ML20210Q710
| ML20210Q710 | |
| Person / Time | |
|---|---|
| Issue date: | 08/06/1999 |
| From: | Vietticook A NRC OFFICE OF THE SECRETARY (SECY) |
| To: | Carro R, Rosalyn Jones, Shapiro R AFFILIATION NOT ASSIGNED, LABOR, DEPT. OF |
| Shared Package | |
| ML20210Q692 | List: |
| References | |
| NUDOCS 9908160094 | |
| Download: ML20210Q710 (3) | |
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MCRETARY August 6, 1999 Mr. Robert A. Shapiro Associate Solicitor for Legislation
& Legal Counsel U.S. Department of Labor N-2428 Labor Department Building 200 Constitution Avenue, N.W. ,
Washington, DC 20210-0001
Dear Mr. Shapiro:
On April 23,1999, the Nuclear Regulatory Commission (NRC) received a letter from an individual seeking NRC support for proposed legislation which would have the effect of
- providing some tax relief to claimants who have received judgments and recovered amounts based on unlawful discrimination claims, including claims made under whistleblower protection provisions such as section 211 of the Energy Reorganization Act. The NRC is concerned with any disincentive to nuclear industry employees who would otherwise come forward to report health and safety concerns. Because the NRC's mandate necessarily gives it a limited perspective on such sweeping tax issues as this one, we are forwarding both the individual's letter and our response for your information and consideration.
Sincerely, T
g u LM Annette Vietti-Cook i
Enclosures:
- 1. Letter from Chairman Dicus to S. Doyle
- 2. Letter from S. Doyle to former Chairman Jackson 9908160094 990906>WtCC PDR ORG
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\,..... August 6, 1999 MCRETARY Mr. Richard S. Carro Associate General Counsel for Legislation, Litigation & Regulation Room 1417, Main Treasury Washington, DC 20220-0001
Dear Mr. Carro:
On April 23,1999, the Nuclear Regulatory Commission (NRC) received a letter from an individual seeking NRC support for proposed legislation which would have the effect of providing some tax relief to claimants who have received judgments and recovered amounts based on unlawful discrimination claims, including claims made under whistleblower protection provisions such as section 211 of the Energy Reorganization Act. The NRC is concerned with any disincentive to nuclear industry employees who would otherwise come forward to report health and safety concerns. Because the NRC's mandate necessarily gives it a limited perspective on such sweeping tax issues as this one, we are forwarding both the individual's letter and our response for your information and consideration.
Sincerely, i % im - kh% J Annette Vietti-Cook
Enclosures:
- 1. Letter from Chairman Dicus to S. Doyle 2 Letter from S. Doyle to former Chairman Jackson e 1
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%,..... August 6, 1999 SECRETARY Mr. Ron Jones Office of Management and Budget ,
72517* Street, N.W., Room 7222 l
Washington, DC 20503 Doar Mr. Jones:
On April 23,1999, the Nuclear Regulatory Commission (NRC) received a letter from an individual seeking NRC support for proposed legislation which would have the effect of providing some tax relief to claimants who have received judgments and recovered amounts '
based on unlawful discrimination claims, including claims made under whistleblower protection provisions such as section 211 of the Energy Reorganization Act. The NRC is concerned with any disincentive to nuclear industry employees who would otherwise come forward to report health and safety concerns. Because the NRC's mandate necessarily gives it a limited perspective on such sweeping tax issues as this one, we are forwarding both the individual's letter and our response for your information and consideration.
