November 2016 Subrogation Newsletter
SALES AND USE TAXES ON SUBROGATION SERVICES: Navigating The Sales Tax Maze In South Dakota, New Mexico, And Hawaii
Currently, only four states – Hawaii, New Mexico, South Dakota, and West Virginia – tax almost all services. Five additional states – Alaska, Delaware, Montana, New Hampshire, and Oregon – do not have a statewide sales tax, even though some local governments may. Therefore, there are 41 states which are supposedly “exempt” from sales tax, even though each of these states tax at least some service, and no two states tax the same services. Only three states impose a tax or fee on all services provided, including legal services – Hawaii, New Mexico, and South Dakota. No matter the justification or effect of such artifices, the payment of such taxes and fees on legal services is a growing problem for subrogation professionals and the insurance industry in general.
Most states now have mandatory car insurance laws that require all drivers to have some type of insurance. However, a growing problem is how to enforce these laws and provide an incentive for everyone to follow compulsory insurance laws in their particular state. A number of states have passed what are called “No Pay, No Play” laws, which are intended to help enforce these mandatory insurance laws by penalizing those who drive without insurance. No Pay, No Play laws vary widely from state-to-state and each may have different exceptions. Knowing which ones they are and how the laws operate to limit damage recovery of the irresponsibly uninsured can make a great deal of difference in today’s claims handling environment.
Montana Court Ignores Public Policy Interests Of State Paying Comp Benefits In Conflict-Of-Law Subrogation Decision
In a decision which will effectively increase the cost of doing business in Montana for small and large employers located outside of the state, on October 4, 2016, the Court did its best impersonation of Georgia and exponentially increased both the cost and risk of doing business in Montana. From this point forward, employers from other states engaging in business in Montana and whose employees are injured in Montana, essentially give up their subrogation rights in third-party cases filed in Montana unless and until they can meet the virtually insurmountable burden of proving that the employee has been “made whole.”
We would like to introduce and welcome you to join our new LinkedIn group! It is called Subrogation Support Network. It is a community managed by Matthiesen, Wickert & Lehrer, S.C., that offers insurance professionals a place to interact, discuss subrogation insurance-related topics and issues, ask subrogation questions, and keep abreast of new developments and/or changes in the subrogation law for all 50 states. If you would like to join this LinkedIn group, please click HERE.