Recent actions by the IRS indicate that it’s about to take action regarding ACA mandate penalties. For months business owners have speculated about the ACA and employer responsibility within it, and how stringently the Internal Revenue Service would enforce it. The agency recently updated its Q and A for shared responsibilities among employers, and has revealed that mandate penalties for employers will be enforced and showcased within the 226J letter. Whether or not an employer is held liable is dependent primarily on the data which the employer submitted to the IRS previously. Below is the most important things business owners need to be aware of.
In September, the Internal Revenue Service introduced the 1094-C and 1095-C forms, which should be applied towards 2017 mandatory reporting. Below is what you need to know about these documents and how they should be used.
Transitioning from a business which operates in a single state to one that operates in multiple states is an important step towards becoming a large business, one of which business owners should be proud. However, while it presents many opportunities, there are also challenges, one of the most poignant of which is multiple state taxation. Below are some ways in which employers can deal with this situation.
The Trump administration has addressed DACA, or the Deferred Action for Childhood Arrivals program, which means that both small and large businesses must be cautious in regards to managing employees whom the program covers to ensure they are in compliance with federal law. Below are some key things to be aware of.
The labor departments of a number of states have recently made announcements regarding the status of their minimum wage, specifically whether or not it will increase. These announcements are important for employers and their payroll departments, as it lets them know what to expect for 2018.
In the past, employers that chose to cover the meals of their employees who were traveling on business could only deduct a maximum of fifty percent of these expenses through income. However, a new ruling has changed this, giving employers the ability to deduct the complete amount for meal costs. Below are additional details regarding this rule and what it means for employers.
The American Tax Court ruled that the NHL Boston Bruins owner would be able to deduct the complete amount that was paid for meals for staff members and players during their away games. The court also concluded that the meals for the Boston Bruins fell under the exception of the 50 percent deduction for meal expenses which is listed under the 274 tax code section.
In order for an employer to qualify, they must show that the food was given in a place that is near the business premises of the employer and were distributed before, during or after the workday. The court also pointed out that the NHL requires their teams to play 50 percent of their games outside their hometown and that it is mandatory for players to attend the pregame breakfast. In fact, players can actually be fined and prevented from participating in a game if they’re absent or even late.
In the past court decisions gave employers within the entertainment business the ability to claim deductions for meals. The U.S. Ninth Circuit Court of Appeals in 1999 made a ruling that an owner of a casino in Las Vegas could completely deduct the meal expenses for their employees. The reason for this is due to the costs, which were considered to be in association with an important business purpose which maintained employees on the premises.
However, this has opened a door to whether small businesses in other industries can also claim these deductions. Many of these businesses find it challenging to determine the meal deductions since the meals may not be directly involved with the work schedules of the employees, as compared to traveling athletes or performers, who will do business in a company form.
When costs for food are deducted, you need records to support your claims. Officially, no deduction is possible unless these records are present, but there are some exceptions to the rule. The IRS carefully reviews deductions for food costs since it has a high likelihood of abuse, and if a return is scrutinized, you will be asked to show records. These records must show where, why and when the meal was consumed. You must also provide receipts for the expenses, with the only exception being not having to keep receipts for meals that cost under $75. There are a number of apps that can make it easier to maintain good records, which allow you to input the location, time and date.
New paid leave laws have been recently passed in the states of Washington, Arizona and the District of Columbia. However, these laws have also become the subject of scrutiny, with new developments occurring regularly. Below are some things that employers based in these states should know.
The Department of Labor in this state, in preparation for the new law which will go into effect in January 2018, has established the 1433 Site to provide the public with guidance as it mandates the two rule sets which will be used to describe and enforce the new law. 1433 is an initiative which received approval in 2016 that requires businesses to give paid sick time to the majority of their workers. It also increases the minimum wage automatically for a number of years consecutively.
Those employed in the state of Washington are expected to gain one hour of paid sick time for each forty hours they work, which gives them time to take care of themselves and members of their family. Public hearings for the first group of rules, which pertain to reporting requirements, notification procedures and the management of records, were held in August. Various businesses in Washington are opposed to this measure and have begun protesting it.
The Chamber of Commerce in Arizona has challenged the requirement that businesses based in the state give employees a minimum of three days of paid sick time which went into effect in July of 2017, which resulted from a measure that was approved by voters. The constitutionality of the law has been challenged, to the extent that business owners and the Chamber of Commerce filed suit to block implementation, stating that it is a violation of state law. Their argument is that the ruling is a violation since it mandates the state to use funds without specifying a source of revenue.
Washington D.C. passed its Universal Paid Leave Act in 2015, which went into effect in April of 2017 and is expected to be funded completely by the fiscal budget for 2018. Regardless, a minimum of five repeal measures are now being reviewed by the D.C. council, particularly the UPLA Amendment Act, which was revealed on June 20th. This measure focuses on alternative ways of establishing paid leave, such as lower payroll taxes for small businesses and employer mandate for larger businesses, or exempting those employers who already give paid leave to their employees.
