.

The bill is one of a number under consideration by Congress and the States. The Motor Vehicle Safety Whistleblower Act sponsored by Senators Thune and Nelson to incentivize auto whistleblowers has already passed the Senate. New York’s Attorney General Eric Schneiderman has also announced a proposal for the Financial Frauds Whistleblower Act to compensate whistleblowers in the banking, insurance and financial services industries.

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Senate Bill would post every physician’s Medicare billing data on Internet

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Aiming to curtail Medicare fraud, Senator Charles Grassley (R, Iowa) introduced a program integrity measure before a Senate Finance Committee hearing on Medicare and Medicaid fraud on March 2nd.

The bill in part would require the Department of Health and Human Services by the end of 2012 start publishing Medicare claims and payment data on the website USAspending.gov. n prohibited by a court ruling for more than 30 years. But some lawmakers recently stepped up their efforts to lift the ban and bring Medicare billing data to light to prevent fraud.

By increasing transparency, the government hopes to prevent billions Medicare and Medicaid Fraud each year. Senator Grassley said, the “more transparency about billing and payments increases public understanding of where tax dollars go,” Grassley said. “The bad actors might be dissuaded if they knew their actions were subject to the light of day.”

Senators to Propose Whistleblower Rewards for the Auto Industry

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Senators John Thune (R-S.D.) and Bill Nelson (D-Fla) are expected to introduce a bill to provide auto industry whistleblowers with up to 30% of monetary penalties resulting from enforcement actions by the Department of Transportation or Justice Department. Called the Thune-Nelson Motor Vehicle Safety Whistleblower Act, it will provide for the Secretary of the Treasury to issue auto industry employees and contractors discretionary rewards for voluntary information about problems at motor vehicle manufacturers, parts suppliers and dealerships. The legislation is modeled after the Internal Revenue Service and Securities and Exchange Commission whistleblower programs, including confidentiality protections.

It is co-sponsored by Claire McCaskill (D-Mo.) and Dean Heller (R-Nevada), the leaders of the Commerce Committee’s subcommittee on consumer protection. The subcommittee is investigating delayed recalls of ignition switches at General Motors. The bipartisan sponsors of the bill suggest that the issue may cross party lines even though corporations have in the past vehemently opposed past efforts to strengthen rewards.

The Detroit News called out the bill as “the first significant auto safety proposal to receive backing of a top Republican.” The chairman of the House Energy and Commerce Committee, Representative Fred Upton (R-MI) said he is still considering proposing a bill for auto reform.

Democrats in the House and Senate proposed sweeping reforms earlier this year. In September, the Vehicle Safety Improvement Act was introduced to reform the industry. Senate Democrats proposed the Early Warning Reporting System Improvement Act in March followed by the Motor Vehicle and Highway Safety Enhancement Act in August.

The introduction of the whistleblower bill comes at a time when several companies in the auto industry are being investigated for defective products. The introduction of the bill coincides with a hearing today in the Senate Commerce Committee regarding the recall of 7.8 million vehicles by 10 major automakers because of defective Takata air bags.

In June, news broke about a GM whistleblower who had been silenced and fired by the company for accusing it of dragging its feet to fix safety issues.  The company had known about the problematic ignition switches for years before it finally issued a recall.

Toyota paid a $1.2 billion fine earlier this year for misleading the government and consumers about unintended acceleration complaints. U.S. Attorney Preet Bharara said, “Even while giving unequivocal assurances that it had fully addressed a grave safety problem, Toyota knew full well that the problem of unwanted acceleration persisted.” Toyota initially blamed the problem on the accelerator being stuck under the floor mat while hiding the potential for “sticky pedals”. The company recall didn’t cover all of the cars in danger and they continued to manufacture problematic vehicles.

Earlier this month, Hyundai Motor and Kia Motors were also fined $300 million for overstating vehicle fuel-economy standards. We haven’t been able to track down the bill yet to determine whether information about this time of fine for a violation of the Clean Air Act will also be covered.

This bill is not the only area where the U.S. Government is considering expanding rewards.

Representative Maxine Walters (D-CA) introduced the Holding Individuals Accountable and Deterring Money Laundering Act (H.R. 3317) into the House of Representatives last October. It provides for an increase in the potential payment for FinCEN whistleblowers from the current maximum payment of $150,000.  The new law would offer a minimum of 10 percent and maximum of 30 percent on eligible recoveries over $1 million.

The Centers for Medicare and Medicaid Services proposed an increase last year in the maximum reward for its own Medicare Incentive Reward Program to $9.9 million from $1,000.  The U.S. Government Accountability Office also published a report on reform of the criminal cartel enforcement laws in 2011 which considered, among other things, adding incentives for reports of antitrust violations.

New York is also considering rewards for information provided to its Department of Financial Services.  The agency, run by Benjamin Lawsky, has issued several large fines against financial institutions this year, including this week’s $315 million settlement with Bank of Tokyo Mitsubishi UFJ.  It also will reportedly pursue penalties against Barclay’s for forex manipulation similar to the conduct involved in settlements between five banks and the CFTC last week.

Collected Proceeds Clarification for IRS Whistleblowers Dropped from Tax Bill

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The Wall Street Journal reported yesterday that the reconciliation of the tax legislation has dropped the definition of collected proceeds for the IRS whistleblower program introduced into the Senate version that passed. The amendment was added by Senator Chuck Grassley, an advocate for whistleblowers and responsible for introducing the legislative provision in 2007 that created the IRS whistleblower program.

