Earlier this week, the IRS released Notice 2024-77, which provides much-anticipated guidance related to the handling of so-called “inadvertent benefit overpayments” from qualified retirement plans under the SECURE 2.0 Act.  The Notice provides information on whether and when a plan sponsor is obligated to attempt to recoup an inadvertent benefit overpayment from the IRS’ perspective, as well as guidance on the rollover treatment of inadvertent benefit overpayments. 

The IRS recently issued Notice 2024-73, which provides much-needed guidance on long-term, part-time employees in ERISA-governed 403(b) retirement plans. Following passage of the SECURE 2.0 Act, an employee is generally considered a LTPT employee if he or she works at least 500 hours per year for two consecutive years.

The U.S. Court of Appeals for the Eleventh Circuit held that a monetary civil penalty imposed for willfully failing to file a foreign bank account report (“FBAR”) was a “fine,” and had to be evaluated for excessiveness under the Excessive Fines Clause of the Eighth Amendment. The Eleventh Circuit held that the penalty was a fine because it did not have a “remedial” purpose that compensated the United States for expenses or loss. Two years earlier, the First Circuit held that a monetary civil penalty imposed for willfully failing to file an FBAR report was not a “fine” and did not have to be evaluated for excessiveness under the Excessive Fines Clause of Eighth Amendment. Final resolution of the issue will require action by Congress or the Supreme Court.

The United States Trade Representative published a Federal Register notice detailing its final modifications to the Section 301 tariffs on China-origin products. USTR has largely retained the proposed list of products subject to Section 301 tariffs announced in the May 2024 Federal Register notice with a few modifications, including adjusting the rates and implementation dates for a number of tariff categories and expanding or limiting certain machinery and solar manufacturing equipment exclusions. USTR also proposes to impose new Section 301 tariff increases on certain tungsten products, polysilicon, and doped wafers.

In Libitzky v. United States, the United States Court of Appeals for the Ninth Circuit affirmed disallowance of a $700,000 federal income tax refund claim. The court said that this was an “unfortunate” case, but they were bound by the statutory language providing for tax refunds, which did not permit equitable tolling of a limitation period.

In a highly anticipated opinion, the United States District Court for the Northern District of Texas invalidated the FTC’s rule banning most non-compete agreements, opining that the FTC exceeded its authority in promulgating the rule and that the rule is arbitrary and capricious. This decision blocks the rule from becoming effective nationwide on September 4, 2024. As a result, existing non-compete agreements may still be valid and enforceable when permitted under applicable law.

The Michigan Supreme Court revived two 2018 voter-initiated laws aimed at increasing the state’s minimum wage and expanding earned sick time for workers. In doing so, the Court held that the Michigan Legislature’s “adopt-and-amend” process—adopting the initiatives and then in the same session significantly altering them—“violated the people’s constitutionally guaranteed right to propose and enact laws through the initiative process” under the state constitution. The decision has major implications for Michigan’s workplaces, especially considering the revived laws, with some adjustments explained below, will go into effect February 21, 2025.

Can a student harassed by another student bring a lawsuit against the school for allegedly creating a hostile environment under state law? On July 29, 2024, the Michigan Supreme Court answered no. The decision underscores the distinction between employer-employee relationships and the responsibilities schools bear in such cases.

The rules relating to delegated authority are complex. A taxpayer is well advised to ensure that the scope of a closing agreement the taxpayer signs is what the taxpayer expects, and that an IRS official who signs the agreement has authority to do so for the matters in the agreement

On August 1, 2024, the National Labor Relations Board is set to roll out its Fair Choice-Employee Voice Rule, which includes three major changes. The effective date of the new rule is September 30, and the rule will only be applied to cases filed after the effective date. Court challenges to the Final Rule are anticipated.

