Relaxed Restrictions for Tough “Innocent Spouse Relief” Rules

Taxpayers who are unfairly pinned with spousal tax liabilities may soon be met with relaxed filing restrictions for “innocent spouse relief,” a recent USA Today article reports. After public outcry against the strictly enforced filing deadline and its ramifications in sensitive cases, the IRS is reconsidering the rule and plans to announce changes in the coming weeks.

Currently, the IRS offers three forms of relief from joint and several liability for spouses who filed joint returns: innocent spouse relief, separation of liability relief, and equitable relief.  However, due to the inherent controversial nature of innocent spouse relief claims, they tend to raise the most problems. 

Under the current IRS guidelines, you must meet the following conditions to qualify for "innocent spouse relief":

  • You filed a joint return, which has an understatement of tax, directly related to your spouse’s erroneous items. Any income omitted from the joint return is an erroneous item. Deductions, credits, and property bases are erroneous items if they are incorrectly reported on the joint return ;
  • You establish that at the time you signed the joint return you did not know, and had no reason to know, that there was an understatement of tax;
  • Taking into account all the facts and circumstances, it would be unfair to hold you liable for the understatement of tax; and
  • You request relief from the IRS no later than two years from the first date the IRS attempted to collect tax from you.

Perhaps in an attempt to combat fraudulent or frivolous claims, the IRS has set a notoriously high bar for granting innocent spouse relief.  In particular, the IRS has been unyielding with respect to the two-year deadline.  A taxpayer may have one of several legitimate reasons for missing the cutoff”including domestic abuse, divorce, fraud, and death”to no avail.  The IRS’ staunch refusal in a number of especially sensitive situations triggered an outcry of criticism from lawmakers and legal aid attorneys.  Critics argue that the strictly-enforced deadline is especially unfair to domestic abuse victims, who are often kept in the dark about their spouses’ finances.

The sensitive issue garnered bipartisan support in Congress.  Minnesota Rep. Michele Bachman, a Republican presidential candidate and former tax attorney, introduced legislation in the House that purports to remove the two year time limit for innocent spouse relief.  Similarly, House Democrats Pete Stark and Jim McDermott urged IRS to revoke the rule in a letter signed by 48 representatives, including all Democrats on the House Ways and Means Committee.  In the Senate, Finance Committee Chairman Max Baus, D-Mont, also called on the IRS to evaluate the rule. In response, the IRS acknowledged that their procedures need to be revised.  The Service says that it is “reviewing the innocent spouse rules” and plans to announce changes soon.

The attorneys at Fuerst Ittleman are adept and efficient in resolving tax refund and relief matters.  If you have a potential tax issue on your hands, contact an attorney at contact@fidjlaw.com.

Supreme Court Holds Failure to Warn Suits Against Generic Drug Manufacturers Are Preempted By Federal Law

On June 23, 2011, the Supreme Court ruled in Pliva, Inc. v. Mensing that federal law preempts state tort law suits against generic drug manufacturers for failure to provide adequate warning labels. The decision comes two years after Wyeth v. Levine in which the Court held that federal drug laws did not preempt such suits against brand-name manufacturers. As a result of its decision in Pliva, generic drug manufacturers have greater protection against state tort suits than their brand-name manufacturing counterparts. Also, as a result of this decision, consumers are left with fewer remedies for injuries caused by taking generic drugs than their brand-name counterparts.

In Pliva, Mrs. Mensing and Mrs. Demahy brought state-law tort claims against generic manufacturers claiming that the labels warning of the dangers associated with the long term use of their drugs were inadequate. As a result of the long term use of the generic drugs, Mrs. Mensing and Mrs. Demahy alleged that they developed a severe neurological disorder whose risk of development was known by the generic manufacturer to be greater than that indicated on the label.

Responding to the plaintiffs’ claims, the generic manufacturers argued that because federal law requires a generic drug to bear the same label as its brand-name counterpart, it was impossible to also comply with a state law duty to revise its labels. Thus, the Court addressed “whether federal drug regulations applicable to generic drug manufacturers directly conflict with, and thus preempt, these state-law claims.”

