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The Ronco Riff

Posted by defensebaseactcomp on October 25, 2012

October 25, 2012

Voluntary Today, Involuntary Tomorrow

Another Successful Flush by Wackenhut G4S

Will the last Ronco Consulting Corporation Employee out please close the lid ?

Posted in Afghanistan, Armorgroup, Civilian Contractors, Exclusive Remedy, Follow the Money, G4S, Iraq, Ronco Consulting, State Department, Taxes, Wackenut | Tagged: , , , , , , , , , , , | Leave a Comment »

Judge Denies Blackwater’s Motion for Arbitration

Posted by defensebaseactcomp on May 23, 2012

Law Offices of Scott J Bloch  May 23, 2012

WASHINGTON, DC (May 23, 2012) – Blackwater Industries, which changed its name to Xe Services, and now has changed it yet again to Academi LLC, lost its initial bid to have the $240 million suit for employee misclassification sent to arbitration and dismissed from federal court in Washington, D.C.

Scott Bloch filed an amended complaint (see link above) in the class action lawsuit on behalf of four former security specialists, who were injured while working for Blackwater, in order to recover their payment of social security, unemployment insurance, and unpaid benefits and state and local withholding and unemployment insurance, and other unspecified damages. The action seeks $240,000,000 in damages for lost benefits, overtime, treble damages and punitive damages, as well as additional amounts as proved for the class of specialists.

The court has rejected that motion filed by Blackwater and required it to file another motion to determine if the same Plaintiffs agreed to have an arbitrator determine if the agreements were unconscionable, procured by duress, fraud and undue influence.

“Blackwater acted illegally and unconscionably toward these brave individuals,” said Bloch. ”Through their fraud as pointed out in the Amended Complaint, they avoided overtime for security workers who worked sometimes 12-16 hours a day 6 days a week. They were forced to sign agreements they never read and were not given time to read and not given copies, which took away valuable rights and were unlawful in their terms. Now the court has rejected their initial motion and required Blackwater to seek the same relief if they can prove that the Plaintiffs who never were allowed to read the original agreements agreed to have an arbitrator determine whether they properly agreed to anything. We continue to assert the illegality of the agreements and the actions of Blackwater.”

Read Xe’s Arbitration Bid Denied in Misclassification Suit here.

Posted in Blackwater, Civilian Contractors, Defense Base Act, Defense Base Act Insurance, Follow the Money, Taxes, Xe | Tagged: , , , , , , , , , , , | 3 Comments »

Ronco Consulting Corporation named in Lawsuit for EEOC Violations

Posted by defensebaseactcomp on May 22, 2012

Ronco Consulting was named in the Defense Base Act Class Action Lawsuit against Defense Base Act Insurance Companies and some Overseas Civilian Contractor Companies.

The EEOC granted a former Ronco Consulting Employee and American Injured War Zone Contractor the Right to Sue under the Americans with Disabilities Act after investigating the complaint.

The Americans with Disabilities Act prohibits discrimination against persons with disabilities.

Even those who were disabled due to the negligence of the company in question.

Posted in AIG and CNA, Civilian Contractors, Defense Base Act, Defense Base Act Insurance, Department of Labor, Injured Contractors, Misjudgements, Ronco Consultilng, Ronco Consulting, Taxes | Tagged: , , , , , , , , , , , , , , , | Leave a Comment »

IRS Targets US Expats

Posted by defensebaseactcomp on January 12, 2012

Updates to our ExPat Tax Page

For years companies like Blackwater and Ronco Consulting  have Misrepresented their employees as Consultants or Independent Contractors to the IRS to escape having to pay Social Security and Medicare payroll taxes.

Thank you Blackwater and Ronco Consulting

At the same time these same companies represented these same consultants and Independent Contractors to be employees for the purpose of purchasing the mandated Defense Base Act Worker’s Comp Insurance.  Even going so far as to have contractors sign new backdated employment contracts AFTER they were injured.

Fraudulent activity of this nature has garnered the full attention of the IRS to the Contract Employee much more so than it has the Contract Company.  Blackwater even continued to do this after the IRS busted them.

