CURRENT MONTH (January 2018)
Attorney General Jeff Sessions Rescinds Obama-Era Guidance on Marijuana Enforcement
By David Bass, Rabobank, NA
On January 4, 2018, Attorney General Jeff Sessions, through a Justice Department memo directed at federal prosecutors, revoked prior guidance on enforcement of federal marijuana laws in states that have legalized the sale and possession of the drug. Sessions’s memo cited the Controlled Substances Act, by which growing, distributing, and selling marijuana is a federal crime. He stated, “[t]hese statutes reflect Congress’s determination that marijuana is a dangerous drug and that marijuana activity is a serious crime.” Prior Obama-era guidance gave U.S. attorneys wide discretion, emphasizing the prosecution of specific crimes related to marijuana, such as drugged driving, distribution to minors, and diversion into states where marijuana remained illegal under state law. The 2014 Financial Crimes Enforcement Network guidance for financial institutions regarding the proper reporting requirements for the banking industry remains in effect for now.
Joint Interagency Statement on New Tax Law Ramifications
By Nicole DeSantis, Rabobank, NA
On January 18, 2018, the Office of the Comptroller of the Currency, the Federal Reserve Board, and the Federal Deposit Insurance Corporation announced an interagency statement on accounting and reporting implications of the new tax law enacted on December 22, 2017. Supervised financial institutions must record the effects of the new tax law in their December 31, 2017, regulatory reports. The guidance clarifies changes in deferred tax assets and liabilities resulting from the lower corporate income tax rate and the impact of the new tax law on regulatory capital.
Proposed Changes to FRB’s Reg. M
By Mark Tew, Rabobank, NA
On January 3, the Board of Governors of the Federal Reserve System (FRB) announced proposed rule changes to the FRB’s Regulation M, which it originally issued to implement the Consumer Leasing Act (CLA). Although the FRB largely transferred its rulemaking authority for the implementation of the CLA to the Consumer Financial Protection Bureau (CFPB) under Dodd-Frank in 2011, conspicuously absent from the CFPB’s oversight and authority were motor vehicle dealers. With these newly proposed rule changes and accompanying Official Staff Commentary, the FRB clarifies the narrower scope of its Regulation M as applying to the motor vehicle dealers that were excluded from the CFPB’s oversight.
“Primary Beneficiary” Test Adopted for Unpaid Internships
By Meagan Bainbridge, Weintraub, Tobin, Chediak, Coleman, Grodin Law Corporation
On January 5, 2018, the Department of Labor (DOL) announced the adoption a new “primary beneficiary” test for determining whether unpaid interns qualify as employees for purposes of the Fair Labor Standards Act (FLSA). In doing so, the DOL follows a string of federal court decisions in focusing on seven factors to determine the “primary beneficiary” of an internship: (1) whether there is an understanding that there is no expectation of compensation; (2) the similarity of the training to an educational environment; (3) whether the internship is tied to a formal education program; (4) whether the internship accommodates the academic calendar; (4) whether the duration is limited to the period in which beneficial learning is provided; (5) the extent to which the intern’s work complements, rather than displaces, the work of paid employees; and (7) whether there is an understanding that there is no entitlement to a paid job at the internship’s conclusion. Only where, based on the unique characteristics of each position, the primary beneficiary test determines that the intern is actually an employee will the intern become entitled to both minimum wage and overtime pay under the FLSA. Using this relaxed approach to determining the employment status of unpaid interns, employers should evaluate their internship programs to determine whether their interns are entitled to minimum wage and overtime pay under the FLSA.
IRS Notifies State Department of Taxpayers with Seriously Delinquent Tax Debts
By Nicole DeSantis, Rabobank, NA
On January 16, 2018, the Internal Revenue Service (IRS) issued Bulletin IR-2018-7 strongly encouraging taxpayers with seriously delinquent tax debts to pay what they owe or enter into a payment agreement with the IRS. Not doing so could lead the State Department to revoke a taxpayer’s passport, or deny its application or renewal. The Bulletin is a result of the Fixing America’s Surface Transportation Act signed into law at the end of 2015.