In determining conflict preemption applied and that Mrs. Mensing’s and Mrs. Demahy’s state tort law claims were barred, the Court focused its analysis on “whether the private party could independently do under federal law what state law requires of it.” The Court found that under federal law brand-name and generic drug manufacturers have different labeling duties. While a brand-name manufacturer is responsible for the accuracy and adequacy of its label, a generic manufacturer’s duty is to ensure that its warning label is the same as the brand-name drug’s.

Consequently, the Court rejected the victims’ argument that, like the brand-name manufacturers in Wyeth, generic drug manufacturers could provide additional warning labels before receiving agency approval through the FDA’s “change being effected” (“CBE”) regulations. In reaching this conclusion, the Court relied heavily upon the FDA’s interpretation of its CBE regulations. The FDA asserted, and the Court agreed, that the CBE regulations only permit generic drug manufacturers to change its label: 1) to match an updated brand-name label, or 2) to follow the FDA’s instructions.

Furthermore, though all manufacturers bear responsibility for the content of their labels at all times to ensure adequate and accurate labeling, the “requirement of sameness” in generic labeling prohibits the unilateral change of a generic label. Instead, the Court adopted the FDA’s position that “generic drug manufacturers that become aware of safety problems must ask the [FDA] to work toward strengthening the label that applies to both the generic and brand-name equivalent drug,” rather than unilaterally changing a label.

However, the Court also rejected the argument that in order for state tort claims against manufacturers of generic drugs to be preempted by federal law, the generic drug manufacturer must first ask the FDA for help in strengthening the brand-name label and thus its own. In rejecting this argument, the Court found that even if a generic drug manufacturer complied with its obligation under federal law to communicate with the FDA about the possibility of a safer label, such actions would not satisfy its state law duty to provide adequate labeling. The Court stated: “state law demanded a safer label; it did not instruct the Manufacturers to communicate with the FDA about the possibility of a safer label.” The Court went on to hold that “when a party cannot satisfy its state duties without the Federal Government’s special permission and assistance, which is dependent on the exercise of judgment by a federal agency, that party cannot independently satisfy those state duties for preemption purposes.”

Therefore, because state tort law requires all drug manufacturers to  adequately and safely label their products, but federal drug regulations prevent generic manufacturers from unilaterally changing their generic drug products’ safety labels, “it was impossible for the Manufacturers to comply with both their state-law duty to change the label and their federal law duty to keep the label the same.” As such, the Court found that state law was preempted by the federal drug regulatory regime.

Given that the Court previously found in Wyeth that “Congress did not intend FDA oversight to be the exclusive means of ensuring drug safety and effectiveness,” this case raises the interesting question of whether the Court’s decision leaves a gap in consumer protection. The practical result of the Court’s opinion is that the ability of an individual to bring a state tort suit for failure to warn of dangers regarding drug products now hinges on whether that drug product is brand-name or generic. However, the Court’s last line of Pliva is telling: “as always, Congress and the FDA retain the authority to change the law and regulations if they so desire.” Fuerst Ittleman will continue to monitor the progress of these issues. For more information, contact us at contact@fidjlaw.com.

GAO Recommends Increased FDA Oversight of Medical Device Recalls

On June 14, 2011, the U.S. Government Accountability Office (GAO) released a new report on the U.S. Food and Drug Administration’s (FDA) oversight of medical device recalls. The report determined that the FDA’s current system for reviewing medical device recalls does not satisfactorily guarantee the removal of unsafe medical devices from the market.

In this report, the GAO discussed how the FDA uses information derived from medical device recalls to aid its oversight. The GAO analyzed data from a sample of medical devices that were recalled between 2005 and 2009. The report identified several deficiencies in the FDA’s current system and recommended that the FDA 1) develop enhanced procedures and criteria for assessing the effectiveness of recalls, 2) document the agency’s basis for terminating individual recalls, and 3) routinely assess information on device recalls. The U.S. Department of Health and Human Services (HHS) agreed with the GAO’s recommendations.