Bob Powers of Power Tax sends us this and asks that we warn all ExPats to be prepared.

Pursuant to an IRS internal memo Memorandum Number: AM2009-0003

This link IRS  has an important note regarding the definition of a foreign tax home (which is necessary to claim the Sec 911 benefit).

The IRS has been using this in somewhat of a distorted way to deny the FEIE to contractors working in Iraq and Afghanistan,, not only those who have families in the U.S., but also single people who left home, joined the military and then were hired as contractors.

If they did not plan in advance and take all the steps necessary to show that their abode was in a foreign country and not in the U.S. they are disallowing the exclusion.

Many have had inexperienced tax preparers or did their own tax return and the case dragged on so long that they lost their administrative appeals rights and facing a substantial tax bill plus penalties cannot afford a good tax attorney to take it to Tax Court.

As a result, the IRS is using their muscle to claim that these workers were living on a base and had no contact with the local community and therefore their “abode-which is not clearly defined anywhere) was in the U.S.

This is the quote from the IRS page:

Tax Home
Your tax home is the general area of your main place of business, employment, or post of duty, regardless of where you maintain your family home.
Your tax home is the place where you are permanently or indefinitely engaged to work as an employee or self-employed individual. Having a “tax home” in a given location does not necessarily mean that the given location is your residence or domicile for tax purposes.

If you do not have a regular or main place of business because of the nature of your work, your tax home may be the place where you regularly live. If you have neither a regular or main place of business nor a place where you regularly live, you are considered an itinerant and your tax home is wherever you work.

You are not considered to have a tax home in a foreign country for any period in which your abode is in the United States . However, your abode is not necessarily in the States while you are temporarily in the United States .

Your abode is also not necessarily in the United States merely because you maintain a dwelling in the United
States , whether or not your spouse or dependents use the dwelling.

“Abode” has been variously defined as one’s home, habitation, residence, domicile, or place of dwelling. It does not mean your principal place of business. “Abode” has a domestic rather than a vocational meaning and does not mean the same as “tax home.”
The location of your abode often will depend on where you maintain your economic,
family, and personal ties.

Example 1.
You are employed on an offshore oil rig in the territorial waters of a foreign country and work a 28-day on/28-day off schedule. You return to your family residence in the United States during your off periods. You are considered to have an abode in the United States and do not satisfy the tax home test in the foreign country. You cannot claim
either of the exclusions or the housing deduction.

Example 2.
For several years, you were a marketing executive with a producer of machine tools in Toledo , Ohio . In November of last year, your employer transferred you to London , England , for a minimum of 18 months to set up a sales operation for Europe . Before you left, you distributed business cards showing your business and home addresses in London .

You kept ownership of your home in Toledo but rented it to another family. You placed your car in storage. In November of last year, you moved your spouse, children, furniture, and family pets to a home your employer rented for you in London .

Shortly after moving, you leased a car and you and your spouse got British driving licenses. Your entire family got library cards for the local public library. You and your spouse opened bank accounts with a London bank and secured consumer credit. You joined a local business league and both you and your spouse became active in the
neighborhood civic association and worked with a local charity.

Your abode is in London for the time you live there. You satisfy the tax home test in the foreign country.

Note that the IRS agents examining these returns are not seasoned international agents and their internal directive is to disallow the exclusion regardless of the taxpayer’s defenses and force it to go to Tax Court.

We recommend you check out Power Taxes pages before you deploy.

U.S. Expatriate Tax & Business Solutions

Posted in Blackwater, Civilian Contractors, Defense Base Act, Exclusive Remedy, Follow the Money, Political Watch, Ronco Consulting, Taxes | Tagged: , , , , , , , , , , , , , , , | 1 Comment »

Class Action Tax Misclassification filed against Xe, Formerly Blackwater

Posted by defensebaseactcomp on June 7, 2011

Scott Bloch blasts Blackwater on behalf of thousands of former employees who were mistreated and denied employee benefits, unemployment and other withholding based on a fraudulent misclassification as independent contractors.

