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Posts Tagged ‘taxes’

2018 GA Legislative Session Adjournment Report

Posted on: May 4th, 2018

By: Allan J. Hayes

The Georgia General Assembly adjourned sine die the 2018 legislative session late night on March 29. What follows is a list and summary of all bills tracked by FMG this session. Governor Nathan Deal must sign or veto legislation within 40 days after sine die adjournment, or it becomes law without his signature.

The legislative session has been over for a month now and the Governor will begin signing bills (and rejecting some) on Wednesday, May 2. After the Governor takes final action on all this legislation, we will give you an update on the fate of the following bills:

 

Health

SB 118 amends the age limit on the current autism coverage statute (O.C.G.A. § 33-24-59.10). As finally passed, the bill requires coverage for an individual covered under a policy or contract who is 20 years of age (previously 6) or under. Also, as amended the bill removes the requirement that coverage for prescription drugs for the treatment of autism spectrum disorders shall be in the same manner as coverage for prescription drugs for the treatment of any other illness under the policy, and increases the annual limit on ABA to $35,000

HB 818 provides that contracts between a health insurer or its contracted vendor or a care management organization and a health care provider shall not contain restrictions on methods of payment to the provider in which the only acceptable payment method is a credit card payment. Prior to initiating or changing payments to a health care provider using electronic funds transfer payments, including virtual credit card payments, a plan shall notify the provider of all fees associated with a payment method, and provide clear instructions as to how to select an alternative payment method.

HB 783 provides for modernization and updates of the Official Code of Georgia Annotated for purposes of conformity. Also provides that any assets of the Commission on the Georgia Health Insurance Risk Pool existing as of June 30, 2018, shall devolve by operation of law and without further action on July 1, 2018. Any liabilities and obligations of Commission 2018, shall be transferred to and assumed by the State of Georgia, by such instruments as may be required to maintain the same.

HB 769 amends statutes regarding institutional and hospital pharmacies regarding remote order entries.  Provides that remote orders must be made by a pharmacist licensed in the state but does not have to be in the state. Authorizes remote orders when the licensed pharmacist will be physically present in the hospital pharmacy within 48 hours (previously 24) and removes the requirement that at least one licensed pharmacist be physically present in the hospital pharmacy.  Also provides for the establishment of the Rural Center for Health Care Innovation and Sustainability, revises provisions relative to certificate of need, establishes micro-hospital definitions, and provides a grant program for insurance premium assistance for physicians practicing in medically underserved rural areas of the state.

HB 64 requires any carrier that issues a health benefit plan in this state through an agent to pay a commission to such agent and shall not structure such commission in a way that directly or indirectly discriminates in the amount of compensation paid to such agent for the sale of a group health benefit plan or for the sale of an individual health benefit plan. Such commission shall be structured to compensate the agent for the first term and for each renewal term thereafter, so long as such agent reviews coverage and provides ongoing customer service for such plan; provided, however, that no such compensation shall be required for any individual health benefit plan sold during a special enrollment period. This shall not apply to renewals of any individual health benefit plan sold during a special enrollment period that renews during the open enrollment period. Nothing shall be construed to require a carrier to pay a commission to an agent who is employed by such carrier.

HB 782 authorizes the Georgia Drugs and Narcotics Agency to request prescription information to a prescription drug monitoring program operated by a government entity in another state or an electronic medical records system operated by a prescriber or health care facility, provided the program or system, as determined by the department, contains legal, administrative, technical, and physical safeguards that meet or exceed the security measures of the department for the operation of the PDMP.

HB 513 allows the Department of Community Health to promulgate rules for a sign to be developed and posted at any medical facility, fire station, or police station to inform the public that the facility is an authorized safe place to leave a newborn child. This is to prevent injuries and deaths of newborn children who are abandoned.

HB 701 amends definitions for drug testing for state employment to allow testing for all forms of opioids. It shall not be defined as an “illegal drug” pursuant to a valid prescription or when used as otherwise authorized by state or federal law.