In 2021, a group of citizen advocacy groups sued the State of Michigan and the Attorney General arguing that the Michigan Legislature’s “adopt and amend” maneuver was unconstitutional, as it circumvented the voters' ability to create policy through ballot initiatives. The case is now before the Michigan Supreme Court, where the current session ends July 31, 2024. If the Michigan Supreme Court reverses the Court of Appeals and strikes down the adopt-and-amend strategy, its decision will have significant implications for employers, as the minimum wage could increase substantially, and new paid sick leave requirements could be imposed.

In Michigan, various state employment laws prohibit employers from retaliating against employees. But can an employee pursue a public policy retaliation claim against the employer in addition to a statutory retaliation claim? On July 22, 2024, the Michigan Supreme Court ruled that anti-retaliation provisions in two important workplace safety laws—the federal Occupational Safety and Health Act and Michigan’s Occupational Safety and Health Act—do not preclude a plaintiff from also asserting a violation of public policy in court.

The United States Department of Labor issued a Field Assistance Bulletin on Artificial Intelligence and Automated Systems in the Workplace under the Fair Labor Standards Act and Other Federal Labor Standards. In light of employers’ increasing use of artificial intelligence and other automated systems in the workplace, the bulletin provides guidance regarding the application of the FLSA, FMLA, nursing employee protections, and the Employee Polygraph Protection Act.

At issue in Continuing Life Thousand Oaks, LLC. v. Commissioner, affirmed May 21, 2024, was the year of inclusion in gross income of an income item. The disputed years were 2008, 2009, and 2010 -- taxable years that preceded the effective date of the Tax Cuts and Jobs Act of 2017. For these taxable years, an item was included in gross income of an accrual method taxpayer if all events established the right to the income item and the amount of the inclusion could be determined with reasonable accuracy. With enactment of the Tax Cuts and Jobs Act, the analysis of inclusion for taxpayers having applicable financial statements changed.

The Internal Revenue Code generally discourages retirement plan participants from requesting distributions from their retirement plan funds prior to age 59 ½ by imposing an additional 10% tax on those distributions. However, the Code outlines several permissible exceptions to this rule under which a participant could request a distribution prior to age 59 ½ and not be subject to the additional 10% tax.

On June 28, 2024, the Supreme Court issued a significant decision that could have wide-ranging consequences for administrative agency enforcement actions. In Securities and Exchange Commission v. Jarkesy, the Court held that the SEC cannot impose civil penalties for violations of the securities laws’ antifraud provisions through in-house administrative proceedings.

The Uniform Power of Attorney Act takes effect on July 1, 2024; it repeals and replaces the durable power of attorney provisions in the Estates and Protected Individuals Code. Michigan now joins 30 other states and the District of Columbia in adopting a version of this unified framework, which provides significantly more guidance on the procedures, powers and limitations applicable to financial powers of attorneys in Michigan. The UPOAA contains 47 separate statutes all relating to financial powers of attorney, whereas EPIC only contained five.

By reversing 40 years of case law, the decision will have a broad ripple effect through the federal regulatory world. Companies that have relied on a federal agency's interpretation of applicable federal statutes should reassess their reliance and companies that are constrained by such interpretations may have a new basis to challenge them.

On June 27, 2024, the United States Supreme Court issued its long-awaited opinion in Harrington v. Purdue Pharma L.P., holding that the Bankruptcy Code does not permit nonconsensual releases of nondebtors.

The U.S. Court of Appeals for the Sixth Circuit has ruled that the waiver of a State's immunity under Title V of the Americans with Disabilities Act (ADA) is unconstitutional. This ruling permits a State to defend a Title V claim under the ADA by asserting immunity.

On Friday, June 21, 2024, the SBRA debt limit reverted from $7,500,000 to $3,024,725 in noncontingent, liquidated debt. Debtors with more than this amount of debt do not qualify to file a bankruptcy case under the SBRA, though they may still file traditional chapter 11 bankruptcy cases. The chapter 13 debt limit also changed.

