CASE NO. 4758 CRB-3-03-12
COMPENSATION REVIEW BOARD
WORKERS’ COMPENSATION COMMISSION
FEBRUARY 15, 2005
ST. PAUL FIRE & MARINE INSURANCE CO.
The claimant was represented by Christopher DePalma, Esq., Kennedy, Johnson, D’Elia & Gillooly, 545 Long Wharf Drive, New Haven, CT 06511.
The respondents were represented by Timothy Zych, Esq., Law Offices of Cynthia M. Garraty, Crossroads Corporate Park, 6 Devine Street, 1st Floor, North Haven, CT 06473.
This Petition for Review from the November 26, 2003 Finding and Award of the Commissioner acting for the Third District was heard August 27, 2004 before a Compensation Review Board panel consisting of the Commission Chairman John A. Mastropietro and Commissioners A. Thomas White, Jr., and Ernie R. Walker.
JOHN A. MASTROPIETRO, CHAIRMAN. The respondents have petitioned for review from the November 26, 2003 Finding and Award of the Commissioner acting for the Third District. The respondents claim error on appeal insofar as the trier based the claimant’s average weekly wage upon a tax filing status that included his girlfriend as a dependent. We find no error on review, and affirm the trial commissioner’s decision.
The claimant sustained a compensable back injury on November 2, 2001, entitling him to benefits. On January 10, 2002, the claimant completed a filing status and exemption form that listed him as single with two exemptions. This status was consistent with his 2000 and 2001 federal income tax returns, as well as his state income tax returns from Connecticut, New York and Maine. Joint Exhibit 1. One of these claimed exemptions was for Tracy Crowe, a woman who resided with the claimant from November 1999 through October 2002, and who was receiving Social Security disability benefits because of neurological problems and arthritic conditions. The claimant received workers’ compensation benefits from January 14, 2002 through March 16, 2003. Initially, the respondent insurer was compensating him at a rate of $590.77 per week, but it reduced his rate to $579.27 per week in July 2002.
The trier found that the testimony of the claimant was credible and persuasive, and that he filed federal and state tax returns for the years in question as single with two exemptions. The trier then found that the claimant’s filing status for the purpose of determining his compensation rate under § 31-310(b) was also single with two exemptions. He set the compensation rate at the original amount of $590.77 per week, and ordered the respondent to issue a voluntary agreement reflecting that rate. He also ordered the respondent to reimburse the claimant for the $11.50 weekly difference that was incorrectly withheld. The respondents have petitioned for review from that ruling.
An injured employee’s entitlement to weekly benefits under Chapter 568 may be established by total or partial incapacity to work, or by another’s dependency status in the event of the employee’s death. See § 31-306, § 31-307, § 31-308, § 31-308a C.G.S. In each of these cases, the ceiling of a claimant’s benefit rate is set at seventy-five percent of his or her average weekly earnings as of the date of injury, after such earnings have been reduced by federal or state tax deductions, and by sums deducted under the federal Insurance Contributions Act (FICA).
Another statute, § 31-310(b), specifically governs the determination of a claimant’s average weekly wage. As a means of facilitating the calculation of that wage, § 31-310(b) requires the chairman of this Commission to publish tables every August 15th “of the average weekly wage and seventy-five per cent of the average weekly wage after being reduced by any deduction for federal or state taxes, or both, and for the federal Insurance Contributions Act to be effective the following October first.” The statute then provides, “Such tables shall be conclusive for the purpose of determining seventy-five per cent of the average weekly earnings of an injured employee after such earnings have been reduced by any deduction for federal or state taxes, or both, and for the federal Insurance Contributions Act made from such employee’s total wages received during the period of calculation of the employee’s average weekly wage for purposes of sections 31-306, 31-307 and 31-308.” All employees who have FICA deductions taken from their income are subject to these rate tables. Donahue v. Southington, 259 Conn. 783 (2002).