HB 769 implements recommendations from the House Rural Development Council relating to health care issues. The bill revises provisions relative to pharmacy practices, as well as provisions relative to credentialing and billing. This legislation provides for the establishment of the Rural Health System Innovation Center and the establishment of micro-hospitals. Also, HB 769 provides for a grant program for insurance premium assistance for physicians practicing in medically underserved rural areas of the state. The bill also increases the value of the tax credit to 100 percent related to contributions to rural hospital organizations.

SB 357 establishes the Health Coordination and Innovation Council of the State of Georgia. The council will create a forum for innovative ideas, evaluation, maximization of resources, and an organized health care approach.

SB 364 authorizes a higher supervisory ratio for physician assistants who have completed a board-approved anesthesiologist assistant program. No primary supervising physician shall have more than eight physician assistants who have completed a board-approved anesthesiologist assistant program licensed to him or her at a time.

Local Government

HB 257 streamlines the reporting process for local government authorities to file their statutorily-required reports to the Department of Community Affairs. It also narrows the dates of reporting from two dates to one.

HB 489 requires the use of the Georgia Procurement Registry for advertisement of bid opportunities for goods and services and public works construction contracts by a county, city, or local board of education. The registry will be free to use by the local government.

HB 618 is a bill to incorporate the city of Skidaway Island.

HB 626 is a bill to create the city of Sharon Springs.

HB 899 removes the disqualification of bidders without experience with the “construction delivery method” when awarding contracts for public works projects through sealed competitive bids.

HB 995 provides a process for a consultant to disclose any conflicts of interest when contracting for services with a local governing authority.

SB 263 authorizes a local referendum for the creation of the city of Eagles Landing.

SB 397 allows counties and cities to contract with real estate agents or brokers to market county or city-owned property.

SB 404 prohibits local governing authorities from charging a separate fee for standby water service for fire sprinkler systems.

HB 381 creates the ‘Abandoned Mobile Home Act’ to provide counties and municipalities with the authority to appoint an agent to determine the condition of a mobile home and how to dispose of the property. The bill also establishes procedures for a landowner to follow if the landowner wishes to remove an abandoned mobile home from his or her property.

Insurance

HB 64 requires insurance carriers that sell health insurance through an insurance agent to provide the agent with a commission that is consistent with the amount proposed in the rates filed with the Department of Insurance.

HB 592 repeals the sunset on the compliance self-evaluative privilege for insurance companies. This privilege allows insurance companies to fix issues arising from an internal audit without suffering reprisal by regulators for the original mistake.

HB 754 allows a Georgia domestic insurer to divide into two or more insurers and allocate assets and obligations, including insurance or reinsurance policies, to the new company. It does so by creating a process that is distinct from a merger, consolidation, dissolution, or formation.

HB 760 allows property and causality insurers, at the time of policy renewal, to simply notify the insured of reduction of coverage in the policy without having to cancel the existing policy and offer a new one.

HB 878 allows insurers and/or insurance agencies to let their insureds cancel their policy over the telephone.

HB 938 provides for a limited credit insurance agency license for the specific purpose of selling credit insurance.

SB 350 updates Georgia law regarding the notice requirements for an insurance company or agent to their policyholders in the case of policy renewal to comport with federal law.

SB 381 provides that a non-admitted insurer domiciled in this state is deemed a domestic surplus lines insurer, if all qualifications are met, and can sell surplus line products in Georgia.

Criminal Justice

SB 369 authorizes the clerk of court to collect a $5.00 fee when an individual enrolls in a pretrial diversion program, and to submit those monies to the secretary-treasurer of the Peace Officer’s Annuity and Benefit Fund.

SB 407 constitutes the reforms and recommendations offered by the Criminal Justice Coordinating Council. The bill allows the Criminal Case Data Exchange Board to create rules concerning e filing in superior and state court criminal cases after January 1, 2019. In addition, all civil complaints in superior and state court are to be filed electronically after July 1, 2019.

