Political Incivility in the Workplace

Blog Post by Anna M. Pepelnjak

Elections are fast approaching. Controversial issues are at stake. The sides are deeply divided. Political discourse has rarely been so combative.

Enter: the workplace. Engaging in political discussion in the workplace can lead to serious disruptions in productivity – or worse. The rancorous debate that goes on in the country, fueled by talk radio and blogs, has no place in the employment setting. Even “water cooler” discussions can become heated and, thereafter, the subject of litigation.

Private employers might be surprised to discover that they need not tolerate such discussions in the workplace. Private employers are free to curb political dialogue during the workday. Employees in private industry do not have “free speech” rights, as public employees do.

Private sector employers can and should adopt policies addressing political discourse. In addition, private employers should examine and modify existing policies, such as e-mail and internet use policies, to guard against unauthorized use for political purposes. Courts have even upheld private sector prohibitions against employee wearing campaign buttons to work.

Human resource professionals should spend some time working with supervisors on ways to curb bitter political debate and discussions, and get workers back to the duties for which they are being compensated. Although that task is not always easy, it is necessary for a well-run, productive work setting.

THE PAPER CHASE — Why Some Residential Lenders are Being Forced to Temporarily Suspend Foreclosure Actions

Blog Post by Ann K. Chandler.

Media outlets have heralded the decisions of certain large banks to suspend their residential foreclosure proceedings. The decision of these banks to temporarily suspend the foreclosures arose from the discovery of the practice of at least one bank of having court documents executed by a bank officer attesting to the bank’s possession of mortgage notes when in fact that officer had no actual knowledge of the whereabouts of the mortgage note.

The fact that a bank may not have ready access to a particular residential mortgage note is not surprising. A mortgage note in a residential loan is not typically held by the same lender that originally made the mortgage loan. In fact, not only are mortgages notes sold, the bank that originally made the mortgage loans may have been sold. Even if the same bank holds the mortgage note that originally made the mortgage loan, that note may be warehoused with the millions of other mortgage notes held by a large bank.

The inability of a bank to find the original mortgage note does not necessarily prohibit that bank from foreclosing on a defaulting borrower. State laws may not require that the original mortgage note be produced to foreclose if the court accepts an affidavit that the mortgage note has been lost or destroyed.

The mistake made by the banks in these foreclosures is that the banks either did not attempt to find the original mortgage notes or did not admit that the original mortgage notes could not be located. Attorneys defending the homeowners were able to successfully argue that unless the bank could show that it currently holds the mortgage note, the bank may have sold the mortgage note to another lender and that lender could also sue the homeowner for payment.

A homeowner experiencing difficulty in making mortgage payments should not assume that a demand to the bank to produce the original note will protect the homeowner from a foreclosure. However, a homeowner in default in payments under its mortgage should be aware that the homeowner may be able to gain additional time to resolve its financial difficulties by requiring the mortgage lender produce the original mortgage note in a foreclosure proceeding.

New Registration Requirements for Tax Return Preparers

Blog Post by: Robert B. Teuber

The Department of the Treasury has recently announced that its new registration system is up and running. The IRS will now require everyone that prepares “all or substantially all” of a tax return to register with the IRS and receive a Preparer Tax Identification Number (“PTIN”).

The requirement is part of a broad ethics reform that has taken place over the last 10 years amidst such accounting scandals as Enron and Worldcom. In 2005, the reforms amended the ethics rules governing tax practice before the IRS (known as Circular 230). The revisions to the ethics rules at that time principally affected the tax profession and the impact on most other people was that they now saw a “Circular 230 Disclosure” attached to any email from an accountant or tax lawyer. The new rules will again principally affect the tax profession but the impact could be much broader.

The new rules require that anyone that is paid for preparing “all or substantially all” of a tax return must register for a PTIN. The requirement that any tax return preparer register and obtain a PTIN may catch a large group by surprise including:

  • Staff accountants working for accounting firms who prepare returns but do not sign or have ultimate responsibility for what the returns say.
  • Paralegals working for attorneys that have as a part of their job requirements the preparation of tax returns.
  • Interns or seasonal employees hired by accountants to help complete tax returns before the April 15th due dates.
  • The friendly neighbor that prepares your tax return for a few dollars.

Understandably the accounting profession is somewhat troubled by these requirements. It is their position that only those accountants that sign the tax returns (and thereby take responsibility for what the return says) should have to register. A rule that only required signing preparers to register would appear to achieve the IRS’ goal of encouraging ethical return preparation. So far, however, the government has refused to modify the rule.

There is an economic component to this registration requirement as well. The annual fee for registering is $64.25. Of this amount $50 will go to the IRS for technology, compliance and outreach. With an estimated 600,000 registering this will result in an astounding $30,000,000 outreach program.

Even more controversial is whether these staff accountants, paralegals, etc. will be subject to the competency testing and continuing education requirements on which the IRS is busily drafting rules. We’ll have to stay tuned to see exactly how this part ends up playing out.

Registration and additional information is available online at www.irs.gov/taxpros.

Disclaimer

The comments and opinions expressed in this blog are intended for informational purposes only and do not constitute legal advice. Reading or using the information in this blog does not create the existence of an attorney-client privilege. Due to the changing nature of the law, the blog posts may contain dated material. For an update on the current law and the application of the law to your particular facts and circumstances, consult a legal advisor. The information contained herein is not a substitute for obtaining legal advice from a qualified attorney licensed in your state.