In criminal cases, oftentimes the most significant element in dispute is whether the defendant harbored the intent to “knowingly” or “willfully” violate the criminal law at issue.  If the defendant denies that he knew what he was doing was illegal, the government must prove beyond a reasonable doubt that the defendant had the required mens rea — or mental state — to violate the law.  The government does this by presenting circumstantial evidence that it argues supports a reasonable inference that the defendant had the required mental state to violate the law.  And defense lawyers test that evidence largely on cross examination and by presenting counterevidence. 

In November 2023, the Government of Ontario passed Bill 149, the Working for Workers Four Act, 2023. The Act places new obligations and prohibitions on employers, and intends to strengthen Ontario’s employee entitlements and workers’ compensation benefits.

Arbitration is supposed to be faster and more economical than litigation. But arbitration is often accompanied by proceedings in court. Recent U.S. Supreme Court decisions leave federal jurisdiction over proceedings to confirm, vacate or modify an arbitration award unsettled, potentially increasing complexity and delay.

The United States Patent and Trademark Office is facing vigorous backlash to its proposal to change terminal disclaimer practice used in patent applications and, not so subtly, discourage the use of continuation applications. Since the Notice of Proposed Rulemaking was issued in May, more than 90% of the public comments to date are strongly opposed, and five former USPTO Directors, Deputy Directors and Patent Commissioner called on the USPTO to pull the NPRM immediately, arguing that the “proposed rules provide perverse incentives and threaten serious harm to America’s innovation economy.”

The Department of Labor recently issued a regulatory package that includes a final rule updating ERISA's definition of an investment advice fiduciary and amending certain related prohibited transaction exemptions. This is the DOL's third attempt to modernize the definition of an investment advice fiduciary to more completely reflect the modern retirement plan landscape. The regulatory package is generally effective September 23, 2024, with some parts of the PTE amendments being gradually phased in and fully effective September 23, 2025. 

Importers must act swiftly to prepare for new Section 301 tariffs which can apply as soon as August 1, 2024, and for exclusions that expire as soon as June 14, 2024. As predicted, the United States Trade Representative (USTR) issued a proposal for the timing of new Section 301 tariffs on Chinese products in certain strategic sectors. Interested parties may submit comments and seek future exclusions through June 28, 2024.

When there are two conflicting contracts—one requiring a court to address whether a case should be decided by arbitration or court action, and another requiring an arbitrator to address that issue—who decides which contract controls? The U.S. Supreme Court answered this question in Coinbase, Inc v Suski. 

As Michigan public schools prepare their 2024-2025 budgets, schools should be aware of the short-term borrowing options available to cover their projected operating cash-flow shortfalls.  

A group of national business associations filed a lawsuit seeking to prevent the U.S. Department of Labor from implementing its new Final Rule on overtime, which significantly increases the annual salary threshold required to classify employees as exempt under the Fair Labor Standards Act.

In Meyer, Borgman, and Johnson, Inc. v. Commissioner, the Tax Court found that customers funded MBJ's research activities, with the consequence that MBJ could not claim federal income tax credits for expenses it incurred to conduct research activities.

The U.S. Department of the Treasury and IRS published final regulations regarding clean vehicle tax credits under Internal Revenue Code sections 25E and 30D established by the Inflation Reduction Act of 2022. Among other important guidance, the Treasury regulations finalized its rules on Foreign Entity of Concern restrictions regarding the section 30D tax credit.

On May 16, 2024, the United States Supreme Court in Smith v. Spizzirri addressed whether district courts are required to stay a lawsuit pending arbitration, or if they have the discretion to dismiss the suit when all the claims are subject to arbitration. The Court held that when a district court finds a case involves an arbitrable dispute and a party has requested a stay of the case pending arbitration, Section 3 of the Federal Arbitration Act compels the court to issue a stay and the court does not have discretion to dismiss the case.

Importers must begin to prepare for another round of Section 301 tariffs on China-based products, as President Biden and the United States Trade Representative (USTR) will seek to take further action on China tariffs resulting from the statutory four-year review process. As of May 2, 2024, the Section 301 tariffs on China-based products have resulted in an estimated $215.28 billion in duties collected from importers.