Sincerely, m Y - l<:d v Annette Vietti-Cook
Enclosures:
1
- 1. Letter from Chairman Dicus to S. Doyle
- 2. Letter from S. Doyle to former Chairman Jackson
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< o WASHINGTON, D.C. 20555 0001 August 6, 1999 CHARMAN 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 Faimess Act of 1999." This proposed legislation, whle 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 Concerns 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,
]
reta Joy Dicus
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Fnday, Aprg A 1999 700 PM Ta SMey Ann Jacuon From Snamon T Dore. W 98 2 of 4 l
I 23 April 1999
.C'D DT SET %e Honorable Shirley Ann Jackson Chamnan APR 9) 10:g C j via fax (301) 415-1672 ,
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Subject:
Reintroduction of II.R. 2792 (105*), and its Potential Positive Effect on the Make-Whole Remedy available to Nuclear Whistleblowers. l
Dear Madame Chairman,
I believe that under the current admmistration, 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 ofnuclear facilities in An.aica. I must tell you ofmy personal situation to inform 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 hearing that arose from an employment disenminatien ("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, thejudge issued a recommended order that included that my former employer make payment for lost wages, and that an additional amount be paid as cv.ugnatory damages related to emotional distress. The USDOL Adnunistrative Review Board agreed with thejudge's recommendations and issued a decision on behalf of the United States Secretary of Labor.
However, a retre active law has been enacted that is to the detriment of persons who have prevailed in employment discrmunation cases including those cases arising under laws that prohibit retaliation against employees for raising occupational and environmental safety concerns.
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 though, had I been allowed to pay the tax in each of the years it should have been received absent 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(1) 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 attorneys 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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% e one might experience as a result of receiving a lump some payment of backpay. I felt that this
- liability Would hhve an adverse effect on the make whO 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 tb state tax rate. I do believe however that this exact scenario could apply to others who are victims of employment discrimination.
Initially I was of the opinion that attomeys fees calculated by the lodestar method ani paid directly to the complainants attomey as per a statute, would not be considered income to a complainant. Ilowever, I have talked to a tax attomey who has cited incidents involving several persons who were victims of employment disenmination, where the IRS taxed complainants directly due to the IRS position that the attorneys fees paid directly to the attorney were considered a forgiven debt and therefore considered as income to the complainant.
According to the National Employment Lawyer's Association (NELA), the retroactive prosision 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 IIouse Ways and Means Conference Committee. It has been reported that this was done by Committee Chairman Bill Archer of Texas, on the day the minimum wage bill was passed by the Congress. According to NELA Senior Staff Attomey Paula Brantner, during the signing statenam, when Prcsident 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. J Accordmg to Robert W. Wood, one of the leading UX tax attomeys and leaaing aut!. ors on the subject of taxes on settlements, 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 aRer having been disenmmated against for engaging in a protected ;
activity in the workplace, such as voicing environmental or safety concems, or even for refusing to j commit a prohibited act. l According to NELA, the IRS requires a victim of employment disenmmation to pay taxes on the j award prior to the deduction of the attomey's fees and then the attomey also pays taxes on the i same money. I have spoken to one person whc has informed me that this was the case in his j i
situation. I have recently talked to an IRS ofIicial who has informed me of a case in which a victim of employment discrimination realized less than ten percent of the award once federal taxes, state taxes and then the attorney'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 I would not be hard to imagine cettain conditions where this lack of resolve could have dire l consequences that could affect any given community. The tax law as it stands clearly negates the l make whole remedies previously available under the employee protection provisions of every environmental law that contains such provisions.. Only the passage of legislation will reinstate ;
f these make-whole remedies and give a potential whistleblower the knowledge that he or she can i
j be made whole in the event of disenmmation. It is this knowledge that may strengthen an 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) l 4
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who is prevented from being killed or injured on the job, or is prevented from conta acting some disease stemming from environmental pollutants. I believe 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 IIR2792105" 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 of sexual harassment or victims of discrmunation due to race, age, disability, or religious belief, and who realize the current tax ramifications, to simply accept a hostile working environment.
Ecre is a website that will lead anyone concemed to information regarding IIR 2792.
http://www.nela.org/nela/taxequity.html Ofparticular interest might be the history that lead up to the need for the legislation. Ecre is a link at this site that explaim 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 disenmmation 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. Ilowever 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 thst 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. Mr. 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 concerns. He also informed me of the lack of an ofIice specifically designed to address policy management, and informed me that I may also want to address this matter directly to your ofIice.
I think that this is an important issue and that the NRC should ultimately voice its opinion to the Congess. I look forward to hearing from your oflice.
Sincerely, Shannon T. Doyle
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