Mercadante et al vs Xe Services, LLC et al

    Statement Concerning Filing of Class Action Tax  Misclassification Against Xe Services (formerly Blackwater) on
 Behalf of Personal Security Specialists for Loss of Benefits and Withholding

WASHINGTON, DC (June 7, 2011) –

Since 2007, Blackwater Industries, which has changed its name to Xe Services, has employed over 10,000 personal security specialists to perform operations in Iraq and Afghanistan under lucrative contracts with departments of the United States Government including the State Department and CIA.

While employing these individuals, many of whom are decorated veterans of the armed services including Special Forces, Army Rangers, Navy Seals, Blackwater sought to avoid millions of dollars in taxes, withholding, and payments of benefits to these employees by classifying them improperly as independent contractors.

Yesterday, Scott Bloch filed a class action lawsuit on behalf of four former security specialists, who were injured while working for Blackwater, in order to recover their payment of social security, unemployment insurance, and unpaid benefits and state and local withholding and unemployment insurance, and other unspecified damages.  The action is brought on their own behalf and thousands of others who have worked for Blackwater and its newly named Xe Services.

The action seeks $60,000,000 in damages and punitive damages, as well as additional amounts as proved for the class of specialists.

“These brave individuals who worked in support of Operation Iraqi Freedom and Afghani Enduring Freedom, deserve better than to be turned away without health insurance, pension benefits, unemployment benefits, and other withholding afforded to Blackwater’s other
employees,” said Scott Bloch.

According to the lawsuit, the United States treasury loses billions of dollars annually to misclassified employees.     Under the commonlaw and the IRS 20 questions put out in 1987 pursuant to a regulation, Blackwater was obliged to classify these individuals as employees if Blackwater had the right to control the employees’ actions, manner of performing duties,  hours, training, equipment, whether the duties of the employees go to a core function of the employer or are duties that are consider ancillary to the main purpose of the company, and other factors.

The lawsuit states that Blackwater provided their equipment, including weapons issued by the government, training, and control over employees’ duties, manner of performing their security  duties, operations they went on, protection details and other duties.

“These veterans were actually given diplomatic passports and classified as employees of Blackwater to the United States government in the contracts as they procured insurance required for employees, and also represented to the State Department that they were
employees,” said Bloch in a statement upon filing, “yet when it came to paying taxes, paying  their employer portion of social security and Medicare taxes that all Americans expect their employers to pay, they simply claimed they were independent contractors.”

The suit also states that one of the representative plaintiffs already had a determination from the IRS that Blackwater misclassified him as an independent contractor.  “The IRS already  determined in the case of one of my clients that he should have been classified as an
employee,“ said Bloch.  “Now thousands of people will have to file amended returns.   Thousands of people will likely be entitled to benefits they were denied due to the misclassification, including payment of their employer share of pension, health and disability
insurance premiums, and other plans that Blackwater filed with the government for its employees, promising it would not discriminate against those employees as they did here.”

In addition, claims the suit, the United States Congress previously held hearings under the Oversight and Government Reform committee, Rep. Henry Waxman, Chair, which determined that Blackwater and its related companies misclassified employees in order to avoid millions of dollars in taxes. In addition, the IRS prior to making the determination on the plaintiff in this suit, had ruled on behalf of other Blackwater security specialists, and related job titles, that Blackwater had misclassified these employees who performed services under contracts in Iraq and Afghanistan.

“Blackwater made hundreds of millions of dollars from taxpayers and hired thousands of former veterans of military service and police officers.  They also had in their ranks Federal Agents, such as current employees of the FBI on leave of absence. They were hired as security specialists in Iraq and Afghanistan,” said Bloch. “It is a grave injustice to them who were  mistreated and left without any health insurance or other benefits for their families, and left to fend for themselves in paying into Social Security and Medicare.  They laid down their lives to protect dignitaries and carry out duties in support of wars for America, and they deserve better than this. Many of these same men risked their lives to protect everyone from the President of the United States to U.S. Senators, Congressman, U.S. Diplomats, to Foreign Presidential & Diplomatic Figures in one of the most dangerous places on the planet.”

The case was filed in the United States District Court for the District of Columbia and covers individuals from all over the United States and some Americans living abroad, including all former and current Blackwater and Xe employees and so-called independent contractors.