The rate tables state in their instructions that an employee’s filing status and the number of exemptions taken must be consistent with the employee’s federal income tax return. As a means of gathering this information, a claimant is instructed to complete a Filing Status and Exemption Form at the time a claim for weekly benefits is filed. In this case, the claimant filled out two such forms, dated December 13, 2001 and January 10, 2002. The instructions to the versions of that form completed by the claimant state, “There are four (4) filing statuses provided. You must select one, based upon your IRS filing status on the date of your injury and the position you took in filing your prior year’s Federal and State Tax Returns. (i.e. DOI 6/15/96, last tax return 12/31/95).” 1 Claimant’s Exhibit A. The claimant in this case checked “single.” Each form then asks, “How many exemptions (include yourself) did you list on your last Federal and State Tax Returns?” The claimant entered “2,” and then listed the names of himself and Tracey Crowe, whom he described as “girlfriend” on one form and “fiancée” on the other. As found by the trier, the claimant’s testimony and his federal tax returns establish that he filed his federal and state income taxes as single with two dependents. Joint Exhibit 1.
Though not specifically mandated by the statute, the approach taken by the Filing Status and Exemption Form and the rate tables is consistent with § 31-310. Wage replacement benefits should mirror what an employer has actually paid out (or a statutorily-specified percentage of that amount). Deductions for federal and state taxes and for FICA are taken from an employee’s wages independent of any involvement by this Commission. In practice, a claimant’s tax filing status is based upon an initial assessment by the claimant (i.e., the completion of a W-2 form and a federal income tax return), which could be—but need not be—followed by a reassessment or challenge on the part of the federal Internal Revenue Service. See 26 U.S.C. §§ 6001-7811 (Subtitle on Procedure and Administration), esp. § 6201 (Assessment Authority), § 6501 (Limitation on Assessment and Collection); § 12-700(a)(5), § 12-702, § 12-703 C.G.S. (rate of state income tax, exemptions and amount of credit are dependent on federal filing status). This process is extraneous to the Workers’ Compensation Act, and we have no express authority to make a determination in regard to a claimant’s tax filing status that would be binding on the federal or state bodies that govern issues of taxation.
Where the amount of compensation due a claimant is at issue, however, a commissioner may be required to interpret statutory provisions codified outside the Act if they are incidentally necessary to the resolution of the case. Hunnihan v. Mattatuck Mfg. Co., 243 Conn. 438, 443 n.5 (1997). “A commissioner must consider other statutory provisions when it is necessary to do so in order to appropriately dispose of the issues before him or her.” Starks v. University of Connecticut, 270 Conn. 1, 22-23 (2004)(emphasis in original). This board has interpreted outside statutory provisions before, including the Internal Revenue Code in Wonacott v. Bartlett Nuclear, Inc., 15 Conn. Workers’ Comp. Rev. Op. 334, 2237 CRB-4-94-12 (June 25, 1996).
In Wonacott, a trial commissioner determined that a claimant’s average weekly wage should include a $350 per week living expense allowance, where the parties had not provided evidence of actual living expenses. The applicable federal statutes, 26 U.S.C. § 62(a), (c) and § 274(d), and their attendant regulations allow such payments to qualify as a per diem allowance only if the employee is required to repay portions related to unsubstantiated travel days. On review, we interpreted the federal provisions and then reversed the trier’s ruling. We held that the relevant test under the federal tax regulations was not “actual living expenses,” but rather whether the claimant could substantiate all of his travel days. There was no suggestion that the claimant, who was from Washington state, had left the geographical area of southeastern Connecticut during the month he was assigned to work there. In arranging the stipend, the parties had also made a mutual effort to satisfy the IRS’ criteria for living expense payments. This intention of the parties was material to our decision on review, but it was not the only important factor in the outcome of the appeal.
