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US Defense Company Employees in Australia Tax Info Class Action

This class action concerns Americans working in a Joint Defense Facility Pine Gap (JDFPG) in Alice Springs, Northern Territory, Australia. The complaint alleges that private tax information was illegally disclosed to their employers, and that the employees were later coerced into agreeing to disclosure of their tax information, to ensure that they were completing their returns as their employers wished. 

The class for this action is all persons who currently work or previously worked at the Joint Defense Facility Pine Gap in Alice Springs, Australia between February 26, 2016 and February 26, 2019.

The defendants in this case are Northrop Grumann, AECOM, General Dynamics, and Raytheon Company.

International tax law says that wages and salaries are taxed in the country in which they are earned. However, at the time this project began in 1966, these rules were not yet established. The treaty for that project said that the salaries of Americans working on the project were taxable in the US. 

In 1983, a tax treaty was concluded that specified that the wages of persons working for US private defense contractors in Australia were taxable in the US.

However, according to the complaint, not everyone agreed on the final rules. The issue was the Section 911 exclusion.

Section 911 of the Internal Revenue Code allows US citizens working overseas to pay no tax on the first $105,900 of that income. Some thought that the 1966 agreement was still in effect and that it required that employees forego the Section 911 exclusion to avoid Australian taxes. But the complaint claims that since the 1983 treaty was later in time, it superseded the 1966 one. 

In August 2017, one of the plaintiffs in this case, Scott Meredith, contacted Castro & Co. for tax help. He believed he could claim the Section 911 exclusion. 

That same month, Northrop Grumann told the American workers they were not able to take the Section 911 exclusion. The company threatened to fire anyone who took it.

In talking to people at JDFPG, Castro & Co. learned that an IRS employee, Melanie Godelis, had given employers taxpayer information about employees who had claimed the exclusion. 

US law says that tax returns may not be disclosed to persons who are not authorized to see them. In May 2018, Castro & Co. sent Godelis a warning letter about this. The following month, they sent her another warning to have no more contact with the plaintiffs in this case.

At that point, Godelis and officials at JDFPG decided to require a retroactive Consent to Disclose for the employee tax forms. The plaintiffs were required to sign the forms and were not permitted to affix notations saying that they were not signing voluntarily. If they would not sign, they were told they would not be allowed to work in Australia or they would immediately begin being taxed at the Australian maximum rate of 45%.

The complaint claims unauthorized disclosure of tax information and fraud. 

Article Type: Lawsuit
Topic: Taxes

Most Recent Case Event

US Defense Company Employees in Australia Tax Info Complaint

February 26, 2019

This class action concerns Americans working in a Joint Defense Facility Pine Gap (JDFPG) in Alice Springs, Northern Territory, Australia. The complaint alleges that private tax information was illegally disclosed to their employers, and that the employees were later coerced into agreeing to disclosure of their tax information, to ensure that they were completing their returns as their employers wished. 

defense_workers_australia_tax_privacy_compl.pdf

Case Event History

US Defense Company Employees in Australia Tax Info Complaint

February 26, 2019

This class action concerns Americans working in a Joint Defense Facility Pine Gap (JDFPG) in Alice Springs, Northern Territory, Australia. The complaint alleges that private tax information was illegally disclosed to their employers, and that the employees were later coerced into agreeing to disclosure of their tax information, to ensure that they were completing their returns as their employers wished. 

defense_workers_australia_tax_privacy_compl.pdf
Tags: Exposing Private Information, Tax