Even prior to the passage of the $1.2 trillion Infrastructure Investment and Jobs Act by Congress, Virginia state agencies and localities were in the midst of major transportation investments throughout the state. With more funds available for transportation projects, Virginia should continue to see improvements to the backbone of the physical economy—roads, rail, public transportation, and shipping.

Highway Projects Underway

495 Express Lanes Northern Extension

VDOT and I-495 toll operator, Transurban, have selected a design-build contractor to construct the final segment of dynamic pricing toll lanes on Virginia’s section of the Capital Beltway. The Lane Construction Corporation will manage the construction of 2.5 miles of additional 495 Express Lanes, which will allow them to ultimately connect to toll lanes planned for the American Legion Bridge, I-270 and I-495 in Maryland. Initial construction activities will begin very soon, and right-of-way acquisition will likely begin in the summer of 2022. The new Express Lanes will open in 2025.

American Legion Bridge Expansion and I-270/495 Maryland Express Lanes

Maryland Department of Transportation (MDOT) has finally confirmed its commitment to relieve one of the worst traffic bottlenecks in the region by partnering with Virginia, the Federal Highway Administration (FHWA), and a private toll operator to expand the American Legion Bridge. They also plan to add managed toll lanes to I-270 and I-495. The project is referred to as OP Lanes™ Maryland, and will ultimately bring managed toll lanes to all of I-495 in Maryland.

MDOT and FHWA have prepared a Supplemental Draft Environmental Impact Statement for the project, and they are in the initial phases of procuring a private partner for the construction and operation of the toll lanes.

Public Transportation Projects Underway

Richmond Highway BRT

Fairfax County, VDOT, and the Virginia Department of Rail and Public Transportation (DRPT) have partnered to bring bus rapid transit (BRT) from Huntington Metro to Fort Belvoir, with the possibility of extending the BRT system into Woodbridge. The design of the BRT system in Fairfax County is nearly complete. The improvements include adding two-way bus lanes in the middle of Richmond Highway, providing three travel lanes and additional turn lanes for cars, and a ten-foot multi-use path on each side of the road.

VDOT has initiated the right-of-way acquisition process for the three miles of the project it is managing from Jeff Todd Way to Sherwood Hall Lane. Fairfax County anticipates having 60% engineered drawings complete in the Spring of 2022 for the portion of the project it is managing—from Sherwood Hall Lane to the Huntington Metro Station. Roadwork is anticipated to begin in 2023, with the BRT system online by 2030.

The project will transform the Richmond Highway corridor, from both a transportation and land use perspective. Fairfax County has updated its Comprehensive Plan through its Embark Richmond Highway study, seeking to capitalize on the new transportation infrastructure by planning for denser development around the nine BRT stations.

Silver Line Phase 2

With Metropolitan Washington Airports Authority (MWAA) officials recently announcing substantial completion of Phase 2 of the Silver Line, and the Silver Line Rail Yard, the process of turning over operations, and maintenance of these facilities to WMATA (aka Metro) is underway. Phase 2 of the Silver Line is currently scheduled to open to riders in May of 2022.

Potomac Yard Metro Station

Construction is well underway for the Potomac Yard Metro Station adjacent to the new Virginia Tech Innovation Campus. However, the opening of the station, originally planned for April of 2022, has been delayed until September of 2022 due to a design flaw in a critical safety system. When the station opens, it will fill what was once the largest gap between Metro stations in the system.

There’s Always More!

There is no longer a lack of transportation funding holding back good projects from moving forward. Before committing to funding projects, it is incumbent on governmental agencies and funding bodies to carefully scrutinize transportation projects to ensure that they serve the needs of the community, solve real problems, and move more people through an interconnected transportation system more efficiently.

The Northern Virginia Transportation Authority (NVTA) is an example of a careful steward of public funds. NVTA is responsible for funding transportation projects through its Six Year Program. The 2018-2023 Six Year Program totaled $1.285 billion. NVTA is currently evaluating project applications for the FY2022-2027 Six Year Program, and it will make final funding decisions in July of 2022. Project applications are evaluated by NVTA staff and consultants, in part, to determine which projects provide the most congestion relief relative to cost.

Similarly, VDOT administers a large portion of its funds for primary and secondary highway projects through its Smart Scale program, which evaluates projects based on factors related to congestion relief, safety, accessibility, environment economic development, and land use. Pre-applications from localities and other entities for FY2023 are due on April 1, 2022.

With all of these transportation projects planned or underway, inevitably right-of-way will be needed from property owners. If you need assistance understanding the impact of a transportation project on your property, please contact Michael Coughlin at 703-680-4664.