Even though medical device recalls are typically initiated by the firm that manufactured the device, the FDA is responsible for overseeing the implementation of a recall. Over 3,500 medical device recalls were initiated over the five-year period under scrutiny in the report.  In addition to its unclear procedures for overseeing recalls, the report indicated that the FDA lacks established criteria for assessing whether firms corrected or removed an appropriate number of devices from the market. Without clear guidance or criteria for recall termination, the FDA frequently exceeded its own prescribed timeframe when making decisions and failed to provide documentation as to how it reached those termination decisions. As a result of the FDA’s vague regulations and processes, FDA officials examining similar recall situations often reached opposite conclusions on the efficacy of a firm’s recall efforts. 

The GAO report also found that the FDA does not regularly analyze its own recall data to identify recurring trends or problems with medical devices. This is a “miss[ed] opportunity to use recall data to proactively identify and address the risks presented by unsafe devices,” the GAO report stated. Senators Chuck Grassley of Iowa and Herb Kohl of Wisconsin are strongly pushing for the FDA to establish periodic reviews of medical device recall data. Senator Grassley explained that “patients would be better served if the FDA took a thorough approach to post-market surveillance of medical devices” because early identification of dangerous devices would “establish greater accountability for patients.”

The FDA’s ability to analyze existing data for clues about potentially hazardous medical devices is particularly important in light of the FDA’s new Medical Device Innovation Initiative. As we reported earlier this year, the FDA launched an accelerated review program for “new, breakthrough medical devices.” Installing review procedures of recall data provides the FDA with an opportunity to regain leverage in the scientific community. Understanding where older devices were inadequate or flawed places the Agency in a better position to make better decisions about future medical devices. This review process can also help keep the FDA from falling too far behind the rapidly evolving scientific community.  

The GAO’s report comes less than a month after the GAO issued a report urging the FDA to make changes to its seafood oversight program, as we reported here. Together, these reports highlight significant weaknesses in the FDA’s regulatory scheme, which have direct implications on public safety and health.

Although Americans continue to demand more improvement from the FDA, it is less clear whether the Agency can implement any real changes. As we reported here and here, the significant decrease in the FDA’s funding may impede the Agency’s ability to institute change.
Fuerst Ittleman, PL will continue to monitor the developments in the FDA’s medical device oversight program. For more information, contact us at contact@fidjlaw.com.

New Excise Tax for Medical Devices and Prescription Drugs

On March 23, 2011, President Obama signed into law the Patient Protection and Affordable Care Act (PPACA). On March 30, 2011, he signed the Health Care and Education Reconciliation Act of 2010, amending the PPACA (collectively “the Act”). The Act provides for a new excise tax on the sale of taxable medical devices and certain branded prescription drugs.

Medical Device Excise Tax

The Act amends Chapter 32 of the Internal Revenue Code establishing a new excise tax on manufacturers or importers of taxable medical devices. The tax is equal to 2.3% of the sale price of medical devices sold after December 31, 2012. Certain medical devices, such as contact lenses and hearing aids purchased by the general public at retail stores, are exempt.

Some members of Congress believe the medical device tax does not meet the health care reform objective to reduce consumer health care costs. Health care consumers may have to bear the burden of the tax because of the inelastic demand for medical devices. Currently, there are three bills in the House and two bills in the Senate seeking to repeal the new medical device excise tax. You can read the full text of the bills and track their status here.

Prescription Drug Excise Tax

Additionally, the Act provides for a new prescription drug excise tax. The $2.5 billion excise tax is an aggregate annual fee imposed on branded prescription drug manufacturers and importers with gross receipts over $5 million from sales to specified government programs.

The IRS issued Notice 2011-9, 2011-6 I.R.B. 459 in December of 2010, describing the proposed fee calculation method and the pharmaceutical manufacturers subject to the tax. The IRS has recently issued new guidance outlining an error dispute resolution for the calculation of the fee.

Prior to May 16, 2011, the IRS mailed a notification of the proposed fee to individual entities. If the company believed that the notification contained an error in the mathematical calculation, it was required to submit a written error report to the IRS postmarked by June 1, 2011, in order for the correction to be considered. Error reports must detail how the entity determined an error occurred and a proposed correction.