Contact Scott J. Bloch, PA:
Scott Bloch, 202-496-1290

Law Offices of Scott J Bloch Website

Posted in Blackwater, Civilian Contractors, Defense Base Act, Political Watch, State Department, Taxes, Xe | Tagged: , , , , , , , , , | 13 Comments »

Tax and DBA Insurance Fraud, Misrepresenting Employee’s as Contractors

Posted by defensebaseactcomp on February 24, 2011

Some Contract Companies avoid paying Medicare and Social Security Taxes on their employees by classifying them as independent contractors or consultants.  The IRS considers this to be Fraud.

These same companies claim these same independent contractors/consultants to be employee’s for the purposes of acquiring mandated Defense Base Act Worker’s Compensation Insurance.  Even going so far as to have workers sign and back date employee contracts after they have been injured so they will be covered.

See more on Misclassification of Employee’s as Contractors at Overseas Contractors Tax Information where you will also find a link to the IRS Form SS-8

Following is a recent SS-8 Determination which confirms the Misclassification and opens up the company to an investigation of Tax and Insurance Fraud and US Labor Law Violations.

Posted in Blackwater, Civilian Contractors, KBR, Taxes | Tagged: , , , , , , , | 3 Comments »

Blackwater Contractor in Iraq Cannot Exclude Compensation Under § 112

Posted by defensebaseactcomp on February 1, 2011

From Tax Professor Blog

The Tax Court yesterday held that a Florida man who earned $98,400 in 2005 working for Blackwater (since renamed Xe) providing security services to the U.S. Army in Iraq could not exclude the compensation from income under § 112 as “combat zone compensation of members of the Armed Forces.

Holmes v. Commissioner, T.C. Memo. 2011-26 (Jan. 31, 2011).

The Tax Court concluded that the taxpayer did not serve in the Armed Forces of the United States but instead was a private citizen hired by and paid by a private company (Blackwater). The Tax Court refused to impose a penalty because the taxpayer relied on an IRS memorandum wrongly stating that civilian personnel in direct support of combat zone military operations qualified for the § 112 exclusion. (Hat Tip: Bob Kamman.)  Please see the original here

Posted in Blackwater, Civilian Contractors, Taxes | Tagged: , , , , , , , | Leave a Comment »

US Cracks down on “Contractors” as a Tax Dodge

Posted by defensebaseactcomp on February 17, 2010

KBR, Blackwater, CSA, MPRI, Ronco Consulting and possibly the company you work, worked for have misrepresented their employees as Independent Contractors in order to keep from paying Social Security and Medicare Taxes.  As an American citizen you are responsible for paying these whether the company you work for is offshore or not.  That is not to say all these companies were offshore that did this.

Now these same companies while happily not accepting the responsibilities of employing you for tax purposes were happy to lie and claim you were an employee when they got the DBA insurance they were supposed to get in order to be eligible to take that government contract.

What might happen that is while your injured, not working  and financially getting screwed over by the DBA insurance company AIG or CNA the IRS might come asking you about those taxes you didn’t pay while you were working overseas tax free but still must pay medicare and SS, which would have cost you 15,000 but with the part the company didn’t pay and the fines and late fees they force you to come up  with $60,000.  Try not to bleed on it.

For more on how to determine if  you were an employee or not go here  MisClassifying Employees as Independent Contractors

But trust that if the company paid your air fare, told you where and when to go to work and how to do it using their vehicles and equipment, you were an employee according to the IRS.

From the New York Times

Federal and state officials, many facing record budget deficits, are starting to aggressively pursue companies that try to pass off regular employees as independent contractors.

President Obama’s 2010 budget assumes that the federal crackdown will yield at least $7 billion over 10 years. More than two dozen states also have stepped up enforcement, often by enacting stricter penalties for misclassifying workers.

Many workplace experts say a growing number of companies have maneuvered to cut costs by wrongly classifying regular employees as independent contractors, though they often are given desks, phone lines and assignments just like regular employees. Moreover, the experts say, workers have become more reluctant to challenge such practices, given the tough job market.