The U.S. Supreme Court held the Copyright Act entitles a copyright owner to obtain damages for a timely infringement claim, even if the infringement occurred prior to the Copyright Act's three-year statute of limitations.

“Third party” or “associational” retaliation is reprisal taken by an employer against someone other than the person who engaged in “protected conduct.” In 2011, the U.S. Supreme Court ruled that Title VII’s anti-retaliation provision covers third-party retaliation claims even though the statute does not explicitly recognize such a theory. On May 10, 2024, the Michigan Supreme Court followed suit, endorsing the theory of third-party retaliation claims under Michigan’s anti-discrimination law, the Elliott-Larsen Civil Rights Act.

The National Labor Relations Board recently held that an employer’s proposal and adherence to proposals could in itself be deemed to be unlawful bad faith bargaining.

Earlier this year, the Haas F1 Team announced it would compete in the 2024 Formula One Championship without the leadership of its former principal Guenther Steiner. Following this separation, Steiner sued his former team for unpaid commissions and unauthorized use of his name and likeness. Now, the team’s sponsor, Haas Automation, Inc., has sued Steiner for allegedly infringing the company’s trademarks with the sale of his book “Surviving to Drive.”

On April 23, the Federal Trade Commission adopted a near-total ban on noncompete agreements, with limited exceptions. The following day, the U.S. Chamber of Commerce and other business groups sued, seeking to block the rule from taking effect. Unless it is enjoined, the FTC rule will become effective 120 days from the date it is published in the Federal Register.

The Department of Labor announced the final version of a rule that will significantly increase the annual salary threshold required to classify employees as exempt under the Fair Labor Standards Act. Although the rule will not change the job duties test under current regulations for administrative, executive, and professional employees, it provides for a stepped set of increases of the minimum salary requirement from the current level of $684 per week ($35,568 per year) to $844 per week ($43,888 per year), affecting approximately 1 million workers.

On April 19, 2024, the United States Department of Education’s Office for Civil Rights issued its long-awaited and lengthy Final Title IX regulations. The 2024 Final Rule requires that all educational institutions that receive federal funds that have knowledge of conduct that reasonably may constitute sex discrimination in their educational programs or activities must respond promptly and effectively to address that conduct. The 2024 Final Rule, which takes effect on August 1, 2024, includes significant changes from the 2020 regulations and feature largely the same core principles contained in the Department’s 2022 draft rules.

Two of the busiest airports in the United States are battling with their smaller counterparts to retain trademark rights in the name of the major cities the airports serve. While the smaller airports want to capitalize on using big city names, the federal trademark-holding larger airports are fighting hard to prevent that, arguing it will sow confusion among travelers. These cases highlight the importance of considering whether an applicant’s proposed mark may be confusingly similar with existing registrations.

Federal law prohibits employers from relying on certain protected statuses (race, color, religion, sex, or national origin) when making employment decisions. Lower courts have required employees suing employers to point to a materially adverse harm caused by the alleged employer discrimination. But is a forced transfer of an employee to another department—with no loss of pay or rank—an “adverse employment” decision? On April 17, 2024, the U.S. Supreme Court ruled 9-0 in the affirmative. 

The Federal Trade Commission and United States Department of Justice recently released new guidance on preservation of electronically stored information from ephemeral messaging tools and collaboration platforms like Slack, Microsoft Teams and Signal. These updates make clear that in future enforcement matters, the DOJ and FTC will be requesting information about which messaging applications, both ephemeral and non-ephemeral, are used within companies.

Over an objection by the IRS, the Tax Court recently ruled that it could limit discovery and permit statistical sampling of voluminous data related to a claimed research credit. The court refused, however, to protect the taxpayer from a burdensome demand by the IRS for production of information about every item in a population of 2,000 to 3,000 from which a statistical sample would be drawn.

