Fourth Circuit holds state administrative proceeding is proper jurisdiction for determining whether arrangement is a MEWA

Article Abstract:

The Fourth Circuit ruled in Employer Resource Management v. Shannon that the Federal Anti-Injunction Act prohibited federal courts from interfering with a Virginia State Corporation Commission proceeding involving insurance law. Employer Resource had sought relief from a state hearing by the agency that would determine if its health and life insurance plan was a multiple employer welfare arrangement. The court ruled that the claimed ERISA exception to the Anti-Injunction Act did not apply. The Second and Sixth Circuits have taken the opposite view in similar cases.

Interpretation and construction, Cases, Insurance, Conflict of laws, Judicial review of administrative acts, Insurance law

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IRS rules that split-dollar, second-to-die life insurance arrangement does not create S corporation second class of stock

Article Abstract:

The IRS found in Private Letter Ruling 9651017 that a split-dollar life insurance agreement between an irrevocable trust created by husband and wife and an S corporation that they were shareholders in did not create a second class of stock that would result in loss of S status for the corporation. The IRS found that the split-dollar agreement did not alter the rights to distribution and liquidation proceeds from the corporation. The IRS also found that proceeds from the policies would not be includible in the gross estates of the husband and wife.

Public Finance Activities, Corporate Income Taxes, Taxation, S corporations, Split-dollar life insurance, Split dollar life insurance

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Electronic receipts sufficient to substantiate certain employee expenses under expense reimbursement arrangement

Article Abstract:

The IRS ruled in PLR 9706018 that an employer's use of electronic receipts to substantiate business expense deductions was satisfactory under IRC section 274(d). The IRS found that the plan was accountable, meaning that reimbursements to the employees were excludible from income, not reported on W-2's and not subject to income or payroll taxes. Under the electronic receipt system, the employees provided paper receipts when the electronic receipts did not break charges down into different types of expenses.

Expense deductions, Expense accounts

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