The U.S. Department of Labor (DOL) recently launched the Payroll Audit Independent Determination (PAID) program, which is designed to quickly resolve unintentional minimum wage violations under the Fair Labor Standards Act (FLSA) without penalty to qualified participants. Workers will benefit by swiftly receiving back wages that are owed, and employers can get into compliance without paying penalties. Employers must act quickly, however, since the pilot program is scheduled to end in about six months.
The Department of Justice recently reminded taxpayers that evading personal or business-related tax obligations can lead to "substantial fines and penalties, and even long prison sentences." Last month, the husband-and-wife owners of a Tennessee staffing company were sentenced to 75 months and one year, respectively, of prison time for failure to pay over $2.8 million in employment-related taxes and withholdings, and for filing false employment tax returns.
Since 1990, the California Employment Development Department (EDD) has retained the statutory authority to issue penalties for failure to file Forms W-2 and/or 1099. Until this year, effective January 1, 2018, taxpayers assessed the steepest of those penalties, Unemployment Insurance Code section 13052.5, did not have a right to petition the assessment. However, since enactment of Assembly Bill 1695 on July 24, 2017, and effective January 1, 2018, Section 13052.5 is now petitionable before the California Unemployment Insurance Appeals Board.
The Internal Revenue Service (IRS) and Social Security Administration are teaming up in November and December to present webinars for employers and tax professionals on topics most relevant to the year's end, including data protection, identity theft, online business services, and filing Forms W-2.
The Mobile Workforce State Income Tax Simplification Act of 2017, which aims to make a person's wages and other remuneration subject to income tax only in the employee's state of residence and the state where the employee was physically present and performed employment duties for more than 30 calendar days, was passed by the U.S. House of Representatives on June 20, 2017. Employers will not have state income tax withholding or reporting requirements for employees who do not fit these criteria. Certain classes of workers will not be considered employees for the purposes of this bill, including professional athletes and entertainers; film and video production employees; and prominent public figures providing services on a per-event basis. The U.S. Senate Committee on Finance currently has the proposed bill under review. Click here to track its progress.
The Treasury Inspector General for Tax Administration (TIGTA) is recommending that the IRS expand the criteria used to refer potential criminal cases for investigation for certain employers that fail to remit payroll taxes to the IRS. TIGTA found that tax noncompliance in employment tax matters is growing, and as of December 2015 the IRS is owed nearly $46 billion in unpaid employment taxes, interest, and penalties.
Effective January 1, 2017, employers with 10 or more employees are required to electronically file and pay their EDD employment tax returns, wage reports, and payroll tax deposits. All other employers will be subject to this requirement effective at the start of 2018.
The IRS Office of Chief Counsel recently released a memo from April 14, 2016, regarding the tax treatment of benefits an employee receives through an employer wellness program. Specifically, the Chief Counsel determined that cash benefits paid as a reward for or reimbursements of premiums paid related to participating in such a program may not be excluded from the employee's gross income. Health screenings and medical care provided under the wellness program are excludable.
On the heels of the most recent development in the Uber worker classification dispute, the Internal Revenue Service has put together a free webinar about the differences between Employee and Independent Contractor worker classifications. Join the agency on May 12, 2016 at 2:00 pm EST (11:00 am PST) to learn about control factors, voluntary compliance, and IRS Form SS-8. Register here: https://www.webcaster4.com/Webcast/Page/925/14635
California's Employment Development Department publishes a new Employer's Guide (DE 44) and Household Employer's Guide (DE 8829) each year to help you understand your rights and responsibilities if your business hires employees.