Supreme Court limits reach of tax crime statute
Law Journals
The Supreme Court ruled Wednesday to make it harder for the federal government to use a section of tax law to convict someone of obstruction.
The government had interpreted a section of the tax code to give it a broad ability to charge someone with obstructing or impeding the work of the Internal Revenue Service. It argued that someone could violate the statute by doing something intended to obstruct the IRS' work, like shredding records, even if the person wasn't under investigation at the time or was under investigation but didn't know it.
But the Supreme Court ruled 7 to 2 to limit the application of the statue. The justices said that to convict someone, the government must show a connection between the obstructive action the person takes and a particular investigation or audit that was pending, or at least reasonably foreseeable.
The court's majority opinion pointed out problems with reading the law broadly. "Interpreted broadly, the provision could apply to a person who pays a babysitter $41 per week in cash without withholding taxes, leaves a large cash tip in a restaurant, fails to keep donation receipts from every charity to which he or she contributes, or fails to provide every record to an accountant.
Such an individual may sometimes believe that, in doing so, he is running the risk of having violated an IRS rule, but we sincerely doubt he would believe he is facing a potential felony prosecution for tax obstruction," Justice Stephen Breyer wrote for court.
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Workers’ Compensation Subrogation of Administrative Fees and Costs
When a worker covered by workers’ compensation makes a claim against a third party, the workers’ compensation insurance retains the right to subrogate against any recovery from that third party for all benefits paid to or on behalf of a claimant injured at work. When subrogating for more than basic medical and indemnity benefits, the Texas workers’ compensation subrogation statute provides that “the net amount recovered by a claimant in a third‑party action shall be used to reimburse the carrier for benefits, including medical benefits that have been paid for the compensable injury.” TX Labor Code § 417.002.
In fact, all 50 states provide for similar subrogation. However, none of them precisely outlines which payments or costs paid by a compensation carrier constitute “compensation” and can be recovered. The result is industry-wide confusion and an ongoing debate and argument with claimants’ attorneys over what can and can’t be included in a carrier’s lien for recovery purposes.
In addition to medical expenses, death benefits, funeral costs and/or indemnity benefits for lost wages and loss of earning capacity resulting from a compensable injury, workers’ compensation insurance carriers also expend considerable dollars for case management costs, medical bill audit fees, rehabilitation benefits, nurse case worker fees, and other similar fees. They also incur other expenses in conjunction with the handling and adjusting of workers’ compensation claims. Workers’ compensation carriers typically assert, of course, that, they are entitled to reimbursement for such expenditures when it recovers its workers’ compensation lien. Injured workers and their attorneys disagree.