Congress passed the IRCA (Immigration Reform and Control Act) in 1986, which required the use of the Form I-9 to verify identity and employment authorization for all new employees, including U.S. citizens hired after November 6, 1986. New hires are required to complete this form within three (3) business days of the date of hire. Employers are required to retain the completed Forms I-9 for all employees, as long as the individuals work for the employer and until one year after the date the employment is terminated or three years after date of hire, whichever is later.
On November 14, 2016, USCIS (U.S. Citizenship and Immigration Services), published a revised version of the Form I-9. Employers must begin using the new version by January 22, 2017. The form has been modified to make it easier to complete on a computer, including prompts to ensure information is entered correctly and drop down lists and other enhancements.
You may obtain a copy of the new form (paper version and fillable PDF version) and a copy of the Handbook for Employers—Guidance for Completing Form I-9 (publication M-274) at the official website www.uscis.gov/i-9. There is no fee to obtain these forms via this website.
Penalty Eliminated for Employer Health Insurance Reimbursements
Last year, the IRS began enforcing a penalty on employers who reimburse employees for the cost of health insurance premiums. The fine was up to $100 per day ($36,500 per year), per employee. On Wednesday, December 7th, legislation was passed eliminating that penalty. Employers can now reimburse employees for the cost of health insurance premiums without being penalized.
In order to qualify, small employers must set up a stand-alone health reimbursement arrangement.
Small Employers Able to Use Stand-Alone Health Reimbursement Arrangements
The legislation passed on December 7th allows employers to fund employee HRAs to pay for qualifying out-of-packet medical expenses and health insurance premiums (including plans purchased from the exchange). Reimbursements to the employee for medical expenses are tax-free only if the employee is enrolled in other health coverage that is minimum essential coverage. Employees that are covered by an HRA will not be eligible for subsidies for health insurance purchased on the exchange. The act takes effect for plan years beginning after December 31, 2016. To qualify for the funding of HRAs, the employer must have fewer than 50 full-time employees (or equivalents) and they must not sponsor a group health plan. The following are a list of additional requirements for the HRA’s:
- The HRA’s must be funded solely by employer contributions
- Must provide payment or reimbursement for medical care expenses or health insurance premiums. Employees must provide documentation/receipts for medical expenses or health insurance premiums paid.
- The maximum reimbursement for health expenses through HRAs is $4,950 for single coverage and $10,000 for family coverage
- If an employer chooses to offer HRA’s, they must be offered to all full-time employees, unless one of the following applies:
- The employee has not yet completed 90 days of service
- The employee is under 25 years old
- The employee is covered by a collective bargaining agreement for accident/health benefits
- The employee is a part-time or seasonal worker
- An employer must make the same HRA contributions for all eligible employees, however the following items may cause the amount to vary:
- Price of the insurance policy
- Age of the employee/eligible family members
- Number of family members covered
The professionals in our office can answer any questions you may have about the new legislation. Call us today.
This is a reminder to employers and small businesses of the new January 31 filing deadline for Form W-2. A new federal law, aimed at making it easier for the IRS to detect and prevent refund fraud, will accelerate by a month the W-2 filing deadline for employers from February 28 to January 31.
The Protecting Americans from Tax Hikes (PATH) Act, enacted last December, includes a new requirement for employers. They are now required to file their copies of Form W-2, submitted to the Social Security Administration, by January 31. The new January 31 filing deadline also applies to certain Forms 1099-MISC reporting non-employee compensation such as payments to independent contractors. As it relates to Form 1099-MISC, the new filing deadline will only impact filers that report nonemployee compensation payments in box 7.
In the past, employers typically had until the end of February, if filing on paper, or the end of March, if filing electronically, to submit their copies of these forms. Also, there are changes in requesting an extension to file the Form W-2. Only one 30-day extension to file Form W-2 is available, and this extension is not automatic. If an extension is needed, a Form 8809 Application for Extension of Time to File Information Returns must be completed as soon as you know an extension is necessary, but by no later than January 31.