HB 978 amends the Code relating to school buses to make it lawful for drivers who meet or pass school buses on a highway with separate roadways or a divided highway, including but not limited to, a highway divided by a turn lane. The bill also allows for the use cameras on school buses to be operated, maintained, or leased to a law enforcement agency and for the recorded images to be reviewed by the agent who provides this service to law enforcement. The bill further allows for placement of an automatic traffic enforcement device within a school zone after the school has applied for a permit from the Department of Transportation for the use of such device.

HB 419 expands the ability for local governments to regulate the ignition of fireworks through local noise ordinances. The bill adds Memorial Day weekend and Labor Day as holidays when local ordinance cannot prevent fireworks from being ignited; however, when areas of the state come under drought conditions, the governor can restrict the use of fireworks. Also, all dealers of fireworks must post the license authorizing the dealer to sell fireworks.

SB 17 allows for a local referendum to lower the initial time to allow for Sunday sales of alcohol from 12:30 p.m. to 11:00 a.m. for any licensed establishment that derives at least 50 percent of annual gross sales from the sale of food or a licensed establishment that derives 50 percent of annual gross income from the rental of rooms for overnight lodging.

Transportation

HB 930 creates the Atlanta-region Transit Link “ATL” Authority. This authority is attached to the Georgia Regional Transportation Authority (GRTA) for administrative purposes and will serve as the transit planning organization for the 13-county metro Atlanta region. The region is comprised of the counties currently under the jurisdiction of GRTA: Cherokee, Clayton, Coweta, Cobb, DeKalb, Douglas, Fayette, Forsyth, Fulton, Gwinnett, Henry, Paulding, and Rockdale Counties. The bill establishes the governance structure of the ATL, as well as funding mechanisms. The ATL oversees all transit planning, funding, and operations within the region.

Taxes

HB 658 extends the sunset date to December 31, 2053 for the eight percent hotel/motel tax allowed in a county where a coliseum and exhibit hall authority were created on January 1,1991.

HB 820 amends Article 2 of Chapter 5 of Title 48, relating to property tax exemptions and deferral, by adding a new section which allows a homestead exemption from the ad valorem taxes for municipal purposes in an amount equal to the amount by which the current year assessed value exceeds the adjusted base year value of the homestead.

HB 918 is the “Largest Tax Cut in Georgia History.” It includes the following changes:

  • 7.5 percent of adjusted gross income floor for medical expense deduction is extended through 2018 and applied to all taxpayers;
  • Net operating losses may be carried forward indefinitely, but may not be carried back to apply against prior year’s tax liabilities;
  • Entertainment expenses are no longer allowed as business deductions; House of Representatives End of Session Report
  • Transportation fringes and other transportation benefits are no longer qualified deductions for employers providing the benefits;
  • Eligibility of building improvements for a 15-year recover period is expanded;
  • Like-kind exchanges are limited to exchanges of real estate;
  • The definition of capital asset is revised by removing patents, inventions, certain models or designs, and secret formulas or processes;
  • Gains from investment in a Qualified Opportunity Fund can be temporarily deferred and permanently excluded if the investment is held 10 years; and,
  • Disaster tax relief provisions, that: allow write-off of hurricane losses; suspend limitations on deductions for charitable contributions made for hurricane relief; give victims penalty-free access to retirement funds; and, eliminate the requirement that personal losses must exceed 10 percent of adjusted gross income to qualify for deduction.

The bill also doubles the state income tax standard deduction to $4,600 for single filers, $3,000 for married filing separately, and $6,000 for married filing jointly. The top personal income tax bracket rate and the corporate income tax rate are reduced to 5.75 percent in tax year 2019 and 5.50 percent in tax year 2020. The rate reduction for 2020 is dependent upon the General Assembly passing a joint resolution affirming the change and the resolution being signed by the governor. The changes in this bill expire on December 31, 2025. The bill also states that there shall be no liability for title ad valorem tax fees when obtaining a replacement title on a vehicle that is not less than 15-years old when the commissioner of the Department of Revenue is provided proof that the title no longer exists.