 

 

Image Source: Express Lanes

President Joe Biden’s announced vaccine-or-testing policy for private businesses with at least 100 employees, has come under legal challenges and the previously announced OSHA rules have been suspended with respect to the implementation and enforcement of the policy pending further litigation. On November 16, 2021, all petitions challenging the OSHA standard were consolidated in the U.S. Court of Appeals for the Sixth Circuit, which is likely to reach the U.S. Supreme Court for a final decision.

On Nov. 5, the Occupational Safety and Health Administration (OSHA) published its highly anticipated emergency temporary standard (ETS) in the Federal Register. If the rule survives legal challenges, it will require covered businesses, with 100 or more employees companywide, to ensure their employees get vaccinated against the coronavirus or wear a mask and test for COVID-19 on at least a weekly basis. The original deadline for compliance with this policy had been January 4, 2022. Now that OSHA has signaled that it will delay implementation and enforcement of the ETS, private larger employers are left to determine whether they want to voluntarily adopt such policies in advance or wait to determine the outcome of the litigation. It is recommended that larger employers understand their options in this regard and OSHA has published guidance in the form of FAQs, which can be found here.

As a reminder, Virginia already has its own workplace Permanent Standards. These standards still require masking and social distancing (even for vaccinated employees in areas of substantial and high levels of community transmission, which covers most jurisdictions in Virginia) and other measures, which remain in place independent of the outcome of the OSHA ETS rules, they can be viewed here. If the ETS is declared valid, then to the extent covered Virginia employers have not already implemented a vaccination and/or testing policy, those rules will also need to be implemented.

The ETS is separate and apart from other Executive Orders that also address COVID-19 in the workplace. The Executive Order on Ensuring Adequate COVID- Safety Protocols for Federal Contractors (EO 14042 issued on September 9, 2021) mandated that covered federal contractors and subcontractors comply with all guidance published by the Safer Federal Workforce Taskforce. The guidance published by the Safer Federal Workforce Task Force can be found here.

The guidance on EO 14042 requires vaccinations (with certain limited exceptions), proper masking, and physical distancing. The guidance requires “covered contractors” to ensure that “covered contractor employees” are fully vaccinated unless the employee qualifies for a religious or medical exemption. On December 7, 2021, the U.S. District Court for the Southern District of Georgia issued a nationwide injunction of this requirement, which followed earlier more limited injunctions issued in Kentucky, Ohio, and Tennessee. Despite these injunctions, many government contractor employers are being directed by their contracting agencies to continue to implement the requirements.

The Executive Order if upheld would apply to most prime federal contractors and subcontractors. For a contractor or subcontractor to be subject to the vaccine mandate, a covered contract (or a “contract-like” instrument) must be at least partially performed in the United States, and must be: (1) for services, construction or a leasehold interest in real property; (2) for services covered by the Service Contract Act; (3) for concessions; or (4) entered into with the federal government in connection with federal property or lands and related to offering services for federal employees, their dependents or the general public. There is also a minimum contract value, which as a general rule is $250,000 that can also act as exemption to the EO.

The EO as drafted applies to a broad range of employees of covered contractors and subcontractors. The vaccination requirements apply to any employee of a covered entity so long as the employee is working full-time or part-time either (a) in connection with a covered contract, or (b) at a covered contractor workplace (includes almost any location controlled by the contractor that has any connection to a covered contract). Employees who work “in connection with” a covered contract include those who perform duties necessary to the performance of the covered contract, but who are not directly engaged in performing the specific work called for by the covered contract, such as human resources, billing, and legal review. Moreover, the vaccine mandate applies to contractor facilities where government contracting work is performed. Unlike the ETS, the EO would not allow covered employers to avoid mandating vaccinations and generally does not provide for testing alternatives.

The government is expected to file its appeal of the nationwide stay as a result of the Georgia case to the U.S. Court of Appeals for the Eleventh Circuit, and pending a contrary ruling there or in the U.S. Supreme Court, federal contractors are left to consider their options.

For contractors who want to move more aggressively to require vaccination, the existing injunctions do not prohibit contractors from voluntarily deciding to continue mandatory vaccines policies on their own. As long as the injunctions remain in force, however, contractors will not be able to rely on the EO to preempt state laws and thus will need to ensure that any such efforts comply with applicable state and local laws.

As of Friday December 17, 2021, the Sixth Circuit dissolved the stay of OSHA’s ETS, which requires vaccination and testing for employers with at least 100 employees.  As of now, OSHA has announced that there will be no citations issued for noncompliance before January 10, 2022.  Additionally, OSHA has announced it will work with employers who are taking reasonable steps to come into compliance before February 9, 2022.

