Shulman Hodges & Bastian LLP

July 2016 Archives

Post-Assessment Tax Filings May Not Be Dischargeable

In a case published by the Ninth Circuit Court of Appeals on July 13, 2016 (No. 14-15857), the Court found that the taxpayer/debtor's attempt to file a very late return was not an honest and reasonable attempt to satisfy the requirements of the tax law and thus, the tax liability was not dischargeable in bankruptcy. In Smith v. United States Internal Revenue Service, the debtor failed to file his 2001 return. In 2006, the IRS prepared its own Substitute for Return showing a $70,662 deficiency owed. The debtor did not timely challenge the deficiency amount and in fact, entered into a payment plan agreement with the IRS. 

Are car dealer employees exempt from overtime compensation requirements of the Fair Labor Standards Act?

In Encino Motorcars, LLC v. Navarro, the Supreme Court was recently asked to determine if the Department of Labor could change its mind a second time whether car dealer employees selling service contracts were exempt from overtime compensation requirements of the Fair Labor Standard Act! (FLSA) In 1966 Congress enacted an exemption under the FLSA for overtime requirements at covered dealerships for "salesman . . . primarily engaged in selling or servicing automobiles." In 1970, the Department interpreted this provision and issued regulations defining "salesman" to mean a salesman engaged in selling vehicles but excluded service advisors who sell repair and maintenance contracts. After several courts rejected this interpretation, the Department changed its policy in 1978 and allowed the application of the exemption to service providers. Unexpectedly, the Department issued a final rule in 2011 removing the exemption for employees selling service contracts which had been relied on by dealers for thirty-three years! 

Shulman Hodges & Bastian LLP
• 100 Spectrum Center Drive, Suite 600 • Irvine, CA 92618
• Local: 949-340-3400 • Fax: 949-340-3000 • Map & Directions
or contact us at 949-427-1654

Shulman Hodges & Bastian LLP
• 3550 Vine Street, Suite 210 • Riverside, CA 92507 
• Local: 951-275-9300 • Fax: 951-275-9303 • Map & Directions
or contact us at 949-427-1654