A U.S. District Court ruled that an employer was liable for damages because it had sent false information about a worker’s income to the IRS. In the case, a woman agreed to a verbal employment contract with a company. She twice told her boss that, based on the contract, she should be classified as an employee rather than an independent contractor. The employer disagreed and sent her Form 1099-MISC at year end. The woman argued that the form, which stated that the company had paid her nonemployee compensation for 2018, was evidence that false information was given to the IRS. The court agreed and ruled that the employer was liable for statutory damages.
In a Private Letter Ruling, the IRS has held that a long-term care (LTC) insurance policy with a death benefit qualified under the “long-term care insurance rule.” Specifically, the LTC policy also included a premium stabilization feature and a refund of premium (ROP) death benefit. The IRS held that the ROP death benefit under the policy was consistent with the requirements for the treatment of the policy as a qualified long-term care insurance contract. The benefit is payable only on the death of the policyholder and, thus, satisfies the IRS timing restriction. The amount of this benefit can’t exceed the percentage of the aggregate premiums paid by the policyholder owner.