It’s tax season again, so it’s time to pay the piper. Despite your efforts to responsibly report and file your taxes with all the allowable deductions and/or adjustments, the Government will find a way to feed itself. The State of Connecticut found a way to do just that to a Contractor despite the State owing the Contractor on a judgment.
Following a successful arbitration, the State of Connecticut Department of Transportation owed to the Contractor a judgment of several million dollars. But, when the Contractor received payment of that judgment from the State, it was “short” by over one million dollars. Upon investigation, the Contractor learned that the State Comptroller had unilaterally reduced the judgment to cover the Contractor’s unpaid taxes. Such taxes were unrelated to the issues successfully arbitrated in the Contractor’s favor.
The Contractor valiantly argued the State could not reduce the judgment amount because the DOT failed to prove the taxes as a setoff or counterclaim during the arbitration. Indeed, the DOT alleged but did not put forth any evidence to prove the amount or that the taxes were overdue. Nevertheless, payment of the judgment triggered review by the Comptroller and State tax statutes authorized the withholding to pay the Contractor’s tax debt.
Paraphrasing an excerpt from Common Sense (1776) by Thomas Paine, government is like an octopus with too many arms and, when one arm fails, another rises to feed the beast.
Connecticut Department of Transportation v. White Oak Corporation, 332 Conn. 776 (Aug. 20, 2019).
Roads & Bridges
Where Does the Buck Stop?
Jon is a monthly contributor to Roads & Bridges magazine. He has been writing the law section for the magazine since January 2020. The link below will take you directly to the Roads & Bridges […]
Pay-If-Paid Unenforceable in Virginia Starting Jan. 1, 2023
As of Jan. 1, 2023, pay-if-paid clauses are unenforceable, regardless of whether a surety/payment bond claim is involved. This is only for subcontracts created on/after 1/1/23.
Also for subcontracts created on/after 1/1/23, the prime must specifically […]
How Short is Too Short
A limitations period is too short when it’s unreasonably short.
Construction Contracting Without Relief Clauses During COVID-19
What to do if your contract lacks the parts to handle COVID-19? Considerations for creating new contracts during COVID-19.
Your Contract Can Handle COVID-19
Uncertainty and risk are not new or novel to contractors. Contracts reduce uncertainty and share the risk of doing or providing something. COVID-19 may have contributed to, but it has not single-handedly created, uncertainty and risk.
Contractors Can Use RFI to Notify the Government
The Board (and the government) should not elevate form over substance in evaluating the sufficiency of a contractor’s notice.
Taxes Due!
It’s tax season again, so it’s time to pay the piper.
Contractor Wins when Government Reconsiders Accord
Ever had buyer’s remorse or second-guessed a decision? When the U.S. Army Corps of Engineers did that, a Contractor won its claim for time and money.
On a flood control project near Nogales, Arizona, severe flooding […]
Claim Certified with Digital Signature Deemed OK
The law is not a trend-setter. It doesn’t readily change or adapt to tech. So, a commonplace practice in business became a dispute when a claimant digitally certified a claim under the Contract Disputes Act.
Jonathan J. Straw
Blog Author
Contact Jonathan
Partner | KraftsonCaudle.com
Download Jon’s Bio
