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Ext. PublicationThe Tax Navigator – Legal Insights Amid Government Shutdown
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Join Sean Muller, The Tax Navigator, as he explores three interesting legal cases from the past week amid the government shutdown.
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Detailed Description of The Tax Navigator – Legal Insights Amid Government Shutdown
00:00:00
Sean: All right. So we still have a government shutdown. There’s been no update on that at all. They’re promising to meet, but they shut the government down and then went on vacation and blamed each other for everything.
So, we’re going to talk about a few interesting cases that have come up over the last week or so.
00:00:14
Sean: One case was actually about remote workers suing to get additional pay under the Fair Labor Act. They were call center employees coming in, logging on to their computer, doing their authentication, opening their apps, and then operating the call center and then obviously working all day. At the end of the day, they would shut their computer down and go home.
Well, they sued to get paid from the moment they walked in the door, and the courts came back and said, no, we’re only paying you for active work, so we’re not going to pay you for logging into your computer. We’re going to start paying you when you actually open up an app.
So, think about an airline attendant, flight attendant. We’re not going to start paying you until the door shuts, similar to that. So that was one case.
00:01:00
Sean: Another case that was out there was a 3M and it was a transfer pricing case between the U.S. and Brazil. Brazil had a special rule that limited the payments that could be made from Brazil to the U.S., and they were not at fair market value.
3M and the government both agreed it was not fair market value, but Brazil limited the payment, and in that case, the IRS lost the case, trying to impute a higher amount of income in the U.S. because Brazil limited the payment that was made.
So that was an interesting case there that the IRS tried to overstep their bounds on a payment that would never be paid out.
00:01:37
Sean: The last case that came up last week was about hobby losses. A taxpayer had bought a ranch and they were trying to do a ranching operation. Never had any profits. There were nine different factors the IRS looks to for a hobby and they failed six of them.
This business didn’t have a business plan and they didn’t have good books and records. They ran everything out of a personal checking book, there wasn’t a business checking account or anything like that. And so, they lost the case for being a hobby. So, they had losses disallowed.
As we’re starting those new businesses, make sure that we have a business plan and make sure we keep separate books and records in what we’re trying to do.
00:02:13
Sean: Those are just some interesting cases that came up in the last week. Hopefully the government shutdown ends soon. Thank you.