Companies that pass off employees as independent contractors avoid paying Social Security, Medicare and unemployment insurance taxes for those workers. Companies do not withhold income taxes from contractors’ paychecks, and several studies have indicated that, on average, misclassified independent workers do not report 30 percent of their income.

One federal study concluded that employers illegally passed off 3.4 million regular workers as contractors, while the Labor Department estimates that up to 30 percent of companies misclassify employees. Ohio’s attorney general estimates that his state has 92,500 misclassified workers, which has cost the state up to $35 million a year in unemployment insurance taxes, up to $103 million in workers’ compensation premiums and up to $223 million in income tax revenue.

“It’s a very significant problem,” said the attorney general, Richard Cordray. “Misclassification is bad for business, government and labor. Law-abiding businesses are in many ways the biggest fans of increased enforcement. Misclassifying can mean a 20 or 30 percent cost difference per worker.”

Employers deny misclassifying workers deliberately. The businesses say the lines are unclear between employee and independent contractor.

Workers are generally considered employees when someone else controls how and when they perform their work. In contrast, independent contractors are generally in business for themselves, obtain customers on their own and control how they perform services.

Many businesses are dismayed about the tougher federal and state scrutiny.

“The goal of raising money is not a proper rationale for reclassifying who falls on what side of the line,” said Randel K. Johnson, senior vice president with the United States Chamber of Commerce. “The laws are unclear in this area, and legitimate clarification is one thing. But if it’s just a way to justify enforcing very unclear laws against employers who can have a legitimate disagreement with the Labor Department or I.R.S., then we’re concerned.”

Among the most often misclassified workers are truck drivers, construction workers, home health aides and high-tech engineers.

Portraying regular workers as contractors allows companies to circumvent minimum wage, overtime and antidiscrimination laws. Workers classified as contractors do not receive unemployment insurance if laid off or workers’ compensation if injured, and they rarely receive the health insurance or other fringe benefits regular employees do.

“This denies many workers their basic rights and protections and means less revenues to the Treasury and a competitive advantage for employers who misclassify,” said Jared Bernstein, who as executive director of Vice President Joseph A. Biden’s Middle Class Task Force has helped orchestrate the administration’s campaign against misclassification. “The last thing you want is to give a competitive advantage to employers who are breaking the rules.”

Organized labor, a strong supporter of Mr. Obama, has long complained about the practice. No administration has undertaken as big a crackdown as Mr. Obama’s, although administration and state officials deny they are doing it as a favor to labor.

California’s attorney general, Jerry Brown, is seeking $4.3 million from a construction firm he accused of misclassifying employees. Last April, he won a $13 million judgment when a court ruled that two companies had misclassified 300 janitors, cheated the state out of payroll taxes and not paid minimum wage and overtime.

Last November, the Illinois Department of Labor imposed $328,500 in penalties on a home improvement company for misclassifying 18 workers, saying it had pressed them to incorporate as separate business entities.

The Obama administration plans to expand investigations by hiring 100 more enforcement personnel. The I.R.S. has begun auditing 6,000 companies to see whether they are in compliance with the law.

Posted in AIG and CNA, Blackwater, Taxes | Tagged: , , , , , , , , , | 1 Comment »

Tax Time 2009 Civilian Contractor’s Overseas and Injured

Posted by defensebaseactcomp on February 1, 2010

Following are answers to our most commonly asked tax questions.

If you received monthly payments from the DBA insurance company they are not taxable.  This is no great gift, it is part of why your benefits are only figured on two thirds of your Average Weekly Wage.

If you were covered under DBA insurance in 2009 you were an employee of the company you worked for unless they misrepresented you as an employee in order to qualify for the insurance.

If your company misrepresented you as an independent contractor for tax purposes you will need to file

Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding Form SS-8

Also see Misrepresenting Employee’s as Contractors

The limit on excludable income for 2009 is  $91,400.00

Social Security and has a limit of   $102,000 for 2008      $110,100 for 2012

See Publication 15

All covered Wages are subject Medicare Taxes

Foreign Earned Income and Housing: Exclusion – Deduction

Please add any helpful experience you’ve had here.

Posted in Taxes | Tagged: , , , , , , | Leave a Comment »

 
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