The new accelerated deadline is intended to help the IRS improve its efforts to spot errors on taxpayer filed returns. Receiving W-2s and 1099s earlier will make it easier for the IRS to verify the legitimacy of tax returns and properly issue refunds to taxpayers eligible to receive them. According to, the IRS it will make it easier to release tax refunds more quickly. The January 31 deadline remains unchanged and has long applied to employers furnishing copies of these forms to their employees.
We anticipate the new deadline will increase your businesses workload. To minimize stress, we recommend the following steps:
- Verify your employee filing status and confirm their mailing addresses before December 31, 2016.
- Verify form W-9 information (for your 1099-Misc contractors) is completely up-to-date and accurate.
- Collect all the necessary information to ensure your forms are “good-to-go” on or about Monday, January 2, 2017.
The professionals in our office can answer any questions you may have about the new filing deadlines and how they will impact your business, call us today.
In July of 2015, President Obama signed into law a new Highway Funding Bill. Section 2006 of that bill modifies the tax filing due dates for tax years beginning after December 31, 2015. The filing deadlines for a variety of entities, including partnerships and C corporations, will change.
As a business owner, it is important to be aware of the new filing deadlines to make sure you are submitting tax returns timely. The following two questions will determine your due date:
- What entity is your business considered?
- When is your tax year end date?
The new due dates are effective for tax years beginning after December 31, 2015 with the exception of C Corporations with fiscal years ending on June 30 (new due dates for June 30 year ends will go into effect for returns with taxable years beginning after December 31, 2025).
We have highlighted below some of the major changes. For a complete list of new due dates, please refer to our giveaway this month, a copy of the AICPA’s resource which includes a list of all original and extended tax return due dates.
||Prior Due Dates
||New Due Dates
|Partnership (calendar year)
|S Corporation (calendar year)
|C Corporation (calendar year)
|FinCEN Report 114
(Replaces FBAR return)
|Individual Form 1040
Extension Modifications for Calendar Year Filers
||5 ½ months
||3 ½ months
|3520-A and 3520
|FinCEN report 114
Extension Modifications for C Corporations
|June 30 FYE
|December 31 FYE
|All other FYE’s
||All revert back to 6 months
Will individual tax filers be affected by the new due dates?
Yes, those who file foreign bank account reports will notice a change. The due date for FBARs will move from June 30 to April 15. FBAR filers are also applicable to receive a six-month extension, similar to tax returns.
The extension dates for trust returns are receiving an extension. Trust returns are still due in April, but the extension will change from September 15 to September 30.
You will want to review your return-filing procedures and determine what changes need to be made to comply with the new dates. The professionals in our office can help you understand how this will affect your business; call on us today.
After much anticipation, the Department of Labor (DOL) recently released a new rule which will change how employers compensate employees. Effective December 1, 2016, workers who earn above the previous threshold but below the new one will qualify to receive time-and-a-half for each hour they work surpassing 40 hours a week. An estimated 4.2 million salaried workers will become eligible for overtime pay under the new rule.
According to the DOL, the new rule will:
- raise the salary threshold at which white-collar workers are exempt from overtime pay from $23,660 to $47,476 per year;
- automatically update the salary threshold every three years, based on wage growth over time;
- strengthen overtime protection for salaried workers already entitled to overtime; and
- provide greater clarity for workers and employers.
It should also be noted that, under the new rule, an employee’s nondiscretionary bonus/incentive payments can count toward up to 10% of the salary threshold, provided that the incentives are paid on a quarterly or more frequent basis.
Job titles do not determine exempt status. In order for an exemption for overtime to apply, an employee’s specific job duties and salary must meet all the requirements set by Department of Labor regulations. If you are unfamiliar with the criteria, more details are available on the Department of Labor website (www.dol.gov).
Many businesses will be affected and must comply with the new rule. According to the DOL, “employers may:
- increase the salary of an employee who meets the duties test to at least the new salary level to retain his or her exempt status;
- pay an overtime premium of one and a half times the employee’s regular rate of pay for any overtime hours worked;
- reduce or eliminate overtime hours;
- reduce the amount of pay allocated to base salary (provided that the employee still earns at least the applicable hourly minimum wage) and add pay to account for overtime hours worked over 40 in the workweek, to hold total weekly pay constant; or
- use some combination of these responses.”
