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BPAA Federal Policy Update - July 13

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TAX

  • What Does the Wayfair Decision Really Mean for States, Businesses, and Consumers?: Various interpretations of the recent Wayfair decision from the U.S. Supreme Court has led to confusion about its impact for online sellers and consumers. Tax Foundation hopes to clear up that confusion with this Q&A. Read the report at the Tax Foundation.
  • Pass-Through Tax Rules Said to Be Delayed Until End of July: U.S. Treasury Department rules outlining which businesses structured as S corporations, partnerships and limited liability companies can claim a 20 percent tax deduction are likely to be delayed until the end of July, according to a senior administration official. The regulations, which will determine how many so-called pass-through businesses can take advantage of a special break under the 2017 tax law, are some of the most anticipated following the bill’s passage. Hundreds of thousands of U.S. employers still don’t know if they qualify. Treasury officials had previously said they were aiming to issue rules specifying what types of businesses can claim the deduction, as well as mechanisms to prevent gaming, in June. The pass-through regulations are among those almost certain to be subject to a 10-day review by the White House’s Office of Management and Budget’s regulations office. The official, who asked not to be named because the details are private, said the OMB office hadn’t yet received any formal submission of draft regulations from Treasury. A Treasury spokeswoman disagreed with OMB, saying that four regulations -- dealing with capital expensing, taxation of overseas profits, penalties for tax preparers and accounting rules for when firms book income -- have already been submitted to OMB. The official responded by saying OMB had received some information about regulations to determine their significance, but reiterated that nothing had been formally submitted by Treasury. Read more at Bloomberg Government.
  • Tax Reform Friday: How Will Wayfair Impact Corporate Income Tax Nexus?: On June 21, 2018, the U.S. Supreme Court issued its ruling in South Dakota v. Wayfair, Inc., holding that physical presence in a state is not required for out-of-state retailers to be obligated to collect and remit sales tax on sales to customers in that state. The Court remanded the case to the South Dakota Supreme Court to determine whether South Dakota’s economic nexus provision otherwise violates Commerce Clause protections. While physical presence has been the constitutional standard for sales tax nexus purposes under the now overturned Quill decision, almost all states have traditionally distinguished that ruling for corporate income tax purposes. However, practitioners have long suggested that Quill’s physical presence rule should apply to corporate income tax nexus and that factor-presence based nexus standards potentially violate this rule. With Quill gone, Wayfair may encourage more states to enact factor-presence based nexus standards for corporate income tax purposes. Alabama, California, Colorado, Connecticut, Michigan, New York, and Tennessee are all states that currently have such a test under which out-of-state corporations are deemed to have nexus for corporate income tax purposes where they have property, payroll, or sales in those states that exceed statutory thresholds. Read more at BNA.

 

LABOR

  • 3 ways Trump's Supreme Court pick could transform U.S. labor law: President Donald Trump’s nominee for the Supreme Court may prove a crucial conservative vote in cases defining protections for gay and lesbian workers, the scope of union organizing, and the rights of workers to take their grievances to court, according to labor law experts. On Monday night, Trump announced the selection of Brett Kavanaugh, a federal judge on the U.S. Court of Appeals for the District of Columbia Circuit. The Supreme Court dealt two significant blows to unions in its most recent term, issuing one ruling that will weaken funding for public sector unions and another that lets companies force workers to settle complaints through private arbitration instead of the courts. Justice Anthony Kennedy, who said late last month that he would step down from the bench, sided with the conservatives in both cases. But experts said the court’s opposition to organized labor’s priorities is likely to intensify if Kavanaugh is confirmed. Read more at STLToday.
  • Many Companies Top $1 Million in Wage-Case Settlements: About 450 large U.S. companies each paid more than $1 million in wage-claim settlements since 2000, with one company topping $1 billion, a study of federal and state court records showed. In all, companies paid billions of dollars in settlements and penalties to resolve wage claims brought by employees. The yearlong study of 1,283 cases that were resolved in favor of employees was published June 5 in a report, “Grand Theft Paycheck: The Large Corporations Shortchanging Their Workers.” In those cases, employers paid $8.8 billion to workers as diversified as cashiers, guards, financial advisers, and pharmaceutical sales representatives, the report said. Additionally, the employers paid $400 million in penalties to the Labor Department’s Wage and Hour Division, it said. But a recent Supreme Court ruling that allowed companies to require workers to pursue wage claims against employers through arbitration rather than in class lawsuits could limit settlement costs and fines for employers, the report said. “Our findings make it clear that wage theft goes far beyond sweatshops, fast-food outlets and retailers,” said Philip Mattera, research director at Good Jobs First and the lead author of the report. “It is built into the business model of a substantial portion of corporate America,” he said in a news release accompanying the report. Paul DeCamp, co-chairman of the national wage and hour practice group at the law firm Epstein Becker Green in Washington, said the term “wage theft” is overly broad and pejorative. “It’s not a legal term,” he said. Read more at Bloomberg Government.
  • Restaurant Industry Sues Labor Dept. Over Tipped Wage Policy: The Trump Labor Department’s battle with the restaurant industry over tipped employee wages now enters a new legal frontier. The Restaurant Law Center sued the DOL late July 6 for maintaining an Obama administration enforcement policy that mandated that tipped workers be paid the full minimum wage for the time they spend on tasks that don’t generate tips, provided those side duties make up at least 20 percent of their weekly hours. The RLC, the litigation arm of the National Restaurant Association, is asking a federal court in Texas to invalidate the policy as arbitrary and capricious under the Administrative Procedure Act. Restaurant workers such as bartenders and servers are owed at least $2.13 per hour, depending on jurisdiction, provided their hourly pay plus tips exceeds the full minimum wage of $7.25 per hour. But the DOL’s Wage and Hour Division states in its field operations handbook that when at least 20 percent of the weekly hours are spent on such side tasks as rolling silverware or filling salt and pepper shakers, the restaurant owes those workers the higher minimum rate for that time. “The Obama Administration quietly slipped an overly restrictive provision on dual-jobs into an internal agency handbook without notice to the public or an opportunity for comment in violation of the Administrative Procedure Act (the “APA”). We are asking the Court to set this provision aside and enjoin its enforcement,” Angelo Amador, the RLC’s executive director, said in a statement. “The Obama-era dual-jobs provision in the Department of Labor’s Field Operations Handbook is arbitrary, capricious, contrary to the Fair Labor Standards Act, promulgated in violation of the APA, and a violation of separation of powers.” A DOL spokesman referred Bloomberg Law to the Justice Department, which didn’t immediately respond to a request for comment. Read more at Bloomberg Government.