When has a party waived its contractual right to arbitrate? Until recently, most federal Courts of Appeal—including the Sixth Circuit— held that a party who participates in litigation (e.g., by serving and responding to discovery, conducting depositions, and so on) has not waived its right to arbitrate unless there was prejudice to the opposing side.

In a rare published decision, the Michigan Court of Appeals enforced a provision in an auto lease that allowed either party to demand arbitration, even though the dealer had assigned the lease to a finance company and no longer owned the lease, and even though plaintiff argued that his claim did not involve the lease agreement.  

Michigan law provides several borrowing options for school districts to cover operational cash-flow shortfalls during a school year. We have prepared a summary of these borrowing options.

Employers with candidates who require initial H-1B employment authorization should plan to submit a registration for those candidates when the H-1B electronic registration period opened on March 6, 2024. The electronic registration period has been extended to 12 p.m. EST on March 25, 2024. During this period, employers may submit registrations for any employees they wish to sponsor for initial H-1B employment authorization.

On February 21, 2024, the IRS announced plans to increase funding under the Inflation Reduction Act to audit the use of corporate aircraft by large corporations, partnerships, and high-income individuals. 

The European Union recently passed a sweeping law regulating corporations and business leaders with respect to artificial intelligence. The first legislation of its kind, the EU Artificial Intelligence Act seeks to impose legal and ethical standards on companies that develop and use AI. While the act does not impose legal obligations on organizations that operate exclusively in the United States, it will serve as a harbinger and potential model for AI restrictions that may one day be passed by the U.S. Congress and state legislatures.

Congress perhaps made an unintended drafting error in the Tax Cuts and Jobs Act when it required a taxpayer to decrease its deduction for research and experimental expenditures. The apparent drafting error is in IRC §280C(c)(1), which provides that if a taxpayer’s research credit for a taxable year exceeds the amount allowable as a deduction for research expenditures for the taxable year, the amount of research expenses chargeable to capital account must be reduced by the excess and not by the full amount of the credit.  

In 2022, Congress passed the Bankruptcy Threshold Adjustment and Technical Corrections Act, raising the debt limits for bankruptcy cases under the Small Business Reorganization Act and under chapter 13, making more debtors eligible for relief under these provisions of the Bankruptcy Code. The increases were temporary and will revert to lower values in June unless Congress extends them or makes them permanent. This significant change could affect the eligibility of businesses seeking bankruptcy protection and may create a surge in bankruptcy filings before the deadline.

The United States District Court of the Eastern District of Texas has struck down the 2023 NLRB regulations defining joint employer status, opining that they were overbroad and could allow a finding of joint employer status even when the putative joint employer did not meet the common law definition of an employer. 

Unscrupulous promotors caused many taxpayers to file claims for the Employee Retention Credit even when they did not qualify. As a result, the IRS views claims for this credit with suspicion and has created several programs allowing taxpayers to withdraw their claims without penalty. In conjunction with this this approach, the IRS has now begun sending letters to taxpayers who have claimed the Employee Retention Credit requesting additional evidence supporting the claim.

On March 1, 2024, an Alabama federal court declared the Corporate Transparency Act (CTA) unconstitutional—but only enjoined its enforcement as to the specific litigants.

Concerns that the Supreme Court's opinion in MOAC Mall Holdings LLC v Transform Holdco LLC may affect property sales in bankruptcy cases have been put to rest following a recent Fifth Circuit opinion that stated Section 363(m) is alive and well and continues to bar challenges to good faith bankruptcy sales.

In SEC v Panuwat, a federal jury in California will hear a novel insider trading theory that the court has allowed to proceed to trial. The SEC says it is unlawful for an individual to purchase securities of a company even if neither the individual nor his employer possess any material nonpublic information from that company. Just as employees and companies should not buy or sell their own company’s stock based on material, nonpublic information, if the Panuwat decision stands they may not be able to buy or sell stock of another company based on their own company’s nonpublic information about the other company.