Below are four steps you can implement which will help integrate the changes successfully into your workflow.
- Review payroll and identify employees who are exempt. The first step is to review your payroll and identify who are currently classified as exempt employees whose salaries are below the new proposed thresholds for executive, professional and administrative white collar exemptions. You should also review the job duties of all employees who are currently classified as exempt to ensure that they meet the duties test under the Fair Labor Standards Act for their overtime exemption to be recognized.
- Consider which positions to transition to non-exempt status. Once you have reviewed your payroll and identified the employees who are exempt it will be essential to carefully consider which positions to transition to nonexempt status. Employers have two options: they can either increase the salary level to maintain an employee’s exempt status or transition the position to nonexempt status. When transitioning positions to a nonexempt status, ask yourself the following questions:
- What will be the basis for pay: hourly or salaried?
- Does this meet the minimum wage requirements?
- Will overtime be permitted? Is it necessary?
3. Evaluate timekeeping practices.
Anticipate more time to track for employees transitioning from exempt to nonexempt status. Establish a formal policy to help track and record time. The policy should define:
- What is considered time worked?
- How is overtime approved?
- Who approves overtime?
- What are the consequences for failing to follow the policy?
4. Communicate changes internally.
The final step is to communicate and educate staff of any policy changes. Don’t forget to include employees who are already nonexempt; they will also need a refresher. Communications and training programs must be timely. Consider having supervisors regularly review employee time-keeping practices to ensure employees are properly reporting their time worked.
Employers have a few months to prepare for the new rule. Our firm’s professionals can help you develop a strategy to ensure your business is in compliance. Call us today.
The Internal Revenue Service recently revised the depreciation limits for business-use passenger automobiles, trucks and vans first placed in service during calendar year 2016. The updated amounts under Revenue Procedure 2016-23 are in table format below.
Passenger Automobiles: The maximum depreciation limits under Code Sec. 280F for passenger automobiles first placed in service during the 2016 calendar year are:
- 1st tax year: $3,160
- 2nd tax year: $5,100
- 3rd tax year: $3,050
- Each succeeding tax year: $1,875
Trucks and Vans: The maximum depreciation limits under Code Sec. 280F for trucks and vans first placed in service during the 2016 calendar year are:
- 1st tax year: $3,560
- 2nd tax year: $5,700
- 3rd tax year: $3,350
- Each succeeding tax year: $2,075
When bonus depreciation rules apply, the first year limitation is $11,160 for personal automobiles and $11,560 for trucks and vans. In both cases, limitations for subsequent years remain the same. The professionals in our office can answer the questions you may have on the updated auto depreciation limits, call on us today.
Hudson, WI – November 23, 2015: Bauman Associates plans to expand its Hudson office by combining employees from its neighboring River Falls office. According to Managing Principal John Satre, this move will help the firm better serve clients in both the River Falls and Hudson markets.
By combining the River Falls and Hudson teams in one location, clients of both offices will benefit from larger client service teams and broader industry expertise. Additionally, consolidating the two offices into one will also help the firm to reduce overhead costs and allow the firm to maintain its competitive billing rates.
By December 1st, the firm plans to close its River Falls office and relocate all of these employees to its Hudson office. The address for the Bauman Associates expanded Hudson office will remain the same: 816 Dominion Drive, Suite 201, Hudson, WI 54016. The office main phone line is 715.386.8181.
About Bauman Associates, Ltd
Bauman Associates was founded in 1947 as a certified public accounting firm and has offices in Eau Claire and Hudson, Wisconsin. The firm provides multi-discipline professional services to businesses and individuals including business consulting; technology training; human resource consulting; tax strategy, planning and preparation; accounting and auditing services; and estate, trust and retirement planning. For more information, visit www.baumancpa.com or call 888-952-2866.