The attorneys at Fuerst Ittleman, PL are knowledgeable in both tax and food and drug law. If you have questions regarding the medical device excise tax, prescription drug excise tax, or the error dispute resolution procedure described above, please contact us at contact@fidjlaw.com.

IRS Struggles to Deal with Increasing Tax Related Identity Theft

As we previously reported here, National Taxpayer Advocate Nina Olson reported numerous problems with the Internal Revenue Services (IRS) reliance on automated customer service available through Taxpayer Assistance Centers (TACs). Among the consequences of this reliance is the IRSs inability to effectively respond to tax related identity theft. Olson noted that the IRSs Identity Theft Protection Specialized Unit is struggling to manage theft cases. In fiscal year 2009, the unit handled approximately 80,000 cases while during October 1 through May 7 of fiscal year 2010 it handled more than 127,000 cases.

Government officials told Congress on May 25th that although curbing identity theft is a top priority for the IRS, there are several other obstacles in fighting tax fraud, including “fiscal constraints and balancing taxpayer impact.” Among other steps taken to prevent tax related identity theft, the IRS has created a system that flags known identity theft victims and a centralized unit to give aid to those affected. According to the IRS Deputy Commissioner for Operations Support, Beth Tucker, the IRS has developed “a comprehensive identity theft strategy that is focused on preventing, detecting, and resolving instances of tax-related identity theft crimes.”

Senator Bill Nelson (D-FL) initiated a hearing for the Subcommittee on Fiscal Responsibility and Economic Growth after considering several cases in his state. He hoped the hearing would help lay the foundation for congressional action. At the hearing, victims testified about how their identities were stolen and how the IRS and other agencies handled the processes. The witnesses discussed problems in communicating with multiple government workers and how the cases were deemed irresolvable. Senator Nelson also sent a letter to the Treasury Inspector General for Tax Administration to launch an investigation into the issue, which has since begun.

According to James White, Director of Tax Issues for the GAO, the IRS does not learn about the crime until after fraudulent returns have been filed, long past the initial theft. In the case of employment tax fraud, the IRS and victims may not know about the theft until over a year later. As discussed by Tucker, “by the time we detect and stop a perpetrator from using someone else’s personal information for his own benefit, the taxpayer-victim’s personal data has already been compromised outside the tax filling process.”

The IRS referred 41 cases dealing with approximately 55,000 individual accounts to the Department of Justice for criminal action in 2010. However, IRS criminal investigators have other areas to investigate, limiting the amount of resources dedicated to identity theft. Privacy laws can also prevent the IRS from alerting law enforcement officials to scams because tax returns and IRS information are confidential.

In January of 2011, the IRS started issuing personal identification numbers (PINs) to taxpayers who had been flagged as identity theft victims. About 56,000 taxpayers received PINs. As discussed by Tucker, the IRS will evaluate the success of the program. The program is meant to avoid delays in filing and processing tax returns. If the program is successful, it will be expanded to include more taxpayers beginning next filing season.

On June 9, the IRS said it is expanding its ability to flag identity theft used to file fraudulent tax returns or employment forms and is moving toward a “forward-looking approach to the problem.” Following IRS Commissioner Douglas Shulman’s remarks at the National Press Club in April, David Knight, the manager for the Pre-Refund Program Office for Earned Income Tax Credits, said that the IRS is attempting to integrate an approach that would “get information from third parties before individuals file tax returns so that it can reject forms with information that does not match.”

In 2010, identity theft overtook credit card fraud as the most common type of fraud. There were more than 470,000 incidents of identity theft that affected more than 350,000 taxpayers. The Pre-Refund Program Office coordinates and oversees pre-refund activities across all IRS functions in order to stop fraudulent returns from being issued. The Pre-Refund Program Office created the Identity Protection Specialized Unit as a central unit to handle identity theft victims.

The IRS has also begun to work with prisons after discovering that a large amount of identity thefts were originating from prisons. The IRS hopes to have disciplinary hearings for prisoners who commit these crimes. The IRS is also working with the Department of Justice to prosecute these cases.

