Parr Richey Frandsen Patterson Kruse attorney Kent Frandsen recently advanced to the second round of the 2011 USGA Senior Amateur golf championship. Prior to commencing his second round play, Michael Trostel/USGA, featured a great article on Mr. Frandsen and his various golf achievements throughout the years. Please click here to read the full article at the USGA website.
Indiana Employment Law: Are Your Workers Properly Classified? (Part 2)
Review of the IRS 20-Factor Test
The 20 factors identified by the IRS and reported in the publication Joint Committee on Taxation, Present Law and Background Relating to Worker Classification for Federal Tax Purposes (JCX-26-07), May 7, 2007 are as follows:
1. Instructions: If the person for whom the services are performed has the right to require compliance with instructions, this indicates employee status.
2. Training: Worker training (e.g., by requiring attendance at training sessions) indicates that the person for whom services are performed wants the services performed in a particular manner (which indicates employee status).
3. Integration: Integration of the worker’s services into the business operations of the person for whom services are performed is an indication of employee status.
4. Services rendered personally: If the services are required to be performed personally, this is an indication that the person for whom services are performed is interested in the methods used to accomplish the work (which indicates employee status).
5. Hiring, supervision, and paying assistants: If the person for whom services are performed hires, supervises or pays assistants, this generally indicates employee status. However, if the worker hires and supervises others under a contract pursuant to which the worker agrees to provide material and labor and is only responsible for the result, this indicates independent contractor status.
6. Continuing relationship: A continuing relationship between the worker and the person for whom the services are performed indicates employee status.
7. Set hours of work: The establishment of set hours for the worker indicates employee status.
8. Full time required: If the worker must devote substantially full time to the business of the person for whom services are performed, this indicates employee status. An independent contractor is free to work when and for whom he or she chooses.
9. Doing work on employer’s premises: If the work is performed on the premises of the person for whom the services are performed, this indicates employee status, especially if the work could be done elsewhere.
10. Order or sequence test: If a worker must perform services in the order or sequence set by the person for whom services are performed, that shows the worker is not free to follow his or her own pattern of work, and indicates employee status.
Indiana Employment Law: Are Your Workers Properly Classified?
Deficits are high, and taxes need to be higher to pay the high costs of government. But raising taxes is politically difficult. So, where can the IRS look to increase revenues? The “tax gap”.
The Tax Gap Misclassification Solution
On February 4, 2009, “TIGTA” (Treasury Inspector General for Tax Administration) issued a report and recommendation noting, among other things, that the IRS has not done a comprehensive study of work misclassification since 1984. In that year, the IRS had estimated that misclassified employees accounted for understatement of FICA, federal withholding, and unemployment taxes of approximately $1.6 billion. According to the TIGTA report, that underpayment is now estimated to be around $2.72 billion. This is one of the reasons that the TIGTA report recommended that the IRS should conduct a study (meaning audits):
Recommendation 2: The Deputy commissioner for Services and Enforcement should consider conducting a formal National Research Program reporting compliance study for employment taxes that includes measuring the impact of worker misclassification on the tax gap.
Indiana Employment Law: Indiana’s Immigration Bill is Now in Effect . . . Mostly
Effective July 1, 2011, Indiana’s much disputed Senate Bill 590 became law. This bill has been hotly contested since its inception for its harsh response to illegal immigrants in Indiana and those who employ them. Certain provisions are still being litigated in court. Although the bill has been watered down from its most extreme provisions, it still contains many changes to Indiana’s existing law. The hallmark of this Bill is the E-Verify Program, a program electronically verifying the work authorization status of newly hired employees. As of July 1, 2011, all state agencies, political subdivisions, businesses seeking more than a $1000 grant from a state agency or political subdivision, and all contractors and subcontractors entering into or renewing a public contract are required to enroll in and participate in this program for all new hires. Some businesses falling within the purview of participation in E-Verify also have to sign an affidavit stating they do not knowingly employ an unauthorized alien. Many also have to provide documentation of their participation in E-Verify. If businesses with public contracts do not comply with this new program and requirements, that contract will be terminated after thirty days, or as soon as is feasible, if this violation is not remedied. The business will then be liable for actual damages. The government may also file a civil action for reimbursement of unemployment insurance benefits paid to an employer that knowingly employed an unauthorized alien.
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Indiana Utility Law: When Does a Company Become a Public Utility?
Indiana utility lawyers took note on June 9, 2011, when the Indiana Court of Appeals issued a decision in United States Steel Corporation versus Northern Indiana Public Service Company (NIPSCO) addressing the issue of when a company becomes a public utility.1 The dispute arose after ArcelorMittal acquired property within U.S. Steel’s large-scale northern Indiana operation and began to purchase certain utilities from U.S. Steel, namely electricity and gas.
