ML20210Q519
| ML20210Q519 | |
| Person / Time | |
|---|---|
| Issue date: | 08/06/1999 |
| From: | Dicus G, The Chairman NRC COMMISSION (OCM) |
| To: | Doyle S AFFILIATION NOT ASSIGNED |
| References | |
| NUDOCS 9908160052 | |
| Download: ML20210Q519 (1) | |
Text
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f UNITED STATES O*
NUCLEAR REGULATORY COMMISSION WASHINGTON, D.C. 20555 0001 e
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August 6, 1999 CHAIRMAN Mr. Shannon T. Doyle
Dear Mr. Doyle:
This is in reference to your letter dated April 23,1999, seeking Nuclear Regulatory Commission (NRC) support for legislation similar to H.R. 2792, the " Employment Discrimination Award Tax Relief Act," which was introduced in the 105* Congress. As you know, on May 27,1999, Representative Pryce introduced H.R.1997, the " Civil Rights Tax Fairness Act of 1999." This proposed legislation, while it differs in several respects from H.R. 2792, would have the effect of providing some tax relief to claimants who have received amounts as a result of unlawful discrimination claims. " Unlawful discrimination," as defined in this proposed legislation, includes claims made under whistleblower protection provisions such as section 211 of the Energy Reorganization Act, as amended.
The NRC has reviewed the fundamental questions that you have raised. The tax issues addressed in proposed legislation such as H.R. 2792 and H.R.1997 encompass a broad range of unlawful discrimination claims, in areas well beyond the purview of the whistleblower protections of section 211. While not expressing views on these bills, the NRC believes the Federal tax laws should not serve as a disincentive to employees who would otherwise come forward with health and safety concerns. In other contexts the NRC has stated that "a reluctance on the part of employee's to raise concerns is detrimental to nuclear safety." See Policy Statement for Nuclear Employees Raising Safety Concems without Fear of Retaliation, 61 FR 24,336 (May 14,1996). However, the NRC's mandate necessarily gives it a limited perspective on these generic tax issues and we are not in a position to endorse particular legislative proposals. Therefore, Congress is in the best position to consider the important issues you raise.
Thank you for bringing our attention to this matter.
Sincerely, f
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Greta Joy Dicus 3'
160004 9908160052 990006 PDR COMMS NRCC CORRESPONDENCE PDR
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Fndey April 23.1999 T00 PM To: SMey Ann Jackson From Stennon T. Dofe.
g Page. 2 cf 4 23 Apri!1999 tc'D Dr SE% IIonorable Shirley Ann Jackson Chairman
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via fax (301) 4151672
Subject:
Reintroduction of II.R. 2792 (105*), and its Potential Positive Effect on the Make-Whole Remedy available to Nuclear Whistleblowers.
Dear Madame Chairman,
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I believe that under the current administration, the NRC is very serious about their mandate. I also feel that the situation that causes me to write this letter will be ofinterest to anyone who has an interest in the safe operation of nuclear facilities in America. I must tell you ofmy personal situation to infbrm you as to how I became aware of a serious situation that could have an adverse effect on the NRC's ability to meet its mandate.
After a hearmg that arose from an employment discrunmation ("whistleblower") complaint that I filed with the U.S. Department of Labor (USDOL), which arose under the employee protection provision of the Energy Reorganization Act, the judge issued a recommended order that included that my former employer make payment for lost wages, and that an additional amount be paid as compensatory damages related to emotional distress. 'Ihe USDOL Administrative Review Board agreed with the judge's recommendations and issued a decision on behalf of the United States Secretary of Labor.
However, a retro-active law has been enacted that is to the detriment of persons who have prevailed in employment discrmunation cases including those cases aiising under laws that prohibit retaliation against employees for raising occupational and environmental safety concems.
As an example, in my case, this law would require that the entire compensatory damage amount be taxed at the highest rate the Intemal Revenue Service can impose on income,39.6% This law was enacted after my damages hearing and after the judge issued his decision, yet was made retro-active thereby severely curtailing the effect that the award would have. Furthermore, as it stands today, most of the back-pay that I will receive will also fall in the 39.6% tax bracket even thou8, had I been allowed to pay the tax in each of the years it should have been received absent h
the disenmmation, it would have fallen into the 15% tax bracket. I have a document from the IRS that indicates, based on the authors understanding of(l) a fee arrangement with my counsel,(apparently taxes are to be paid prior to the deduction of the attomeys fees), (2) the state tax rate, and (3) the federal tax rate ; that I will owe over 100% of my settlement to attomeys and to the state and federal taxing authorities. One line of the document indicates that I will have to borrow money to settle the DOL complaint. I am hoping that the letter contains hyperbola.