If you are a victim of identity theft, have any questions regarding IRS procedures, or any tax provision, please contact Fuerst Ittleman, PL at contact@fidjlaw.com.

Swiss Officials Address Previous Fiscal Issues while Discussing the Implementation of the FATCA

Switzerland is seeking to resolve “past fiscal problems” with the US while discussing the implementation of the new U.S. Foreign Account Tax Compliance Act (FATCA). Mario Tuor, the spokesman for the Swiss Federal Department of Finance’s State Secretariat for International Financial Matters (SIF), indicated that the goal of the talks is to look for a broad resolution of outstanding tax matters concerning Swiss financial institutions rather than negotiating individual agreements. Tuor said that “[t]he objective is to achieve legal security and to keep the bureaucratic workload as low as possible.”

Tuor’s comments followed a June 10 Reuters report which stated that the US and Switzerland are in negotiations on a deal that would allow several Swiss and European banks to engage in a common settlement to avoid potential US prosecution for helping US taxpayers hide accounts. Tax practitioners said that if such an agreement was reached, it would push many taxpayers into the IRSs Offshore Voluntary Disclosure Initiative (OVDI) so that “individuals [may] disclose their offshore assets in return for a set penalty structure and the chance to avoid prosecution at the individual level.”

Michael Abhul, the head of the SIF and Switzerland’s Chief Negotiator on International financial and Tax Issues, leads Switzerland in its discussions with the US. He led the Swiss team that negotiated the handing over of more than 4,000 secret accounts held by US taxpayers in UBS in order to settle proceedings that could have led to the loss of the bank’s operating license in the US for facilitating tax fraud. Ambuhl has no plans to visit the US in the near future, indicating that an agreement may not be approaching.

US officials said earlier that the settlement with UBS was not the end of their attempts to crack open Swiss banking secrecy and find undeclared funds of US taxpayers. On February 23, four managers and bankers with Credit Suisse Group AG, Switzerland’s second largest bank, were charged with conspiring with other Swiss bankers to help US customers use secret accounts to evade income tax.

Tax authorities are also believed to be exchanging information on stolen bank data from secret accounts at Julius Baer, a major private Swiss bank and the Geneva-based private banking arm of HSBC. Julius Baer announced earlier this year that it has agreed to pay German officials 50 million Euros in exchange for avoiding legal proceedings in Germany over accusations that the bank helped German clients evade taxes. HSBC has admitted that the identities of thousands of account holders were compromised by the theft of client data later passed on to French tax officials.

As we previously reported here, FATCA will impose a 30 percent withholding tax on certain payments from US sources, including investment income and capital gains, paid to foreign financial intermediaries or their clients. These foreign intermediaries have the capability to avoid taxes by reaching agreements with the IRS requiring the intermediary to disclose information on US taxpayers that have accounts with the institution. FATCA will have a major impact on Switzerland’s financial sector and its investments in the US. The Swiss Federal Department of Finance noted that SIF was “instructed to explore with US authorities the possible application of simplified rules for complying with FATCA,” but a large number of uncertainties remain regarding the application of the legislation.

Practitioners have indicated that they are not specifically aware of a potential common agreement between the US and Switzerland regarding multiple banks. Notably, however, development of such an agreement would be a blow to bank secrecy and would encourage more people to disclose their assets to the IRS.

If you have any questions regarding FATCA, OVDI, or any other tax provision, please contact Fuerst Ittleman, PL at contact@fidjlaw.com.

IRS Guidance on the Offshore Voluntary Disclosure Program Likely to Increase Participation

Tax practitioners recently commented on the IRS’s guidance regarding the benefits of its second Offshore Voluntary Disclosure Initiative (OVDI). Several tax practitioners said that the 2011 initiative will likely encourage more taxpayers to enter into the program.

According to tax practitioners, the provision permitting taxpayers to request a 90-day extension of the August 31 application deadline is a “helpful and positive step in the right direction.” As discussed by Mark Matthews, former Chief of IRS Criminal Investigations

The possibility of an extension comes as a great relief to practitioners who want to help the clients come into compliance, but were fearful that delays in obtaining bank records, for example, might cause them to miss the deadline and then get into an unnecessary dispute about penalties. It is rarely the taxpayer’s fault that the bank records take a while to obtain.