The opinion issued by the Sixth Circuit is not a final decision on the constitutionality of the mandate, as the case still has to be heard on the merits.  Additionally, Georgia’s Attorney General has already announced an application has been filed to the U.S. Supreme Court requesting to stay enforcement of the ETS in the interim.

Again employers are urged to determine their options while the legal challenges continue.

For help with both interpretation and compliance solutions, please contact Wendy Alexander.

The House Ways and Means Committee released, and advanced out of committee, draft tax legislation addressing corporate, international and individual income tax changes. Changes are also proposed for gift and estate tax laws, and the taxation of trusts. These changes remain subject to revision as the legislation moves through the legislative process before a full vote.

There are several gift and estate tax provisions in the proposed legislation that would significantly impact both current structures and future planning. The proposed legislation contains some provisions that would take effect based upon the date of introduction (September 13, 2021), some that would take effect based upon the date of enactment, and some that would take effect on January 1, 2022.

Several key proposals that would affect the current gift and estate tax laws and the taxation of new and existing trusts are set out below:

1. Early Elimination of Increased Exemption from Gift and Estate Tax and Generation-Skipping Transfer Tax Exemption – Effective Date January 1, 2022

The temporarily increased estate and gift tax exemption and generation-skipping transfer (“GST”) tax exemption (each currently $11.7 million) would be reduced by 50% for gifts made or deaths occurring on or after January 1, 2022, rather than the currently scheduled reduction date of January 1, 2026 under the Tax Cuts and Jobs Act of 2017. Under the proposed legislation, both the estate and gift tax exemption and the GST tax exemption would be reduced to $6.03 million beginning January 1, 2022. The proposed legislation would retain the current 40% estate, gift, or GST tax rate.

2. Changes Affecting Grantor Trusts

An irrevocable grantor trust occurs when the grantor is treated as continuing to own the trust assets for income tax purposes even though the grantor is not treated as owning the trust assets for estate tax purposes. The taxation of any portion of an irrevocable grantor trust  established after the date the legislation is enacted and of the portion of an irrevocable grantor trust established prior to enactment (which is attributable to a contribution made after the date of enactment), is subject to change, as follows, pending the passage of the legislation:

• Affected irrevocable grantor trusts will be included in the grantor’s estate at death based on the value of those assets on the date of death.
• A distribution from an affected irrevocable grantor trust during the grantor’s lifetime to anyone other than the grantor or the grantor’s spouse will be treated as a taxable gift from the grantor on the date of the distribution.
• If an affected irrevocable grantor trust ceases to be a grantor trust during the grantor’s lifetime, the assets of affected irrevocable grantor trust will be treated as if the grantor made a taxable gift of those assets on that date.
• Sale or exchange transactions between a grantor and an affected irrevocable grantor trust would no longer be disregarded for income tax purposes.

Irrevocable grantor trusts established prior to the enactment date and to which no further contributions are made after the date of enactment and non-grantor trusts would not be affected by these proposals.

These changes would impact not only the ability to create new irrevocable grantor trusts as effective estate tax planning structures, but may impact existing irrevocable grantor trusts that rely on additional contributions.

3. Elimination of Valuation Discounts on Passive Assets – Effective on Enactment of Legislation

Valuation discounts for lack of control and lack of marketability typically associated with partial interests will be disallowed for the portion of closely-held entities made up of “non-business” assets. Non-business assets are defined generally as passive assets held for the production of income and not used in an active trade or business.

4. Increased Income Tax Rates for Non-Grantor Trusts – Effective Date January 1, 2022

Non-grantor irrevocable trusts, which are separate income taxpayers whose income is not reported by the grantor, would be subject to the same increase in tax rates as individuals in the highest income tax bracket (from the current 37% to 39.6%). Trusts would reach the 39.6% bracket at approximately $12,500 and would be subject to a 3% “surcharge” on income in excess of $100,000. In contrast, this surcharge would only apply to individuals with income over $5 million. These rate increases would take effect beginning January 1, 2022.

5. Limitations for Non-Grantor Trusts on Sale or Exchange of Qualified Small Business Stock – Effective Date September 13, 2021

Trusts would also be subject to limitations regarding the exclusion from gain on the sale or exchange of qualified small business stock for sales or exchanges occurring after the date on which the legislation was proposed, September 13, 2021.

If you currently have an irrevocable grantor trust in place (such as a life insurance trust or defective grantor trust, etc.), please contact us to discuss some strategies that may preserve – at least in part – the efficiency of those trusts.

