As some of you may have seen on Facebook, a new video with Jane Fonda has been making the rounds. It concerns the latest Department of Labor proposed rules concerning employer treatment of tips. Leaving the politics of Jane Fonda aside this is an important issue that needs to be understood. A great source to understand this issue is the latest post from Wage & Hour Insights written by Bill Pokomy on December 8th. I highly recommend you review his analysis of the proposed rule.
I attended the October 5th payroll industry telephone conference call. On the call Scott Mezistrano, with the IRS Industry Stakeholder Engagement and Strategy, provided the listeners with updated information on the W-2 Verification Code Pilot Program for the 2018 filing season (2017 Forms W-2).
First just a quick review of the program itself. It was implemented during the 2016 filing season. Its purpose is to combat tax-related identity theft and tax refund fraud. It requires a 16-character code be input into box 9 so that the tax filer can be verified when filing taxes electronically. It only appears on the Form W-2 copies B (filed with the employee’s federal tax return) and C (the employee’s copy). If the Verification Code (VC) is deemed valid, then the IRS treats the W-2 data submitted with the Form 1040 to be valid, thereby reducing false fraudulently filed tax returns.
For the 2016 Forms W-2 only ADP, Ceridian, Intuit, Paychex, Payroll People, Prime Pay and Ultimate Software participated in the test pilot program. If the taxpayer had a VC it was entered 34% of the time. However, when it was entered, it was validated 97% of the time.
For the 2017 Forms W-2 there will be 10-12 service bureaus or payroll software companies participating in the program. This includes the same companies as in 2016 along with the National Finance Center and a few more payroll service providers. This should result in approximately 66 million Forms W-2 containing the code. That results to about 1 in 4 forms that will be filed.
Nina Olson is with the Taxpayer Advocate Service (TAS). This is an independent organization within the IRS that assists taxpayers who are experiencing “troubles” with the IRS in getting issued resolve through the “normal channels”. During recent congressional hearing she was asked what seemed like simple questions concerning the types of IRS guidance taxpayers can rely on. But the answer was not simple. She has written a blog; IRS Frequently Asked Questions Can be a Trap for the Unwary on July 26, 2017, that contains excellent information for those of us who need to research tax questions and rely on tax guidance from the IRS. I recommend reading it to ensure you know what you can and cannot rely on when researching the IRS website for tax guidance.
If you are currently using the fluctuating workweek that is permitted under the Fair Labor Standard Acts (FLSA) you may want to review that decision. The Fifth Circuit Court of Appeals has drawn some limits on that method. Bill Pokorny has done a fantastic blog on discussing this recent court case. Check it out for the latest if you are currently using this type of workweek or just want to increase your current knowledge in this area.
When conducting my webinars on the FLSA requirements one area always seems confusing to attendees and that is the eight types of payments that can be excluded when calculating regular rate of pay. The one found most often to be confusing to my attendees and maybe to you as well is the one that is for bona fide overtime premiums. Bill Pokorny has done an excellent blog post on this subject that I know you will find helpful on this topic. Please take the time to check it out if you offer this type of payment or to improve your general payroll knowledge.
With the major disasters befalling us many employers and employees are looking for ways to help or seeking help to recover. The IRS, the states and others are providing relief for these disasters. For example the IRS is permitting pension plan hardship loans and filing extensions. They are also permitting leave sharing programs and leave donations with favorable taxation. Click here for outline of the IRS latest tax relief.
The states are also giving disaster relief. So far Alabama, Colorado, Georgia, Hawaii, Idaho, Illinois and Wisconsin have posted tax filing/payment relief for employers. You need to check the individual website for each state to see who is offering this type of relief.
In addition, Ernest and Young’ Workforce Advisory Services are offering a complimentary webcast tomorrow morning on Disaster Relief: Workforce Considerations for Employers at 9 am pacific/12 noon eastern.