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Indiana Municipal Law and Indiana Utility Law – Indiana Court of Appeals Affirms Ruling that Town Ordinance Regulating the Sale or Lease of Natural Resources was invalid. (Part 2)
Avon attempted to argue that Indiana Code §36-1-2-23 permits it to regulate the water in the Park because groundwater is a watercourse or body of water within the meaning of the statute. Indiana Code §36-9-1-10 states that a watercourse “includes, lakes, rivers, streams, and any other body of water.” Further, Avon argued that the Township and WCCD’s plan to sell the groundwater constituted a “business use” under Indiana Code §36-8-2-7, which authorizes “a unit [to]…regulate any business use of a water course.”
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Indiana Municipal Law and Indiana Utility Law – Indiana Court of Appeals Affirms Ruling that Town Ordinance Regulating the Sale or Lease of Natural Resources was invalid.
On November 12, 2010, the Indiana Court of Appeals issued an opinion in a case affecting Indiana municipal law and Indiana utility law, Town of Avon v. W. Cent. Conservancy Dis., addressing whether an ordinance authorizing a town to regulate the sale or lease of natural resources was valid. The Court also addressed whether an aquifer was a “watercourse,” subject to the town’s regulatory authority under the Watercourse Statutes; whether the town’s ordinance was consistent with state regulation of groundwater; and whether the town interfered with the township and district’s common law right to use the groundwater in its aquifers as it saw fit.
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Indiana Utility Law and Indiana Municipal Law: City of Jeffersonville v. Hallmark at Jeffersonville, L.P. 937 N.E.2d 402 (Ind. Ct. App. 2010) (Part 2)
In Time Warner, a television cable company assessed late fees against its customers when their payments were not received by the due date. Time Warner’s customers filed lawsuits in order to recover the late fees paid in excess of the company’s actual damages caused by the late payments. 802 N.E.2d at 887-889. The Indiana Supreme Court held in Time Warner that the voluntary payment doctrine did not apply to Time Warner’s customers and discussed three main factors to consider when deciding whether to apply the voluntary payment doctrine. Id. at 891. First, that court observed that Time Warner’s customers had to pay the late fees in order to continue to receive cable service. Id. Next, the Time Warner court approved of the comments in the Restatement (Third) of Restitution and Unjust Enrichment which “limits application of the voluntary payment doctrine to situations where a party has voluntary paid a disputed amount.” Id. (emphasis added). The Time Warner court also stated that “customers in a government created monopoly deserve special protection because they have no where else to go for cable services.” Id. at 892. Finally, the Time Warner court reformulated Indiana’s definition of the voluntary payment doctrine by citing the comments of Restatement (Third) of Restitution and Unjust Enrichment § 6 cmt. e (Tentative Draft No. 1, 2001) as follows:
 [a] more appropriate statement of the voluntary-payment rule, therefore, is that money voluntarily paid in the face of a recognized uncertainty as to the existence or extent of the payor’s obligation to the recipient may not be recovered, on the ground of “mistake,” merely because the payment is subsequently revealed to have exceeded the true amount of the underlying obligation.
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Indiana Utility Law and Indiana Municipal Law: City of Jeffersonville v. Hallmark at Jeffersonville, L.P. 937 N.E.2d 402 (Ind. Ct. App. 2010)
Hallmark of Jeffersonville, L.P. is a developer of multi-family apartment buildings. In 2006, Hallmark planned to develop three multi-family apartment buildings in the City of Jeffersonville (the “City”). Two of the three buildings were to include twenty-four units and the other one was to include thirty-two units. Hallmark inquired with the City as to the cost of the necessary permits. The City informed Hallmark, on December 28, 2006, that it owed the City a total of $120,000, or $1,500 per unit, in order to connect to the City’s sewer system (this fee is known as a “tap-in” fee). Hallmark submitted the $120,000 tap-in fee by January 5, 2007 and the City agreed to connect Hallmark’s development to the sewer system. After Hallmark’s submission of its payment, it realized that it may have paid more than what was necessary under the City’s sewer tap fee ordinance and believed that it had been overcharged.
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Indiana Utility Law and Indiana Municipal Law – Indiana Court of Appeals Affirms Ruling that Developer’s Overpayment of Sewer Tap-In Fee Based on City’s Miscalculation Was Not an Unrefundable Voluntary Overpayment
In November 2010, the Court of Appeals of Indiana rejected a claim that a developer voluntarily overpaid a sewer tap-in fee that was incorrectly calculated by the City of Jeffersonville.
In City of Jeffersonville v. Hallmark at Jeffersonville, the Court held that the voluntary payment doctrine did not preclude the developer from receiving a refund of approximately $105,000. In this case, Hallmark, the developer, was constructing three buildings which included a total of eighty units. In order to obtain the proper permits, Hallmark was required to pay a sewer tap-in fee under the City’s ordinance related to sewer services. Hallmark paid that fee, which was assessed by the city engineer to be $1,500 per unit, for a total of $120,000.
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