Resources

Earlier this week, the IRS released Notice 2024-77, which provides much-anticipated guidance related to the handling of so-called “inadvertent benefit overpayments” from qualified retirement plans under the SECURE 2.0 Act.  The Notice provides information on whether and when a plan sponsor is obligated to attempt to recoup an inadvertent benefit overpayment from the IRS’ perspective, as well as guidance on the rollover treatment of inadvertent benefit overpayments. 

The IRS recently issued Notice 2024-73, which provides much-needed guidance on long-term, part-time employees in ERISA-governed 403(b) retirement plans. Following passage of the SECURE 2.0 Act, an employee is generally considered a LTPT employee if he or she works at least 500 hours per year for two consecutive years.

The U.S. Court of Appeals for the Eleventh Circuit held that a monetary civil penalty imposed for willfully failing to file a foreign bank account report (“FBAR”) was a “fine,” and had to be evaluated for excessiveness under the Excessive Fines Clause of the Eighth Amendment. The Eleventh Circuit held that the penalty was a fine because it did not have a “remedial” purpose that compensated the United States for expenses or loss. Two years earlier, the First Circuit held that a monetary civil penalty imposed for willfully failing to file an FBAR report was not a “fine” and did not have to be evaluated for excessiveness under the Excessive Fines Clause of Eighth Amendment. Final resolution of the issue will require action by Congress or the Supreme Court.

The United States Trade Representative published a Federal Register notice detailing its final modifications to the Section 301 tariffs on China-origin products. USTR has largely retained the proposed list of products subject to Section 301 tariffs announced in the May 2024 Federal Register notice with a few modifications, including adjusting the rates and implementation dates for a number of tariff categories and expanding or limiting certain machinery and solar manufacturing equipment exclusions. USTR also proposes to impose new Section 301 tariff increases on certain tungsten products, polysilicon, and doped wafers.

In Libitzky v. United States, the United States Court of Appeals for the Ninth Circuit affirmed disallowance of a $700,000 federal income tax refund claim. The court said that this was an “unfortunate” case, but they were bound by the statutory language providing for tax refunds, which did not permit equitable tolling of a limitation period.

In a highly anticipated opinion, the United States District Court for the Northern District of Texas invalidated the FTC’s rule banning most non-compete agreements, opining that the FTC exceeded its authority in promulgating the rule and that the rule is arbitrary and capricious. This decision blocks the rule from becoming effective nationwide on September 4, 2024. As a result, existing non-compete agreements may still be valid and enforceable when permitted under applicable law.

The Michigan Supreme Court revived two 2018 voter-initiated laws aimed at increasing the state’s minimum wage and expanding earned sick time for workers. In doing so, the Court held that the Michigan Legislature’s “adopt-and-amend” process—adopting the initiatives and then in the same session significantly altering them—“violated the people’s constitutionally guaranteed right to propose and enact laws through the initiative process” under the state constitution. The decision has major implications for Michigan’s workplaces, especially considering the revived laws, with some adjustments explained below, will go into effect February 21, 2025.

Can a student harassed by another student bring a lawsuit against the school for allegedly creating a hostile environment under state law? On July 29, 2024, the Michigan Supreme Court answered no. The decision underscores the distinction between employer-employee relationships and the responsibilities schools bear in such cases.

The rules relating to delegated authority are complex. A taxpayer is well advised to ensure that the scope of a closing agreement the taxpayer signs is what the taxpayer expects, and that an IRS official who signs the agreement has authority to do so for the matters in the agreement

On August 1, 2024, the National Labor Relations Board is set to roll out its Fair Choice-Employee Voice Rule, which includes three major changes. The effective date of the new rule is September 30, and the rule will only be applied to cases filed after the effective date. Court challenges to the Final Rule are anticipated.