SUMMER 2016

122
THE DISTRIBUTOR’S LINK
JIM TRUESDELL DEPARTMENT OF LABOR RULES SQUEEZES ATTORNEY-CLIENT PRIVILEGE from page 38
Groups such as the National Retail Federation, the
American Chamber of Commerce, the Associated Builders
and Contractors, and the National Federation of Independent
Business were among many sounding the alarm. It would
seem that there is almost a certainty that there will be
multiple legal challenges to the rule. As of early April four
trade associations had already announced suits. One would
anticipate that lawyers themselves would be mounting a
challenge to the rule since it affects them as well as their
employer clients.
The final rule is set to apply to labor contracts beginning
on July 1. Consider the logical extension of this kind of
thinking. Whenever companies hire advertising firms should
they be required to advise prospective consumers of the
ad agencies behind a campaign and the fees paid to it?
What about all financial service firms and advice received by
companies? What about environmental consultants? There
really is no end to the disclosures that might be required
since there is an affected constituency of almost every
action a business takes. There is a stakeholder who can
logically claim to be affected by such actions and thus be
entitled to transparency in knowing who the consultants are
on the company payroll.
By singling out specialized labor-management
consultants and attorneys for this new reporting requirement
the Obama Administration (through its appointed agency
heads) is showing clearly that it will unabashedly take
whatever steps it deems necessary to protect the interests
of its political allies. This is especially so in these waning
months of the President’s term. We see this resolve in their
recently disclosed overtime threshold rules, their attempts
to shorten the union representation election process and
a host of other rules being pushed through in rapid-fire
order. In fairness, it has undoubtedly happened in previous
pro-business political eras from the other perspective. But
the extent to which we are seeing a blatant revision of
rules by executive directive is clearly unprecedented and
overreaching.
This particular rule, reaching far into the legitimate
private thought and planning processes of business owners,
and undermining long recognized confidentiality of attorney
and client is most disturbing. It is a step too far--- and
deserves to be set aside by whatever court ends up hearing
the legal challenges sure to come!
JIM TRUESDELL
BART BASI CUBA, NOW ON THE RIGHT SIDE OF THE IRS from page 42
(iv) which the Secretary of State has, pursuant to
section 6(j) of the Export Administration Act of 1979,
as amended, designated as a foreign country which
repeatedly provides support for acts of international
terrorisms.
Do you see the legal problem Cuba had with the
IRS? There were only 5 countries on the Section 901 list
as of December 31, 2015, which then included Cuba,
Iran, North Korea, Sudan, and Syria (Internal Revenue
Bulletin 2005-3). It had been over a half-century since
the incident between once amicable neighbors.
Enter Revenue Ruling 2016-8
In Revenue Ruling 2016-8, the IRS announced
that Cuba is no longer one of the countries described
in Section 901 of the Internal Revenue Code. It is
retroactive to December 21, 2015. There are plenty
of arguments, both for and against, thawing relations
against Cuba. On the down side, a ruthless dictator is
getting what he wants. On the up side America is safer
and has another business partner in a close neighbor.
The current Administration believes the adversity to the
Cubans served neither nation. While differences and
valid arguments remain against, The Administration has
taken a very large step here with Revenue Ruling 2016-8
in accomplishing its goal.
Conclusion
Here at The Center we don’t get into politics. What
will happen next, is a matter for politicians to process,
for people to ponder, and history to be written. We
do valuations and business succession planning, and
we do both well. We do not endorse nor condemn this
revenue ruling. We want business people to know, this is
a big event in the business tax world and there is quite
possibly a new haven for business in North America. This
is opportunity for American business. While the relations
between the two countries are not that of an alliance or
business partner yet, they may become just that. They
are now on the right side of the IRS.
BART BASI