For businesses small and large, the temptation to avoid having to deal with payroll taxes, unemployment insurance and benefits for employees is strong and the savings can be quite substantial. Why not just call someone that does work for you an “independent contractor” and avoid all of that expense? For the employee, isn’t it nice to get a larger check each pay period without the pesky reduction for Social Security and Medicare?

The answer is a resounding NO!

Last year, the Virginia General Assembly passed a law concerning the misclassification of employees as independent contractors that actually has some teeth and should make businesses think twice about whether the savings is worth the risk. Additionally, the IRS is scrutinizing larger companies such as Uber for this exact thing.

Why the scrutiny? Estimates are that the taxing authorities are losing billions of dollars to this sort of activity. Employees don’t realize that they are really on the short end of this designation. Not only do employees not receive benefits they are entitled to, they actually lose money because the employer is no longer contributing its 50% of the payroll taxes (~7.5%). Moreover, independent contractors are not covered by unemployment by the business (they are independent right?).

To address this issue, in 2020, the Virginia general assembly enacted Va. Code § 58.1-1900 addressing the misclassification of employees as independent contractors. First, there is a presumption of an employee relationship as opposed to IC. Second, under § 40.1-28.7:7. Misclassification of workers is a civil cause of action for an employee to pursue damages for misclassification. Virginia ties the standard to the then existing IRS standard for classification.

As to enforcement, there are both civil penalties and a private cause of action by the employee. Under § 58.1-1901, civil penalties range from $1,000 to $5,000 per employee. Under § 40.1-28.7:7.A, the law provides that:

If the court finds that the employer has not properly classified the individual as an employee, the court may award the individual damages in the amount of any wages, salary, employment benefits, including expenses incurred by the employee that would otherwise have been covered by insurance, or other compensation lost to the individual, a reasonable attorney fee, and the costs incurred by the individual in bringing the action.

As with the Fair Labor Standards Act and the Virginia Wage and Hour laws, this is now an area that businesses should document their reasons that particular individuals that regularly provide services are truly independent contractors rather than employees.

For any questions on this topic, please contact litigation and business transactions attorney Andrew Burcher.

After a year off, the firm hosted the Annual JDRF Golf Outing at Westwood Country Club in Vienna. Art Walsh and the golfers/guests could not have asked for a brighter day to raise money for type 1 diabetes (T1D) research. Golfers enjoyed a full day on the course and finished their rounds just in time for the raffle and live auction. This year, the event raised $76,200, increasing the total amount raised over the past years to more than $1.5 million.

On behalf of Art Walsh, the Firm would like to thank clients, friends, and family who participated in this year’s event and donated generously to JDRF.

JDRF works every day to change the reality of T1D by funding research, advocating for government support of research and new therapies, ensuring new therapies come to market, and connecting and engaging the T1D community. Founded by parents determined to find a cure for their children with T1D, JDRF expanded through grassroots fundraising and advocacy efforts to become a powerhouse in the scientific community with more than 100 U.S. locations and six international affiliates. JDRF has funded more than $2 billion in research to date and has made significant progress in understanding and fighting the disease. Our Firm is proud to work with JDRF and continue to help find the cure for T1D. To learn more about T1D, please visit JDRF’s website.

View the team pictures from this year’s golf outing here!

In September, law firm bands from the DMV area performed at the 9:30 Club to raise money for their favorite charities at the 7th Annual Law Rocks DC concert. Law Rocks is a non-profit organization that hosts a series of concerts headlining legal professionals from around the globe and has raised over $615,000 in the past seven years. Larry & the LandLawyers will once again take their rightful place on stage. Larry & the LandLawyers is a band comprised of three Walsh Colucci attorneys, John Rinaldi, Mark Goetzman, and Mike Kieffer, and a friend/client of the firm, Larry Clark of Felice Development Group. This year Larry & The LandLawyers performed to raise funds for LUNGevity, in memory of our dear friend Pete Dolan, and also continued their support for HomeAid Northern Virginia. LUNGevity is the nation’s largest lung cancer-focused nonprofit, changing outcomes for people with lung cancer through research, education, and support. Donations help drive advances in lung cancer detection and treatment that are saving lives, and provide free education and support to all affected by lung cancer. HomeAid Northern Virginia is a successful and dynamic non-profit started by members of the Northern Virginia Building Industry. This organization focuses on building and renovating housing and shelter facilities for the organizations that own or operate them. To learn more about HomeAid Northern Virginia and support their local programs, please visit homeaidnova.org.