Whistleblower Law Updates: Ag Gag, CAARA, VA

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A few different updates regarding whistleblower legislation around the country:

Idaho’s Ag Gag Law was Ruled Unconstitutional

A U.S. District Court Judge invalidated Idaho’s anti-whistleblower law on First Amendment grounds. Idaho State Senator Jim Patrick, the Republican who sponsored the bill, believes the decision will likely be appealed.

The “ag-gag” law passed in 2014 and was signed by the Idaho Governor. The law banned covert filming of animal abuse on farms. Seven other states have passed similar laws recently. The Idaho law is the first to be ruled unconstitutional.

CAARA Passes Senate

A few weeks after Senator Grassley and Patrick Leahy reintroduced the Criminal Antitrust Anti-Retaliation Act into the Senate, it was approved by unanimous consent after a few minor changes. The legislation will now go to the House.

The bill protects covered individuals against employer retaliation for lawfully providing information to the federal government that the individual reasonably believes is a violation of the antitrust laws.

It does not offer incentives like the Dodd-Frank whistleblower programs. The U.S. Government has previously expressed concern that it will have a difficult time meeting the higher burden of proof in a criminal trial if the defendant can argue that the informant is biased by monetary incentives. The U.S. already has an immunity program in order to incentivize members of cartels to come forward and report their activity in violation of antitrust law.

It is the second whistleblower law to be passed by the Senate and waiting for action by the House of Representatives. Previously, the Senate unanimously passed the Thune-Nelson Motor Vehicle Safety Whistleblower Act which provides incentives to whistleblowers working in the auto industry.

Houses Passes VA Accountability Act

The U.S. House of Representatives passed a bill last week that would give additional protections to whistleblowers within the Department of Veterans Affairs in the wake of the scandal about patient scheduling that came to light last year. We haven’t talked about this here on the blog before because we generally don’t represent government whistleblowers unless they are reporting corporate misconduct.

However, it is worth noting the potential new protections. The bill would require disclosures of wrongdoing to be passed up the chain of command as well as impose mandatory discipline on any employee who retaliates against a whistleblower. The bill still faces opposition in the Senate and President Obama has threatened to veto it because of the impact it would have on the due process rights of federal employees.

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It Is About Time!

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For years, powerful lobbyist for corporate America have successfully impeded government intervention with regard to wide-spread violations of state and federal wage protection laws. Well, times have changed. Yesterday, Senator Sherrod Brown and Representative Lynn Woolsey introduced the Employee Misclassification Protection Act which is aimed at helping millions of workers who are misclassified by their employers as independent contractors, often as an excuse to avoid paying federal and state payroll taxes. This scheme allows unscrupulous employers’ to cut cost by as much as 30 percent—and gives them an unfair advantage over law-abiding competitors, driving down labor standards for all workers.

For workers affected by this practice—construction workers, hospitality workers, broadcast technicians, stage hands, musicians, home health care workers and day laborers, among many others—this bill offers a pathway to receiving labor protections that most Americans take for granted, like being paid the minimum wage and receiving overtime pay after 40 hours of work, or workers’ compensation when they are hurt on the job. Workers wrongly classified as independent contractors also are denied pension or and health benefits, and are told they aren’t protected by civil rights laws.

The bill would require employers to classify workers as employees, using a well-defined test that has existed since 1947, and it establishes a penalty for failing to do so. It applies common sense to the workplace, requiring that employers tell workers if they have been classified as independent contractors and how they can challenge that classification. The bill also protects workers who do challenge misclassification from retaliation.

Workers should be paid what the law says they are due. Misclassification has cost workers untold millions in wages and has cost the federal and state governments many millions in unpaid income, Social Security, unemployment and workers compensation taxes and premiums. New York City construction industry losses in payroll taxes and social insurance premiums due to misclassification are estimated at $170 million a year. In Ohio, the attorney general estimates annual costs from worker misclassification may be $100 million for unemployment insurance, more than $510 million in workers compensation premiums and almost $180 million in forgone state income tax revenues. Misclassification, he says, cost cities and villages more than $100 million in local income tax revenues in 2006, and cost school districts $7.8 million in 2008. Many other states report a similar impact. In fact, the Internal Revenue Service reported that in 1984, almost 20 percent of construction industry employers misclassified workers; a number that has surely grown.

This bill is a step in the right direction to protect workers, make sure that the country’s labor standards are upheld and place all employers on a level playing field. We look forward to working with Senator Brown and Representative Woolsey and their colleagues on this important piece of legislation. It is a crucial component in our ongoing campaign to ensure that all jobs are good jobs.

Eric L. Young, is a seasoned trial lawyer who specializes in wage and hour litigation and whistleblower litigation. Mr. Young can be contacted at 800-590-4116 or eyoung@young-lawgroup.com.

One Year Anniversary of Amtrak Derailment

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Today is the one year anniversary of the derailment of Amtrak Train 188 at the Frankford Curve in Philadelphia. Sarah Feinberg, the Administrator of the Federal Railroad Administration, called it the “most deadly rail accident we’ve had in a very long time.” We thought we would take a look at some of the changes that have been made since the accident and some of the news that is expected in the next week or so.

SEC and CFTC Push Congress for More Funding

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The annual battle over the funding of securities and derivatives regulators by Congress took a step forward today as a Senate panel heard from the chair of the SEC and the CFTC concerning their Fiscal Year 2017 budget request. Combined, the SEC and CFTC are seeking funding for the hiring of more than 400 additional staff members.

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