Some Subchapter S Distributions Are Not "Dividends"

The Massachusetts Supreme Judicial Court has ruled that where, in 1984 and 1985, (1) two Subchapter S corporations made distributions to taxpayers, (2) the distributions did not exceed the taxpayers, adjusted basis in their stock, and (3) were treated as distributions from each corporation's accumulated adjustment account, the distributions were other 5 percent Part B income; not Part A income. The decision overturned the Commissioner of Revenue's reclassification of the distributions as income taxable as dividends at 10.75 percent.

Why This Is Important . . . Distributions from Subchapter S corporations that meet these requirements are subject to the lower earned income tax rate in Massachusetts.

Commercial Driver Hearing Requirement Upheld

The Federal Highway Administration's requirement that commercial vehicle drivers be able to hear has been upheld. Three truck drivers sued claiming that the hearing requirement violated federal disability discrimination laws. While the Court agreed that ordinarily determinations concerning the ability to drive should be made on an individual basis, the court found that an absolute standard was not unreasonable where it was implemented in the interest of public safety.

Why This Is Important . . . This is a landmark case in the area of disability discrimination law. It demonstrates a willingness to defer to standards adopted in the interest of public safety.

Exporters And Shippers May Receive Refund

A Court of International Trade decision entitles exporters and shippers to a tax refund. An exporter challenged the Harbor Maintenance Tax which imposes a tax of .125% on the declared value of goods exported from this country. The court found the tax was unconstitutional. Under the Court's decision a refund is due for all harbor maintenance taxes paid within the two years preceding the date on which a company files a claim for a refund.

Why Is This Important. . . . The decision limits refunds to the two year period preceding a claim. The sooner a claim is made, the greater the refund period that will be available to exporters.

New Massachusetts Sexual Harassment Law

Massachusetts has adopted a new law on sexual harassment which requires all Massachusetts employers to adopt and distribute a policy against sexual harassment. Active Nicolai Law Group clients have received a memorandum describing the law's requirements and the possible consequences for non compliance.