Here, we are similarly confronted with a situation in which a claimant’s average weekly wage is dependent on the application of a federal regulation. As the amount of the claimant’s average weekly wage is again at issue, we follow Wonacott, and hold that the trier was required to consider whether the claimant’s filing status under the federal regulation was supported by sufficient evidence. The applicable federal statute here is 26 U.S.C. § 152(a), which defines as a dependent “any of the following individuals over half of whose support, for the calendar year in which the taxable year of the taxpayer begins, was received from the taxpayer . . . (9) An individual . . . who, for the taxable year of the taxpayer, has as his principal place of abode the home of the taxpayer and is a member of the taxpayer’s household.” 26 CFR 1.152-1 elaborates that a dependent need not be related to the taxpayer in order to qualify under this definition. The five prerequisites to classification as a dependent under § 152 are that the individual obtain over half her support from the taxpayer, that her principal place of abode be the taxpayer’s home, that she be a United States citizen or national under § 152(b) (or a resident of the United States or a contiguous country), that she not file a joint return pursuant to 26 U.S.C. § 151(c)(2), and that her gross income be less than the threshold amount ($2,900 for 2001), as per § 151(c)(1)(A).
At the formal hearing, the parties expressed no doubt that Crowe met four of the prerequisites of the dependency test, as corroborated by the claimant’s testimony. May 1, 2003 Transcript, p. 8. The respondents’ attorney was uncertain, however, that the claimant was paying over half her support. The claimant testified that Crowe was receiving Social Security Disability benefits from the federal government. Id., p. 14. These did not qualify as “income” under the Internal Revenue Code, but created some question as to how much support Crowe comparatively received from the claimant. He testified that she was getting “around five hundred” per month from the government, and that she spent this money on herself, including $2,000 on automotive repair. He also testified that she paid some of her past debts out of her Social Security money. Id., p. 16. He, meanwhile, paid for her room and board, including rent, heat, and electricity. He characterized himself as supporting her financially during the tax year of 2001. Id., p. 8.
The trial commissioner explicitly found this testimony credible, and went on to find that the claimant’s filing status was single with two exemptions. It is not the place of this board to reassess a trial commissioner’s credibility determinations on appeal. Duddy v. Filene’s (May Department Stores Co.), 4484 CRB-7-02-1 (October 23, 2002); Pallotto v. Blakeslee Prestress, Inc., 3651 CRB-3-97-7 (July 17, 1998). The evidence before the trier may not have been as thorough as that which would be demanded by the IRS if the claimant’s income taxes were audited, but it was sufficient to substantiate his claimed tax filing status of single with two dependents. Without more evidence to the contrary, the trier was not required to override the claimant’s representation of his federal tax filing status. We recognize that this issue is primarily a matter of federal jurisdiction, and that it would be problematic to open a door by which claimants could be routinely required to offer independent proof verifying the contents of their tax returns.
Much of the respondents’ brief is devoted to the argument that Crowe could not qualify as a dependent for purposes of § 31-310 because she does not meet the definition of “dependent” under § 31-275(6), or “dependent in fact” under § 31-275(7). This line of reasoning is not persuasive. The test of dependency under our Act is designed to define a class of beneficiaries who are entitled to personally claim benefits under § 31-306 in the event of an injured employee’s demise. That is a very different proposition from the use of the Internal Revenue Code to designate dependency in order to define exemptions on a claimant’s tax return. There need not be, nor is there, a fixed relationship between the two, and our holding here does not create a point of entry into our system for individuals who do not qualify as dependents or dependents-in-fact of their own accord.
The trial commissioner’s decision is hereby affirmed.
Commissioners A. Thomas White, Jr., and Ernie R. Walker concur.
1 The January 10, 2002 filing of the Form 1A used a December 18, 1996 revision of the form, while the December 13, 2001 filing used the then-current March 16, 1998 revision. We note that the Filing Status and Exemption Form was again revised on December 11, 2002, and now directs that “The Filing Status and Exemption(s) . . . MUST reflect employee’s Federal tax status for the Date of Injury provided here.” BACK TO TEXT