Budget

HB 684 is the $26.2 billion Fiscal Year 2019 budget. Highlights include:

  • More than $160 million toward boosting K-12 education, graduation rates, college accessibility, and career training programs, including a $35.6 million increase to the Zell Miller College Scholarship fund, and $12 million to expand Georgia’s College and Career Academy network;
  • More than $16 million toward children’s mental health programs, including $10.3 million for psychiatric crisis centers, $2.4 million for mental health care for foster children, and $1 million for suicide prevention programs;
  • $3.875 million toward an improved statewide health care system, including $1.5 million toward Georgia’s Health Coordination and Innovation Council, $375,000 for the Rural Health System Innovation Center, and more than $2 million toward the creation of more than 100 new residencies and preceptorships for doctors and nurses;
  • $7.5 million toward combating the statewide opioid and addiction epidemic, including $3.5 million toward a statewide drug task force and $4 million toward local community grants for substance abuse and recovery centers;
  • $6 million toward autism treatment and care programs;
  • $10 million to improve school safety through local community grants, in addition to $1.6 million for student metal health awareness training;
  • More than $1.2 million toward targeted rural Georgia funding, including $737,000 toward rural economic development and $858,000 toward the Center for Rural Prosperity and Innovation.
  • The bond package includes $489.8 million for higher education projects including those at the Board of Regents, the Technical College System of Georgia, and Georgia Military College. The budget provides state colleges and universities with $351.5 million for 32 projects including MRR; $5.9 million for Georgia Military College to complete renovation and equip Jenkins Hall; and $5 million for Georgia Research Alliance (GRA) equipment and infrastructure. Finally, the bond package includes $114 million for 12 projects within the Technical College System of Georgia, including $25 million for facility major repairs and renovations and $12 million for college and career academies.
  • $250 million, or 21% of the bond package, is dedicated to transportation and infrastructure funding, including: $100 million for the fourth year of funding for the repair, replacement, and renovation of bridges; $12.5 million for rehabilitation and improvements on state-owned rail; $100 million to the State Road and Tollway Authority to fund transit needs across the state; and $35 million to match federal funds and continue the Savannah Harbor deepening project.
  • The budget recognizes $1.83 billion in motor fuel funds in the Department of Transportation to continue capital construction projects, as well as local maintenance and improvements.
  • Finally, HB 684 includes $20.2 million for the second phase of a two-year plan to increase foster care per diem rates for relative and child placement agency (CPA) foster care providers, which brings the rate to the USDA’s southeastern average. The budget also includes $3.6 million to provide a 2.5% increase in the per diem rate for child caring institutions (CCI) and child placement agency(CPA) administrative costs.

If you have any questions or would like more information, please contact Allan Hayes at [email protected].

Tax Day Troubles?

Posted on: April 12th, 2018

By: Jessica C. Samford

As the well-known saying goes, “Nothing can be said to be certain, except death and taxes,” and with the federal individual income tax deadline quickly approaching on Tuesday, April 17, 2018, now is a good time for tax professionals to take a quick break from their busy season and take account of the possible liabilities that could arise when filing tax returns.

Similar to legal malpractice claims against a lawyer, an accountant may be held liable for professional malpractice, which often involves allegations of a negligent act or omission in performing accounting services below the standard of care for certified public accountants, for example. A simple illustration of this would be if a tax professional misses the deadline by failing to file either the tax return or the extension, postmarked on or before Tax Day (perhaps with a payment to accompany the extension to decrease the potential for interest and penalties).

While the advent of e-filing alleviates some of the pressure of the Tax Day deadline, there could still be mistakes within the returns themselves. Whether it be inadvertent typos, reliance on figures miscalculated by prior tax professionals, or reliance on misrepresentations by clients, the decision to amend the return or not after a mistake is discovered also affects potential liability of the tax professional. Unhappy clients can get creative in asserting numerous claims under a variety of theories in addition to professional malpractice, such as breach of fiduciary duty, fraud, constructive fraud, negligent misrepresentation, breach of contract, breach of good faith and fair dealing, violation of applicable state laws, etc.

