ILN Today Post

South Carolina: Lawmakers override veto and pass a gas tax increase

As promised, the South Carolina legislature overrode Gov. Henry McMaster’s veto and passed H3516, the Infrastructure and Economic Development Reform Act, 32 to 12. Thus, effective on July 1, 2017, and then annually on July 1 until 2022, motorists will be subject to a new gas tax of 2 cents per year, for a total of 12 cents by 2022. All of the revenue is to be separated from the general fund, and deposited into either the State Highway Fund, the State Non-Federal Aid Highway Fund, or the Infrastructure Maintenance Trust Fund. The current rate is 16.75 cents per gallon, which puts the Palmetto state’s gas tax at the second lowest, behind only Alaska, whose state gas tax is 12.25 cents.

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ILN Today Post

H1B Visa’s Impact on IT Firms

The recent overhauling of the H1B visa policy under the Trump Administration, has led to rising concerns and uncertainties on issuance of visas in the Indian IT industry.

For instance, the revised H1B visa guidelines prescribe for certain eligibility criteria like minimum educational qualifications, requirement of establishing that a particular position is a specialty occupation etc. The US Citizenship and Immigration Services had also recently clarified that an entry level computer programmer position would not generally qualify as a position in a “specialty occupation”. A position of “specialty occupation” requires higher education and would typically include scientist, engineers, skilled computer programmers, etc. The impact of these guidelines are, therefore, likely to be felt by entry-level IT recruits the hardest, many of whom travel to and are regularly outsourced to the US, for projects of US companies.

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Appointment of Receiver by way of Equitable Execution over Single Farm Payment Funds

A particular execution remedy available to lending institutions with specific reference to situations involving periodic or lump sum payments such as Single Farm Payment funds (“SFP”), has come before the Commercial Court recently, with surprising results.

In respect of the entitlement to access the SFP, there are essentially two options available to a creditor or receiver. First, such funds may be amenable to attachment by garnishee order, as would be the case with any funds coming to the debtor via a third party. A garnishee order operates to direct the third party to pay a specific sum of money to a creditor. It effectively allows a creditor to collect funds owed by a debtor by accessing the debtor’s property when it is in the hands of a third party. In such circumstances, where a garnishee order is secured, the funds sought would be paid directly by the third party to the creditor.

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Time to get your affairs in order now you’ve stopped streaming S Town!

Have you been listening to the latest podcast sensation created by the producers of Serial and This American Life?

Has the intriguing estate planning (or lack thereof) of John B. McLemore got you thinking about ensuring that you have your own house in order?

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Talking Tax – Issue 77

Case law

The Tribunal to confirm an assessment when a taxpayer fails to appear

In Melbourne Home Insulation Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2017] VCAT 654, the Victorian Civil and Administrative Tribunal (VCAT) confirmed the payroll tax reassessments for the relevant tax years issued by the Commissioner of State Revenue (Commissioner) to Melbourne Home Insulation Pty Ltd (Applicant) by reason of the Applicant’s non-appearance at the hearing.

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Taking stock of stocktakes: insolvency practitioners’ entitlement to incentive fees

Bicheno Investments Pty Ltd v David John Winterbottom [2017] NSWSC 536 has confirmed that the completion of a stocktake does not necessarily require a full physical stocktake. Rather insolvency practitioners may satisfactorily complete a stocktake by reviewing a business’ records, provided they are satisfied that those records are accurate and complete. On this basis, Justice McDougall of the Supreme Court of New South Wales confirmed that the Receivers were entitled to retain a $2 million incentive fee. The decision also serves as a reminder of the impact the definition of a ‘stock take’ has in retention of title matters.

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Beware the consequences of not being flexible

The Fair Work Act 2009 (Cth) (FW Act) provides employees with a right to apply for flexible working arrangements if they meet certain criteria. Provided that an employer complies with the process for dealing with such requests, there is no direct mechanism under the FW Act for an employee to challenge their employer’s decision. But does that mean the reasons for a refusal are immune from scrutiny? A recent decision of the Fair Work Commission (FWC) provides a reminder that compliance with the procedural requirements under section 65 isn’t always enough.