The letter was written in response to an invitation that I made to the IRS to comment on whether or not they would be interested in filing an amicus curie brief to address the extra tax liability that
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one mi ht experience as a result of receiving a lump some payment of backpay. I felt that this 8
liability would have an adverse effect on the make whole remedy available under the ERA, and that it should be considered an element of damages. I am hoping that the IRS letter included a worst case scenario.' I know that they are mistaken as to the nature of the contingency agreement I have with my counsel and believe that they are mistaken as to the state tax rate. I do believe however that this exact scenario could apply to others who are victims ofemployment disenmination.
Initially I was of the opinion that attorneys fees calculated by the lodestar method and paid directly to the complainants attomey as per a statute, would not be corsidered income to a complainant. However, I have talked to a tax attomey who has cited incidents involving several persons who were victims of employment disenmination, where the IR S taxed complainants directly due to the IRS position that the attomeys fees paid directly to the attomey were considered a forgiven debt and therefore considered as income to the complainant.
According to the National Employment Lawyer's Association (NELA), the retroactive provision in the new law was tacked on to the 1996 Minimum Wage Bill ( H.R. 3448 (104* congress)) at 4:00 in the moming, without conference before the House Ways and Means Conference Committee. It has been reported that this was done by Committee Chairman Bill Archer ofTexas, on the day the minimum wage bill was passed by the Congress. According to NELA Senior Staff
. Attomey Paula Brantner, during the signing statenwm, when President Clinton signed the Minimum Wage Bill, he expressed his reservations regarding the inclusion of this provision.
This provision retroactively changed the taxability of compensatory damages other than those arising from physicalinjury.
According to Robert W. Wood, one of the leading U.S. tax attomeys and leaaing authors on the subject of taxes on rettlements, this legislative language would never have survived on its own merit.
This law, coupled with existing tax law, would appear to negate years of precedents that allow a victim to be made whole after having been discrumnated against for engaging in a protected activity in the workplace, such as voicing environmental or safety concems, or even for refusing to commit a prohibited act.
According to NELA, the IRS requires a victim of employment discrmunation to pay taxes on the award prior to the deduction of the attomey's fees and then the attorney also pays taxes on the same money. I have spoken to one person whc has informed me that this was the case in his situation. I have recently talked to an IRS official who has informed me of a case in which a victim of employment discnmmation realized less than ten percent of the award once federal taxes, state taxes and then the attomey's fees were deducted.
If the current tax situation is allowed to continue it could have a chilling effect on an employee's resolve to voice environmental or occupational safety concems. In light of today's technology, it would not be hard to imagine certain conditions where this lack of resolve could have dire consequences that could affect any given community. The tax law as it stands clearly negates the make whole remedies previously available under the employee protection provisions of every i
environmental law that contains such provisions.. Only the passage of legislation will reinstate these make-whole remedies and give a potential whistleblower the knowledge that he or she can be made whole in the event of disenmination. It is this knowledge that may strengthen an j
employee's resolve to voice environmental or occupational safety concems, and it is the strength of this resolve that could prove to be priceless to the person (or the family or friends of that person) i 1
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' *6 who is prevented from being killed or injured on the job, or is prevented from contracting some disease stemmmg from environmental pollutants. I beheve that the make whole remedies in existence prior to Mr. Archer's inclusion of the language in the Minimum Wage Bill, were in place to protect the health and safety of all citizens. I further believe that the tax code as it stands diminishes that protection. Congressman Terry Everett is considering reintroducing legislation
( formerly HR2792105* congress ) that may correct this situation.
As a side note, not directly related to the NRC's mandate, the current tax situation could also cause those persons who are victims ofsexual harassment or victims ofdisenmmation due to race, age, disability, or religious belief, and who realize the current tax ramifications, to simply accept a hostile working emironment.
There is a website that will lead anyone concemed to information regarding HR 2792.
http://www.nela.org/ncla/taxequity.html Of particular interest might be the history that lead up to the need for the legislation. 'Diere is a link at this site that explains that history.
It is clear that a situation now exists that runs counter to the intent of all anti-discrimination laws including the employee protection provision of the Energy Reorganization Act. If one were to look at this from the dark side, it would appear that the IRS has been enlisted to target those who have prevailed in raising employment discrimination claims much in the same fashion that the IRS has been used to target individuals involved in organized crime. Those that I have spoke to within the IRS realize this tax situation as unfair. However they are required to operate according to certain guidelines..
I believe that there is about to be significant national press coverage related to this matter and believe thtt the press will be in contact with the EEOC, NRC, OSHA, EPA and the USDOJ.. I have been in contact with other federal agencies and someone from each agency realizes the potential effect on their mandate. I am requesting that the NRC also look into this matter, take a position as to how this current situation effects their mandate and respond to this letter. hh Baker has given me a cursory opinion that the NRC may wish to address this matter and has informed me that he is working through channels in an effort to address my concems. He also informed me of the lack of an office specifically designed to address policy management, and informed me that I may also want to address this matter directly to your office.
I think that this is an important issue and that the NRC should ultimately voice its opinion to the Congress. I look forward to hearing from your office.
Sincerely, Shannon T. Doyle
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