The IRS clarified that it is possible that taxpayers who opt out of the program could receive a better deal on civil penalties if they have acted in good faith. The IRSs previous approach provided for blanket sanctions, regardless of whether a taxpayer was willfully evading taxes or simply made a mistake.

According to Matthews, “probably more than anything, the tone of the guidance was helpful, because it did not carry the threat that an opt-out was a sure way to a retaliatory audit.” He emphasized that advising clients is still difficult because there is no track record and the potential penalties are high.

Additionally, tax practitioners commented on the provision that allows taxpayers living abroad who earned less than $10,000 annually in US source income and complied with the tax reporting and payment rules in their country of residence to qualify for a five percent penalty instead of the 25 percent penalty mandated by the program. As discussed by Matthews, the IRS is

sending a message that there are situations when mitigation is appropriate, that there are circumstances that don’t warrant a 25 percent penalty. Nether long-term non-US residents nor their global tax advisers could conceive of a penalty of 25 percent of their net worth when many clients had no US tax liability.

If you have any questions regarding the IRSs Offshore Voluntary Disclosure Initiative or any other tax provision, please contact Fuerst Ittleman, PL at contact@fidjlaw.com.

Cuts in Food Safety Funding

After three days of a full floor debate, the U.S. House of Representatives approved the 2012 Agriculture Appropriations Bill on June 16, 2011. The bill proposes significant cuts to the U.S. Food and Drug Administration (FDA) and the U.S. Department of Agriculture (USDA) budgets for food safety programs.

President Obama requested a 30 percent increase of the FDA budget in order to implement the changes required by the Food Safety and Modernization Act (FSMA). As we previously reported, the FSMA expands the powers of the FDA. However, the appropriations bill reduces the FDA food safety budget by $87 million from last year – nearly $205 million less than the President requested. As a result, food safety advocates are concerned that the budget reductions could seriously harm the FDAs ability to protect the U.S. food supply. Without adequate funding for FDA food safety programs, foodborne illness rates could rise.

The appropriations bill also cut the USDA budget for the Food Safety Inspection Service (FSIS) by $88 million, which is an 8 percent reduction from the 2011 budget. Because the FSIS budget primarily funds personnel, advocates worry there will be fewer inspections for meat, poultry, and processed eggs. The administration said cuts to food inspection may require the agency to furlough frontline food inspectors. Consequently, farmers and ranchers will have to continue to feed their livestock while they wait for inspection in order to receive the USDA seal of approval for slaughter. Budget cuts would also threaten small processing plants that rely on the stream of inspections for production. As a result of fewer inspections, consumers are likely to see an increase in prices and the risk of contaminated food.

Additionally, the House amended the appropriations bill to prohibit the FDA from approving the sale of genetically engineered (GE) salmon. Critics, concerned that the sale of GE salmon will threaten the salmon fishing industry of coastal states, question whether the fish is safe for human consumption. For more information on the approval of genetically engineered salmon, please see our previous report.

Fuerst Ittleman will continue to monitor the Senate version of the bill. For more information contact us at contact@fidjlaw.com.

FDA Releases Final Citizen Petition Guidance for Section 505(q)

On June 8, 2011, the U.S. Food and Drug Administration (FDA) announced the release of the final guidance document regarding citizen petitions subject to section 505(q) of the Federal, Food, Drug, and Cosmetic Act. Section 505(q), which was added by the FDA Amendments Act (FDAAA), states that the FDA shall not delay approval of pending Abbreviated New Drug Applications (ANDAs) for generic drugs as a result of citizen petitions that request FDA action.

Section 505(q) was designed to help prevent sham petitions, which are citizen petitions typically submitted to the FDA by pharmaceutical companies which hold patents to brand-name drugs in order to intentionally delay the approval of ANDAs submitted by manufacturer of generic versions.

