The U.S. Justice Department is weighing in on an appeal by BNSF railroad over a $145,000 judgment to a former employee hurt on the job, saying a judge's order to pay the full amount without deducting federal railroad retirement taxes could be "harmful to the United States because ... it may interfere with federal tax collection."
The case stems from a lawsuit filed in 2004 by Eddie Heckman, who was injured on the job a year earlier.
A jury awarded $145,000 to Heckman in 2011. BNSF paid the award, but deducted $6,200 to cover what it said was Heckman's federal railroad retirement tax withholding. The railroad said in court filings that it sent that money to the IRS and contends it is required to pay taxes on judgments that include compensation for lost wages.
Heckman objected, and a Box Butte County judge last year ordered BNSF to pay Heckman the $6,200 it had withheld, saying the jury award was not compensation for lost wages, but other damages.
BNSF appealed that order, and the Nebraska Supreme Court will hear arguments in the matter on May 28.
Heckman's attorney, Andrew Snyder of Scottsbluff, argues in a legal brief that the railroad retirement payroll tax can't be taken on a jury award not tied to wages.
Snyder did not return messages Friday. BNSF attorney Nichole Bogen and BNSF spokesman Andy Williams declined to comment.
In a friend-of-the-court brief, the U.S. Department of Justice said the lower court judge was wrong to declare that the judgment did not include compensation for wages lost — and warned that Heckman will deal with the IRS regardless of the outcome of the case.
"If BNSF is required to pay the withheld amount directly to (Heckman), that money will be considered compensation ... and would be subject to tax under (federal law)," wrote Robert Homan, an attorney for the Justice Department. "If Heckman believes that some or all of the payment that already has been made to the IRS on his behalf should not be taxed, his recourse is filing a claim for refund with the IRS and, if that is denied, bringing a suit for refund."
Homan did not return messages Friday seeking comment.
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