Claims Administration, Taxation and Validation
With the addition of Damasco & Associates, Miller Kaplan Arase LLP now provides tax compliance services for more than 750 Qualified Settlement Funds annually, most of the major claims administration and distributions firms, administrative agencies and law firms.
Damasco’s experience with Qualified Settlement Funds started in the 1980’s with the tax code and treasury regulations defining Qualified Settlement Funds. Since 2005, Damasco & Associates has served as the Tax Administrator for Fair Funds and disgorgement funds established by the United States Securities and Exchange Commission. In this role, the firm provides support and services that allow for the efficient and accurate distribution of money to injured or defrauded investors, and the accurate reporting of tax information associated with those distributions.
In addition to its work with the SEC, the firm serves as the tax administrator for many other settlement funds, including those resulting from government enforcement actions, self-directed distributions and class action settlements.
Client: Individual clients in receipt of large whistleblower award of $80 million from a False Claims Act settlement.
Issue: Refusing to acknowledge California Revenue and Taxation Code’s nonconformity with the Internal Revenue Code on the issue, the California Franchise Tax Board denied multi-million dollar above-the-line deductions for attorney’s fees paid by two clients in a qui tam False Claims Act lawsuit. Clients sought taxpayer representation from our firm led by Jude Damasco and including Nicholas Sanchez.
Results: Provided pro bono representation spanning nearly two years, which resulted in FTB conceding the deduction.
California AB 1513, which went into effect on January 1, 2016, added section 226.2 to the California Labor Code. The statute establishes standards for compensating “piece-rate” employees for rest and recovery periods and other nonproductive time going forward from the effective date of the statute. Labor Code section 226.2 also establishes a process for employers to make payments to employees for previously uncompensated or under-compensated rest and recovery periods, and nonproductive time, for the period July 1, 2012 to December 31, 2015. Participation in the process creates an “affirmative defense” for certain claims that may be pending against the employer in existing litigation, or that might be asserted in future litigation, with respect to the time period prior to January 1, 2016. Employers that timely notified the California Department of Industrial Relations of their intent to participate in the affirmative defense provisions have until December 15, 2016 to make payments to employees. Miller Kaplan Arase LLP has reached out to the California Employer Development Department on behalf of claims administration firms that are assisting employers with AB 1513 affirmative defense payments to implement compliance processes for employers with common employees.
If you require assistance with tax compliance issues arising out of the implementation of AB 1513 affirmative defense payments, please reach out to Nicholas Sanchez or Julia Damasco.