Michigan’s new Prevailing Wage for State Projects Act (the “Act”) became effective on February 13, 2024, which requires construction workers who are working on public sector capital improvement projects sponsored or financed by the state, to be paid wages and fringe benefits that are commensurate with the wages and fringe benefits paid to other construction workers working in the same locality on similar contracts.

In 2023, U.S. Customs and Border Protection heightened enforcement of the Uyghur Forced Labor Prevention Act. Increasing enforcement and political pressure means that importers should take steps now to prevent a potential shipment seizure by CBP.

Generative artificial intelligence has the potential to revolutionize efficiency and productivity in our day-to-day working lives. But while this technology is becoming more sophisticated by the day, companies should still proceed with caution when using GAI in a workplace setting due to its potential impact on confidential and proprietary information.

Michigan’s new Prevailing Wage for State Projects Act (the “Act”) became effective on February 13, 2024, and is substantially similar to a prior statutory prevailing wage requirement which was repealed in 2018.

A federal income tax case pending in federal district court in Virginia, shows the importance of laying groundwork for litigation long before a complaint is filed. At issue is a difficult question of statutory interpretation.

Reporting companies will be required to file reports with the Financial Crimes Enforcement Network of the Department of the Treasury identifying all "beneficial owners" (generally any individual directly or indirectly controlling the reporting company or owning 25% or more of the ownership interests of the reporting company) and "applicants" (generally any individual filing an application to form or register the reporting company). 

Reporting companies should begin gathering the required information for the company itself, and each beneficial owner and company applicant.

The U.S. Financial Crimes Enforcement Network published its final rule implementing Section 6403 of the Corporate Transparency Act, which will take effect on January 1, 2024 and require “tens of millions” of companies doing business in the U.S. to report certain information about their beneficial owners.

On February 13, 2024, Public Act 214 of 2023 (“PA 214”) takes effect, amending Michigan's Open Meetings Act to give some public bodies greater freedom in holding electronic meetings. 

NLRB Regional Director Laura Sacks ordered a representation election to be held to determine if the Dartmouth University Men’s Basketball team will be represented by the Service Employees International Union. The decision addressed questions that had been left unanswered in a 2016 decision regarding Northwestern University’s football team (where a regional director held football players who received athletic financial aid scholarships were employees, but where the board ultimately determined not to retain jurisdiction over only a single football team and did not definitively make any conclusions on player employee status).

California’s Governor signed Assembly Bill (AB) 1076 making it unlawful to impose non-compete clauses on employees. The changes to the law took effect on January 1, 2024, but employers have until February 14, 2024, to provide the required notices under the statute.

The Department of Homeland Security published a final rule adjusting the fees to file certain immigration applications with U.S. Citizenship and Immigration Services. The new fees go into effect on April 1, 2024, and will result in increased fees for most filings (some of which are significantly higher).

The Department of State has published guidance and FAQs advising eligible H-1B visa applicants on how they can participate in its pilot program for domestic H-1B visa renewals, which will begin on January 29, 2024. Along with eligibility requirements and timelines, DOS’s online guidance includes an eligibility navigator where interested applicants can answer a series of questions to determine if they are eligible to participate in the pilot program. 

The IRS recently issued Notice 2024-02— dubbed the “Grab Bag Notice”— which addresses multiple provisions in SECURE 2.0. The guidance is 81 pages long, comes in the form of frequently asked questions and answers, and speaks to a wide variety of topics on several provisions of SECURE 2.0 which either already are, or will soon become, effective.

The IRS and the U.S. Department of Labor recently issued guidance which addresses the newly created Pension Linked Emergency Savings Accounts (“PLESAs”), a novel plan design option authorized under SECURE 2.0. PLESAs are essentially “side car” savings accounts that can be added to defined contribution plans. PLESAs are subject to significantly relaxed distribution restrictions and are intended to facilitate plan participation and retirement savings among lower income workers.