Although having to file taxes may be as certain as death, accounting service liability has many uncertainties to account for, such that professional liability insurance and assistance of legal counsel should be considered in any risk management strategy.

If you have any questions or would like more information, please contact Jessica Samford at [email protected].

Continuing Fiduciary Relationship Does Not Always Toll the Statute of Limitations in California

Posted on: March 5th, 2018

By: Brett C. Safford

In Choi v. Sagemark Consulting, 18 Cal. App. 5th 308 (2017) (“Choi”), plaintiffs, husband and wife, filed a lawsuit in November 2010 alleging that defendants, their former financial advisors, offered negligent and fraudulent financial planning advice with respect a complex investment program involving life insurance and annuities under former section 412(i) of the Internal Revenue Code (“IRC section 412(i) Plan”).  Audited by the IRS in 2006, Plaintiffs alleged that defendants misrepresented the IRC section 412(i) Plan’s promised benefits as well as its risk of adverse IRS action and tax consequences.  The audit concluded in 2009, and plaintiffs were subject to significant penalties and tax liabilities caused by the IRC section 412(i) Plan.

Defendants moved for summary judgment, arguing that plaintiffs’ causes of action were barred by the applicable statutes of limitation.  Defendants introduced two communications to show that plaintiffs were aware the IRS had identified defects in the IRC section 412(i) Plan as of November 2006, and IRS penalties and damages would be accruing as of September 2007. Trial court granted summary judgment, finding that plaintiffs were on notice of the IRS penalties as of September 2007, and therefore, the two-year and three-year statutes of limitations applicable to plaintiffs’ causes of action expired prior to filing of the complaint in November 2010.

The Court of Appeal affirmed, rejecting plaintiffs’ arguments that (1) the September 2007 e-mail only put plaintiffs on notice that damages might occur in the future, and (2) the fiduciary or confidential relationship between plaintiffs and defendants, as their financial advisors, tolled the statute of limitations.  Applying the general “discovery rule,” the court concluded that the plaintiffs discovered or should have discovered defendants’ negligent advice as of the September 2007 e-mail because that e-mail indicated “‘legally cognizable damage’ in the form of IRS penalties.” Choi, 18 Cal. App. 5th at 330.  Despite uncertainty as to the monetary amount of the penalties, “‘the existence of appreciable actual injury does not depend on the plaintiff’s ability to attribute a qualifiable sum of money to consequential damages.’” Id. at 331.  The court further held that tolling did not apply, even though the fiduciary relationship between plaintiffs and defendants continued while they collectively challenged the IRS assessment, because “[d]elayed accrual due to the fiduciary relationship does not extend beyond the bounds of the discovery rule.” Id. at 334.  Therefore, the court “decline[d] to apply the tolling principles to a scenario in which the defendants had disclosed the facts necessary to support’ the plaintiff’s cause of action.” Id.

The Court of Appeal’s analysis in Choi is significant in the professional liability context for two reasons.  First, the court reaffirmed that the general “discovery rule,” i.e., the statute of limitations period begins to run when a plaintiff discovers or should have discovered the cause of action, is the default rule for when causes of action accrue in professional liability cases.  The Court rejected plaintiffs’ attempt to apply a differing accrual rule applicable only to accounting malpractice actions arising from negligent preparation of tax returns.  The court explained, “It may be that actual injury results from an accountant’s allegedly negligent preparation of tax returns only as determined by an IRS audit, but the same cannot be said for more wide-ranging categories of negligent tax-related or investment advice.” Choi, 18 Cal. App. 5th at 328.

Second, and more importantly, the appellate court declined to toll the statute of limitations even though plaintiffs and defendants maintained a fiduciary relationship while challenging the audit.  California recognizes that certain cases involving a fiduciary obligation will toll the statute of limitations.  For example, the statute of limitations in a legal malpractice action is tolled while “[t]he attorney continues to represent the plaintiff regarding the specific subject matter in which the alleged wrongful act or omission occurred.” Cal. Civ. Proc. Code, § 340.6, subd. (a)(2).  However, in Choi, the court held that the discovery rule is not displaced by delayed accrual due to a fiduciary relationship—at least in the financial advisor-client context.  The court reasoned that Plaintiffs were on inquiry notice of the facts constituting their injury as of September 2007, and their continuing relationship with defendants “did not prevent or delay [them] from discovering the wrongdoing beyond September 2007.” Choi, 18 Cal. App. 5th at 335.