The final guidance document outlines how the agency will treat petitions believed to be shams. The guidance details: (1) how section 505(q) applies to a particular citizen petition; (2) whether a petition would delay the approval of a pending ANDA; (3) the certification requirement; and (4) the verification of supplemental information.

Citizen petitions, including communication with the FDA intended to delay approval, must be submitted in writing pursuant to § 10.30 or § 10.35 and filed as comments in the appropriate docket. However, section 505(q) does not apply to petitions that could not under any reasonable theory delay the approval of a pending application, or to petitions submitted before September 27, 2007. Additionally, for section 505(q) to apply, the petition must concern a pending application at the time of submission.

A petition that meets the provisions of section 505(q) may not delay the approval of a pending application unless the FDA determines that a delay is necessary in order to protect the public health. The FDA provided two examples of public health issues that could necessitate a delay of the application: (1) whether a proposed generic drug is bioequivalent to the reference listed drug, and (2) whether an indication can be safely omitted from the labeling because the indication is patent protected. The FDA will evaluate if a petition delays the pending application by addressing whether the application would be ready for approval but for the issue(s) raised in the petition.

Pursuant to section 505(q), a petition must be certified by the petitioner to be considered for review by the FDA. The purpose of the certification is to ensure that the petitioner has disclosed all relevant information, both favorable and unfavorable, and verified the information is accurate. If the petition fails to include the exact language of the certification or complete date, the petition will not be reviewed. If a petitioner mistakenly submits a petition without the complete certification statement, he must submit a letter withdrawing the deficient petition and submit a new petition. The 180-day timeframe for the FDA response will begin upon submission of the new petition.

According to the final guidance document, the FDA timeframe to respond to a citizen petition could be tolled if the petition requests the FDA to take an action related to a specific aspect of a pending ANDA for which there is no final decision. A FDA response to a citizen petition should not interfere with an ANDA as a whole; therefore, a response may be issued beyond the timeframe if the petition is related to specific aspects such as a proposed trade name or specific claims proposed in the labeling.

We will continue to monitor the effects of the new citizen petition guidance and section 505(q). For more information contact us at contact@fidjlaw.com.

Consumer Financial Protection Bureau Seeks Public Comment To Help Shape Nonbank Supervision Program

On June 23, 2011, the Consumer Financial Protection Bureau (“CFPB”) announced a Notice and Request for Comment regarding the expansion of its nonbank supervision program. A copy of the U.S. Department of the Treasury press release can be read here.

Created with the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, CFPB, which begins operations on July 21, 2011, was tasked with the responsibility of regulating both banks and nonbank institutions which offer financial products or services to ensure that these institutions comply with federal consumer financial protection laws. Under the Dodd-Frank act, CFPB is authorized to supervise all banks with more than $10 billion in assets as well as all sizes of nonbank mortgage companies, payday lenders, and private education lenders.

Dodd-Frank also grants CFPB the power to regulate nonbank institutions in other consumer financial services markets. However, prior to the expansion of the nonbank supervision program into other financial services markets, the agency must first define by regulation who qualifies as a “larger participant” in the market, thus making them subject to regulation. Dodd-Frank requires that CFPB promulgate its initial rule defining which “large participates” of nonbank consumer financial market services it intends to regulate by July 21, 2012.

In its Notice and Request for Comment, CFPB seeks comments on the six nonbank financial services markets it intends to regulate: 1) debt collection; 2) consumer reporting; consumer credit and related activities; 4) money transmitting, check cashing, and related services; 5) prepaid cards; and 6) debt relief services. CFPB also seeks comment on the criteria to be used to determine whether a company will qualify as a large participate including: 1) the thresholds for inclusion, 2) what data should be used to set these thresholds, and 3) whether a single test or market specific tests should be adopted to determine a large participant. A copy of the Notice and Request for Comment can be read here. The initial comment period will run for 45 days from the date of publication in the Federal Register.

Fuerst Ittleman will continue to closely monitor this issue for the latest developments from CFPB. If you have questions pertaining to how Dodd-Frank and the creation of CFPB will affect your business or how to ensure that your business maintains regulatory compliance at both the state and federal levels please contact us at contact@fidjlaw.com.