In Private Letter Ruling 202352011, the taxpayer asked the IRS to determine the amount that it will realize in a property transaction. The taxpayer will receive the property in an arm’s length exchange with its counterparty, but the taxpayer will not be able to reasonably ascertain the value of the property received.

On January 10, 2023, the U.S. Department of Labor (DOL) published the final version of the Independent Contractor rule under the Fair Labor Standards Act (FLSA) proposed in October 2022. The rule will take effect on March 11, 2024.

In 2023, the Securities and Exchange Commission issued various proposed rules on regulatory changes that will affect SEC-registered investment advisers (RIAs). Since these rules are likely to be put into effect, RIAs should consider taking preliminary steps to start integrating the new requirements into their compliance policies and procedures.

Effective January 22, 2024, Michigan’s law on compulsory arbitration of public labor disputes will be officially amended to include police officers and firefighters employed by higher education institutions. The new law also adds corrections officer employed by a county sheriff in a county jail, work camp, or other facility maintained by a county that houses adult prisoners within its scope.

In October 2023 the IRS launched a withdrawal program for Employee Retention Credit claims for employers who now doubt the validity of their claim. Unfortunately, employers who already deposited their refund checks were not included in this program. To address this discrepancy, the IRS announced a new voluntary disclosure program allowing for the penalty-free repayment of ERC credits. Specifically, employers who have received and deposited a refund for a claimed ERC may volunteer to repay only 80 percent of the claimed credit without being assessed penalties or interest.

In a December 28, 2023, decision of the Michigan Court of Appeals, Yono v. County of Ingham, the court determined that a taxpayer whose property was foreclosed upon was entitled to the surplus of the property’s value over the delinquent taxes when it was transferred to the land bank.

Can a collective bargaining agreement limit the authority of a labor arbitrator to determine the appropriateness of a disciplinary punishment? It can, but only when the CBA clearly says so, reiterated the Michigan Court of Appeals in a recent decision.

In December 2023, the National Highway Traffic Safety Administration (“NHTSA”) announced it had finalized amendments to Federal Motor Vehicle Safety Standard (“FMVSS”) 213 regarding child restraint systems (“CRS”). These amendments, which become effective December 5, 2024, are intended to “modernize the standard,” according to NHTSA.

The U.S. Department of the Treasury and Internal Revenue Service (IRS) published long-awaited proposed regulations regarding the Foreign Entity of Concern exclusions related to clean vehicle tax credits established by the Inflation Reduction Act of 2022 (IRA). If adopted, the regulations will have significant implications for U.S. electric vehicle (EV) manufacturers, the relevant supply chain, and consumers. 

The Department of State (“DOS”)’s pilot program for domestic H-1B visa renewals will begin on January 29, 2024, and run through April 1, 2024. As H-1B visa applicants accepted into the pilot program will no longer need to incur the time and expense of applying to renew their visas through a U.S. Consulate abroad, this is a much anticipated and welcomed advancement.

U.S. Citizenship and Immigration Services (USCIS) has received enough petitions to reach the 65,000 H-1B visa regular cap and the 20,000 H-1B visa U.S. advanced degree master’s cap and has completed the H-1B selection process for fiscal year 2024. U.S. employers seeking to sponsor employees under either the H-1B regular cap or U.S. advanced degree cap will need to focus on applications for fiscal year 2025, the registration for which will open in March 2024.

The IRS announced on December 6 that it has begun mailing over 20,000 notices to taxpayers denying Employee Retention Credit claims for either not having a business during the covered period or having no paid employees at that time. These letters allow for an administrative process to appeal the denied ERC and provide steps for such appeal. 

The IRS recently issued guidance explaining that OSHA communications regarding COVID-19 precautions alone do not allow employers to qualify for the Employee Retention Credit. Other than some start-up businesses, there are two ways for an employer to qualify for the ERC. First, an employer could qualify if a government order required a full or partial shutdown of the operation of the business due to COVID-19. Second, an employer could qualify if its gross receipts in 2020 and 2021 took a sufficient dive compared to 2019.