 

SPORTS BETTING

  • States Weigh Bets on Mobile Sports Gambling: Now that states are free to craft laws legalizing sports gambling, the latest question is whether to enter the potential $9 billion mobile-betting market. Americans legally gambling on this weekend’s World Cup final and other athletic competitions primarily are doing so in person at a limited number of casinos. Increasingly, though, gamblers in other countries are placing wagers from their smartphones. In the U.K., the world’s largest legal sports-betting market, revenue from online wagers has more than doubled over the past five years and now represents 60% of the market, whereas revenue from in-person betting has fallen by about 12% over the same period, according to data from Gambling Compliance, an industry research firm…Mobile betting could increase total U.S. sports gambling revenue by $9 billion, to $16 billion total, if all 50 states adopted it, according to estimates from Eilers & Krejcik. For casino operators and book makers, mobile gambling is attractive because it makes placing bets easier and allows for in-game wagering, seen as a strong growth area. The stakes extend beyond the gambling industry. Professional sports leagues and television networks stand to gain from increased viewership of sporting events, with research showing bettors consume more games and more minutes of sporting events than those who don’t. Read more at Wall Street Journal.

 

FOOD AND BEVERAGE

  • Plastic straw bans won't save oceans: 'We're trading a lot for nothing': The rush to clean up the oceans by deep-sixing plastic straws is swelling as big corporate fish like Starbucks jump aboard, even as skepticism builds over whether the campaign is more trouble than it’s worth. The coffee giant announced Tuesday that it will eliminate by 2020 its signature single-use green straws, the kind found in Frappuccinos and other cold drinks, joining a growing list that includes Hilton, Hyatt, American Airlines, SeaWorld and IKEA, as well as Seattle. The rising tide has alarmed disabled people, many of whom cannot drink from standard cups, while recent research has shown that when it comes to ocean waste, plastic straws and utensils discarded by U.S. consumers represent a drop in the bucket. “It’s a symbolic effort that isn’t going to help anything,” said Angela Logomasini, senior fellow at the free-market Competitive Enterprise Institute. “We’re trading a lot for nothing in return.” She pointed to a 2017 study by German researchers in the journal Environmental Science & Technology that found 10 rivers in Asia and Africa are responsible for 88 to 95 percent of the plastic debris found in the world’s oceans. “The concern is about plastics in the ocean, which is a real concern, but banning plastic straws isn’t going to fix it. Read more at The Washington Times.
  • 'Disabled People Are Not Part of the Conversation.' Advocates Speak Out Against Plastic Straw Bans: Some disabled rights advocates are speaking out against an emerging trend of restaurants and other companies phasing out the use of plastic straws with drink orders, arguing that the alternatives can be inadequate for customers with various disabilities. Plastic straws have been disappearing from coffee shops, airlines, hotels and more amid concerns that they frequently wind up as ocean waste, presenting an environmental hazard. The campaign against them accelerated this week amid news that major companies like StarbucksAmerican Airlines and Hyatt are drastically reducing their use, in some cases opting for straw-less plastic tops on some drinks instead. But disability advocates say they feel the campaign against plastic straws is being waged without adequate input from disabled customers.
  • FDA Proposes To Revise Certain Requirements For Calorie Labeling On Glass-Front Vending Machines: The U.S. Food and Drug Administration is proposing to revise the front of pack (FOP) type size labeling requirement for packaged foods sold in glass-front vending machines. The proposed change would apply only to calorie declarations on the front of packages that consumers can view through the glass before deciding which foods to purchase. Some industry representatives voiced concerns that the current requirements for type size, established in the FDA's 2014 final rule on calorie labeling for foods sold from vending machines, would make the calorie labeling size fluctuate widely and created technical challenges that could make it difficult to comply with the regulation. The FDA has proposed a requirement that would make the type size more consistent on food packages while still ensuring that consumers can read the information before making their purchase. Read more at Vending Market Watch.
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