The Court of Appeal’s decision in Choi undermines the commonly asserted proposition that a continuing fiduciary relationship will toll the statute of limitations and reaffirms the importance of the “discovery rule.”  At least in professional liability cases involving financial advisors, plaintiffs cannot hide behind their fiduciary relationship with defendants to avoid a statute of limitations defense.  Rather, the central inquiry is when did plaintiffs discover their causes of action—regardless of whether the discovery occurred before or after the termination of the fiduciary relationship.  As such, the Choi decision provides valuable authority for professional liability defense attorneys, especially those representing financial advisors, in cases where the statute of limitations may offer a defense.

If you have any questions or would like more information, please contact Brett Safford at [email protected].

Changes to Property Tax Appeals in Georgia

Posted on: May 4th, 2015

By: M. Michelle Youngblood

Taxes.  For most Americans, that word immediately brings to mind the 15th of April and the payment of federal income taxes.  But as property owners in Georgia are well aware, there is another kind of that can have just as much impact on the bottom line – ad valorem property taxes, usually due in the fall of each year.  Surprisingly, though, not every owner is aware that property values, on which ad valorem taxes are based, can be appealed.

Since 2009, the Georgia Legislature has made changes to the appeal process almost every year, and 2015 is no exception.  Amendments in previous years have added the options of having an arbitrator or hearing officer hear the appeal, instead of the Board of Equalization.  The latest round of revisions provide taxpayers with additional rights, including:

  • The right to interview an officer or employee authorized to discuss tax assessments relating to the valuation of the taxpayer’s property within 30 days of a written request;
  • The right to record that interview (at the taxpayer’s expense);
  • The right to record proceedings before the Board of Equalization or hearing officer (at the taxpayer’s expense); and
  • The right to enforce the interview requirement in Superior Court, and to recover reasonable attorney’s fee and expenses of litigation resulting from that enforcement, plus damages of $100.00 per occurrence.

The amendment also allows the parties to skip over the Board of Equalization hearing, and take the appeal straight to Superior Court, if the taxpayer and Board of Tax Assessors agree to do so in writing.  In addition, the parties are required to attend a settlement conference within 45 days of the notice of appeal, and before it is certified to Superior Court.  There are stiff penalties for failing to attend the settlement conference.  If the Board of Tax Assessors refuses to attend, then the taxpayer’s stated value is deemed to be the fair market value for the tax year in question, and can not be increased for the two (2) years following.[1]  If the taxpayer does not attend, he is not allowed to seek or be awarded attorney’s fees or costs of litigation in Superior Court.

Another change is a reduction in the cost to take a tax appeal to Superior Court.  Previously, the filing fee was the same charged by the Superior Court for any other civil action.[2]  Once the latest amendment takes effect, the filing fee is reduced to $25.00.

The changes enacted in the most recent amendments take effect on July 1, 2015.[3]  The entire text of House Bill 202 can be found at http://www.legis.ga.gov/Legislation/20152016/153902.pdf

 


[1] Except in certain specific circumstances specified in the statute.

[2] Which varies slightly from one county to another, pursuant to statute.

[3] Other changes contained on the same law do not become effective until January 1, 2016.

Dangers of Hiring Independent Contractors

Posted on: July 22nd, 2013

By: Leanne Prybylski

Many contractors hire independent contractors, rather than employees, to avoid paying taxes and benefits.  Contractors should be aware, however, that the costs of misclassifying employees as an independent contractors could end up being more expensive than it would have been to pay the taxes and benefits for the employees in the first place.  For more information, see the recent article by Leanne Prybylski, “The Dangers of Hiring Independent Contractors.”