In 2016 and again in 2023, legislation was enacted that expanded the permitted use of a school district sinking fund to include various equipment items. The new permitted uses include school security improvements, technology, student transportation vehicles (e.g., school buses), trucks, vans, and parts, supplies and equipment to maintain these vehicles.

The stream of cases challenging disallowance of research tax credits continues in the Tax Court with Phoenix Design Group, Inc. v. Commissioner. Trial in the Tax Court is pending.

On December 5, 2023, the U.S. Court of Appeals for the Sixth Circuit ruled that emeritus status does not necessarily create a constitutionally protected property interest. Although the court punted on the question of whether lost pay or harm to "tangible benefits" in connection with revocation of emeritus status could create a constitutionally protected property interest, the appeals court held that reputational harms purportedly resulting from a loss of emeritus status, standing alone, do not create a protected property interest under the U.S. Constitution.

Michigan Governor Gretchen Whitmer signed into law several bills intended to protect voting rights and improve election procedures across the state. In November 2022, Michigan voters overwhelmingly approved Proposal 2022-2 (“Prop 2”), which enshrined certain voting rights in Michigan’s Constitution. Since the addition of Prop 2 to the state constitution, Michigan’s legislature has continued to enact even more sweeping changes in election administration.

On November 20, 2023, the National Highway Traffic Safety Administration (“NHTSA”) announced that it was withdrawing a previous proposal to create a new Federal Motor Vehicle Safety Standard (“FMVSS”) requiring vehicle-to-vehicle (“V2V”) communications in certain new vehicles.

Michigan Governor Gretchen Whitmer signed into law energy legislation passed by the House and Senate earlier this month. The law will address Governor Whitmer’s 2023 “MI Healthy Climate” initiative, and make renewable, clean energy a priority in Michigan.

On November 22, 2023, Michigan Governor Gretchen E. Whitmer signed into law two bills reforming the teacher and school administrator evaluation processes at K-12 schools. The new legislation introduces significant changes to teacher and school administrator evaluations, shifting the focus towards more streamlined rating categories, modifying the basis for evaluations with an emphasis on teacher performance, and mandating the involvement of educators in developing evaluation tools.

The Internal Revenue Service recently announced the 2024 cost of living adjustments for the estate and gift tax exclusion amounts.

On November 15, 2023, the U.S. Court of Appeals for the Sixth Circuit issued a decision that underscores the importance of ensuring proper steps are taken when Title IX complaints are first received by a school for sexual harassment and that post-incident sexual harassment allegations stemming from the student-on-student harassment are also promptly addressed. 

On November 6, 2023, the U.S. Court of Appeals for the Sixth Circuit rejected a challenge to a 1970 amendment to the Michigan Constitution that prohibits payment of “public monies” to private schools.

On October 30, 2023, President Biden issued an Executive Order, along with a summary Fact Sheet concerning the safe, secure, and trustworthy use of artificial intelligence. The Order mandates various federal agencies to develop new rules and regulations reflective of the administration’s goals and key considerations as set forth in the Order. We expect a number of proposed rules and regulations surrounding the use of AI in nearly every industry in the coming months.

A common problem for intellectual property owners in the age of e-commerce is trying to unmask the identity of anonymous infringers to get the infringing activity to stop. Even if a brand owner is successful in unmasking the identity of an infringer, it can be exceedingly difficult to find an appropriate jurisdiction to bring a claim, as infringers are often foreign with no substantial ties to the U.S.

The Federal Court of Appeals for the Eleventh Circuit held that a taxpayer could not avoid late filing and late payment penalties because of the failure of his CPA to electronically file his returns timely. The court ruling is technically correct, but a re-work of e-filing responsibilities may be appropriate to timely inform taxpayers whether their agents electronically filed the returns.