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Court Finds “Plausible” DOJ’s Assertion That Anti-Steering Provisions Violate Section 1 of the Sherman Act

Recently, Judge Robert T. Conrad, Jr. of the United States District Court for the Western District of North Carolina (Charlotte Division), rejected efforts by The Charlotte- Mecklenberg Hospital Authority, doing business as the Carolinas Health Care System (“CHS”), to dismiss, at the pleadings stage, a complaint filed by the United States’ Antitrust Division of the Department of Justice, and the State of North Carolina, asserting that CHS’s anti-steering provisions in its payer contracts unreasonably restrain trade in violation of section 1 of the Sherman Act. Recognizing the Court’s limited review of preliminary motions, Judge Conrad, in the matter styled as United States of America et al v. The Charlotte-Mecklenberg Hospital Authority d/b/a Carolinas Health Care System, Civil Action No.3:16-cv-00311-RJC-DCK (W.D. N.C., Mar. 30,2017), ultimately concluded that the allegations of the Complaint, taken as true for purposes of ruling on the motion, asserted a claim that was “plausible,” meeting the pleading standards established by the Supreme Court in Bell Atlantic Corp. v. Twombly, 550 U.S. 544,570 (2007).

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Venture Capital Shareholder Agreements – More Attention Now, Less Heartache Later

It’s an exciting time for a client when a venture capital investor (VC) comes onto the scene. Company founders work hard to find financing. When big money and an attractive valuation are proposed, it’s hard for them not to get caught up in the moment. But financing always comes with strings attached. Clients need to be aware. Show me the money! (But give me a reasonable shareholder agreement too.)

“Investor Rights Agreement,” “Right of First Refusal and Co-Sale Agreement,” the simple “Side Letter” are all different varieties of shareholder agreements. Whatever the shape and size, a shareholder agreement can contain a broad variety of potential tricks and traps.

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Protecting personal representatives: interim estate distributions

How should a personal representative (PR) deal with a request from a beneficiary for an interim distribution before the estate is finalised?  Estates can take many months to conclude but a beneficiary may be in need of some of their inheritance sooner.  Can an executor help out without putting him or herself on the line?
Any PR (be they an executor of a Will or an administrator of an intestate estate) facing a request for an early distribution should consider their own position as well as the beneficiary’s.  A PR owns a duty to the court, both to gather in the assets of the deceased and also to ensure that sufficient estate assets are retained to meet all liabilities and pay creditors.  Not all liabilities may be evident at the time of death.  Failure to retain sufficient funds to pay these may result in creditors pursuing the PR personally, so a PR must exercise caution in the face of such requests.

Unless the PR was very familiar with the deceased’s finances, or the beneficiaries can be entirely trusted to return estate assets if necessary, a PR should consider taking advantage of the protection offered by s.27 of the Trustee Act 1925 and advertise for creditors in the London Gazette (and elsewhere if appropriate, depending upon the deceased’s circumstances).  Once the two month notice period has expired and if the PR has still received no notification of a claim prior to distribution, any creditor who appears after distribution has to pursue the recipient of the estate funds, rather than the PR.

Section 44 of the Administration of Estates Act 1925 provides that ‘a personal representative is not bound to distribute the estate of the deceased before the expiration of one year from the death’.  Accordingly PR’s cannot be forced to distribute sooner but could consider doing so if they are confident that all liabilities and creditors have been ascertained. 

For deceased UK domiciliaries, PRs should be aware that claims under the Inheritance (Provision for Family and Dependents) Act 1975 can be issued up to 6 months after the Grant of Probate is itself issued and the claimant then has a further four months in which to serve the claim.  Therefore 1975 Act claimants can appear up to ten months after the Grant has issued.

If an interim distribution is needed sooner, a PR should consider insisting on a form of indemnity from the beneficiary to confirm that, should a claim be made against the PR in connection with the estate, the beneficiary will indemnify the PR for that claim out of the funds distributed.  The PR will need to consider whether that beneficiary will be good for the money if the indemnity needs to be relied upon.  Ideally the PR will also obtain confirmation from the beneficiary that the beneficiary accepts the sums distributed at least in partial satisfaction of their interest in the estate.  It may be appropriate to provide a set of draft estate accounts at this point.

Alternatively, depending upon the assets comprising the estate and their administrative powers, the PR may be able to offer to loan a beneficiary a portion of their share of the estate, in return for a suitable indemnity.  This is likely to be more satisfactory for a PR, as the PR still retains ownership of the estate assets, albeit in the form of an IOU.  The creditworthiness of the beneficiary will need to be considered once again.
Lay PRs, in particular, can often feel under pressure from family member beneficiaries to make early distributions.  However, creditors need make no exceptions for lay PRs!  The law allows PRs to protect themselves and a prudent PR will do just that.

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