The UPLA is expected to be funded through at payroll tax of 0.62 percent that employers will pay into a pool which is administered through the government of the District of Columbia, which will distribute the benefits to employees working in the area. The duration of sick leave remains the same, which is 8 weeks for parents who have recently had a child and six weeks to provide care to sick relatives.
The fourth quarter of 2017 is near, which means that more states will begin revealing the new rates for unemployment tax which is expected in 2018. States may alter their unemployment tax so that they can maintain the balance of their trust fund. Below are some things employers should know so that they’re prepared.
The unemployment tax is federally mandated and imposes a tax on employers which are used for the purpose of funding workforce agencies. Employers are expected to send this tax yearly, usually by completing Form 940 which is then transmitted to the Internal Revenue Service. The unemployment tax will cover a portion of unemployment insurance administration, as well as job service systems in each state. It also pays a portion of unemployment benefits which are extended, but like most taxes it is subject to change over time.
Some states will set up a single range for tax rates, which is referred to as a rate table or schedule. From these every employer is given a rate which is determined by their unemployment in association with their yearly payroll. Other states instead maintain multiple schedules, which are determined by the balance of their trust fund. Those which are expected to finalize their unemployment taxes for 2018 include South Dakota, New Hampshire, Wisconsin, Oklahoma, Georgia and Arkansas.
Oklahoma and Georgia both have multiple schedules which are determined upon a primary group of rates. Georgia actually uses 6 schedules which are essentially altered versions of the primary schedule, where every schedule denotes a percentage for which the employer’s primary tax rate schedule may be adjusted.
Oklahoma could utilize basic rates from either one of the four factors which are conditional, or from the unadjusted range which is 0.1 to 5.5 percent. The conditional factors will typically go into effect whenever the state’s trust fund balance is beneath a specific level. Every factor which is conditional will denote assessments which will be added for the tax rate of every rate group.
New Hampshire and Arkansas both have a single set of rates for employers that are experienced, and for the most part these rates won’t change. Additional surtaxes, rate reductions or assessments can be applied to the basic rate of employers depending on trust fund balance and whether the employer has a negative or positive rating.
Both Wisconsin and South Dakota will use multiple schedules. These schedules will go into effect based on the balance of the trust fund for unemployment. South Dakota is expected to select rates from up to two schedules for the very first time next year, under measure H.B. 1097 which was signed in March by Governor Daugaard. To learn more about unemployment taxes which are scheduled for release in 2018, review the Unemployment Insurance Chart.
Workplace safety is a necessary and fundamental part of the daily operations of every business. OSHA, or the Occupational Safety and Health Administration, have recently established a new law which places increased accountability on businesses that employ more than twenty people. This rule is called OSHA 300A, and here is what you need to know so that your organization will be in compliance with this regulation.
This new ruling establishes that current OSHA reports must be conducted electronically. The date whereby this new law will go into effect hasn’t yet been revealed, but it doesn’t mean that employers should not begin preparing for it in advance. 300A is also referred to as the “Summary of Work Related Injuries and Illnesses,” and will be a type of form that has to be transmitted once a year for any business that has over twenty employees.
The key thing to know regarding OSHA 300A is that it has to be transferred in an electronic manner. Traditionally, companies weren’t required to do this, but things have changed as various government agencies continue to update their computer and networking equipment to adapt to new technologies. Submitting the form electronically reduces the paperwork, which is good for the environment, while also lowering administration costs.
Any business that has more than 250 employees must fill out additional forms electronically such as the OSHA 300 and 301, on top of the 300A. The ruling applies to companies in specific industries, and you will want to check out the OSHA’s official site to find out if the industry your company operates in is included.
The form will need to be completed on the official OSHA website, using three possible options – CSV file, API or web form. The CSV file is best for those who want to file numerous establishments simultaneously, while the API is ideal for companies that already utilize an electronic record-keeping system. The web form option will meet the needs of those with basic filing capabilities.
The primary explanation from OSHA regarding the 300A is that transmitting it electronically will enhance the safety of employees throughout the country. Some of the data will be published publically by the agency, which allows both existing employees, the general public and recruitment candidates to know how well companies are doing in regards to the safety of their workers.
OSHA has also stated that acquiring the data electronically will better enable it to focus on compliance assistance as well as enforcement. It is ultimately believed that this new rule will have a positive effect on the profits of many companies as they see a steady decrease in the occurrence of workplace accidents in the high costs that are associated with them.
Payroll taxes in and of themselves are complex, but becomes more so for large businesses that operate in multiple states. This is because these taxes are subject to federal, state and local regulations, which can change at any time. Therefore, it is in the best interests of HR departments to keep abreast of these changes, because if they don’t the company could be held liable. The Affordable Care Act has muddied the waters further, particularly in regards to common ownership, which is a reference to businesses that have franchises or which operate in numerous locations. Below are some additional things regarding payroll taxes to consider.