15Feb 2011 by Nancy Smyth

Fair Labor Standards Act-Employee Record Keeping Requirements

IRS Information, Payroll Tips
Employee record keeping requirements must include proper time and payroll records for it's workers.  The Fair Labor Standards Act, as well as most state wage and hour laws, are the ones who determine what is or is not "proper". In January, the USDOL (United States Department of Labor) announced that it had recovered $1 million in unpaid overtime from federal defense contracts in California.  This recovered money was based, in part, on the DOL's findings that the contractors had violated the record keeping requirements, which are part of the Fair Labor Standards Act (FLSA).  Specifically, the DOL found that the contractors in question had failed to maintain proper time and payroll records for it's workers.  Read the entire article by clicking here. The Fair Labor Standards Act sets minimum wage,…
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17Dec 2010 by Nancy Smyth

Straight from the IRS – Social Security Tax Reduced to 4.2%

IRS Information, Payroll Tips
12/17/2010 I just received the following email which is of interest to ALL employers and payroll personnel. Payroll Tax Cut to Boots Take-Home Pay for Most Workers; New Withholding Details Now Available on IRS.gov WASHINGTON - The Internal Revenue Service today released instruction to help employers implement the 2011 cut in payroll taxes, along with the new income-tax withholding tables that employers will use during 2011. Millions of workers will see their take-home pay rise during 2011 because the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 provides a two (2) percentage point payroll tax cut for employees, reducing their Social Security (FICA) tax withholding rate from 6.2% to 4.2% of wages paid.  This reduced Social Security withholding will have no effect on the employee's future Social…
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08Nov 2010 by Nancy Smyth

SBA to begin contracting program for women

Construction News, IRS Information
News from the National Association of Government Contractors SBA officials announced on Oct. 4 that the agency is setting up procedures to help woman-owned small businesses gain more access to the federal contracting marketplace. A final rule is forthcoming in the Federal Register. Working with the Federal Acquisition Regulatory Council, SBA officials will begin a four-month implementation of the Women-Owned Small Business program. They will be building infrastructure to support the certification process and allowing for ongoing oversight. Officials say that by early 2011 contracts will begin to become available to small businesses owned by women under the program. Such an initiative has been promised for years to bolster access to women-owned businesses who have been an historically under-represented segment of the government contracting community. The proposed rule states that…
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16Apr 2010 by Nancy Smyth

2010 Hire Act – Tax Break for Small Business

Construction News, IRS Information
From the Hire Act of 2010 website President Obama signed the Hiring Incentives to Restore Employment (HIRE) Act on March 18, 2010. This new $17.5 billion legislation (scaled down from an earlier $150 billion package) is of particular interest to businesses as it includes new tax benefits directly related to hiring employees and writing off investments in equipment. The new tax incentives for businesses to hire unemployed workers: payroll tax exemption of the employers share of Social Security taxes on wages paid to these workers after March 18, 2010. employer tax credit of up to $1,000 per worker The new employees must meet these criteria in order to qualify for the business tax credits. hired between Feb 3, 2010 & Jan 1, 2011 newly-hired employee was unemployed during the 60…
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14Apr 2010 by Nancy Smyth

IRS to Step up Audits of Sole Proprietors

IRS Information
From WebCPA The Internal Revenue Service plans to check for unfiled tax returns and look for unreported income from sole proprietors of small business during correspondence audits. Estimates by the IRS show that $68 billion of the $345 billion tax gap in 2001 was due to the underreporting of income by sole proprietors. The IRS conducted more than 5.1 million correspondence examinations between fiscal year 2004 and FY 2008 that recommended the IRS collect approximately $35 billion in additional taxes, according to a new report by the Treasury Inspector General for Tax Administration. For each tax return examined, a correspondence examination generated about $6,800 in recommended additional taxes. TIGTA found 129 audits where sole proprietors may have avoided tax and interest assessments totaling more than $1.7 million because the IRS…
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05Apr 2010 by Nancy Smyth

IRS & State Auditors Crack Down on Independent Contractors

IRS Information
While looking for a way to increase tax revenues, the IRS and many state governments are cracking down on how companies classify their workers.  If your business uses independent contractors you should get ready for new scrutiny! You may wonder - "What's the big deal, so what if I use independent contractors"? Well, it's like this.......when a you as a business owner report payments made to independent contractors - you report those wages using a 1099 form.  When payments are reported using a 1099 form, you as the business owner aren't required to pay unemployment insurance, worker's compensation insurance OR PAYROLL TAXES on that money. Hiring independent contractors isn't against the law, however, there are very strict rules about WHO/WHAT an independent contractor is and often times what you may…
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21Jan 2010 by Nancy Smyth

IRS to demand new reconciliations

IRS Information
The IRS plans to require credit card and other firms that process transactions to report gross network transactions to participating merchants—and the IRS—annually starting next year. The IRS will use the reports as it does W-2s and 1099s. Thus, a company whose gross receipts differ from those in these reports will be audited or asked to explain the differences. That means each business  will have to monitor and reconcile the reports and, if there are errors, request corrected statements. [IR-2009-106; REG-139255-08, Income Tax Regs].Stay tuned for further updates as they become available.
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02Jun 2009 by Nancy Smyth

Summer Hiring – Rules for 2009

Construction News, IRS Information, Payroll Tips
From the May 2009 issue of the General Ledger. Firms owned by parents that employ their children. Owners’ children can work for the firm, regardless of age, number of hours worked or time of day—if the parent(s) own 100% of the business. Children under 16 cannot do hazardous work such as use lawn mowers, sewing machines, etc., work where food is cooked, or work near flammable or hazardous material. Minimum wage: 100% of owners hiring only immediate family members need not pay the minimum wage. But if owners regularly employ nonfamily members, they must pay even family members the minimum wage. Owners’ children under 21: Wages are exempt from FUTA. Owners’ children under 18: Wages are exempt from FICA—if the parents are sole owners or sole partners—but FIT must be…
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28Apr 2009 by Nancy Smyth

White House Delays rule requiring electronic verification

Construction News, IRS Information, Payroll Tips
{from the American City Business Journals/Denver on 4/27/09} Federal contractors will now have until June 30 before they have to use the E-Verify system to check the eligibility of their employees to work in the U.S. The Obama administration postponed the date the electronic verification rule would apply to government contractors and subcontractors in order to have more time to review it, according to U.S. Citizenship and Immigration Services. The rule was issued by the Bush administration in November. Business groups have filed a lawsuit challenging the rule, contending the government doesn't have the authority to make use of E-Verify mandatory. Congress created the E-Verify system as a voluntary program, they noted. More than 117,000 employers now use the Web-based system, which compares information supplied by employees with government records.…
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