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 | All According to Plan
ALL ACCORDING TO PLAN | Exact Measurements Go a Long Way
In December 2013, a contractor agreed to replace four bridges for the […]
Roads & Bridges | Connecting the Dots
CONNECTING THE DOTS | Showing Causation in Contracting Cases is Critical
In this asphalt case, the prime contractor agreed to perform a $13 […]
Roads & Bridges | Liquidated Damages
LIQUIDATED DAMAGES | Penalties and What is Unenforceable
Liquidated damages typically flow from delays, but they are not always solidly enforced.
In June 2017, […]
Roads& Bridges | Warranty Provisions
WARRANTY PROVISIONS | Contracts must be interpreted thoroughly to avoid absurd results
You are responsible for things within your control. Be careful if […]
Roads& Bridges | The Agreed Price
THE AGREED PRICE | This case stands as a warning about pay-if-paid clause
History cannot be rewritten and a bad, but legal, […]
Roads& Bridges | Confusing Waters
CONFUSING WATERS | A Supreme Court ruling leaves room for ambiguity
What happens when there may be a “significant nexus” between “adjacent” and/or […]
Roads & Bridges | Authority Defined
AUTHORITY DEFINED | The Law of Agency is Important to Understand
For any project, this Russian proverb is helpful: Doveryay, no proveryay – […]
Jurisdiction is Power
Not bad power, but the ability of a decision-maker (e.g., court) to decide which side is right (or which is more correct). […]
Roads & Bridges | Defining Labor
DEFINING LABOR | How the Miller Act continues to shape the industry
In the late 1700s, risks of nonpayment caused a shortage of […]
