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Working Capital Blog

Posted on: February 23rd, 2017

Tax Tip: Gather W-9 and W-4 Info in Real-Time to Streamline Year-End Reporting

Tax Tip: Gather W-9 and W-4 Info in Real-Time to Streamline Year-End ReportingWith so many deadlines demanding attention, business owners will often meet one and then put it in the rearview mirror as they move onto the next. While it is certainly satisfying to scratch a filing off the to-do list, putting some compliance requirements out of mind until the next year-end can actually compound the work and stress the next time they come due.

A perfect example of this phenomenon is Form 1099 reporting of certain payments made in trade or business. Even though this year’s January 31 deadline has come and gone, companies that stay on top of collecting the necessary information from vendors throughout the year via IRS Form W-9 can considerably reduce the headache of tracking it all down at once at the end of the year.

Request W-9s in real time

Whether you do business as an individual or sole proprietor or your company is classified as a partnership, corporation or LLC, the IRS requires the reporting of vendor and other types of payments via Form 1099 each calendar year. Taxpayers must use Form W-9 to gather information about each vendor. Staying on top of the W-9 requirement becomes much easier when collected in real time.

Requesting a W-9 from each vendor as soon as the business relationship begins is a best practice for tax record keeping and also prevents a year-end rush to track down vendors with whom you may no longer be working. Now that 1099s are due to the IRS one month earlier (January 31 instead of the February 28 due date in previous years), businesses have even less time to gather information and prepare this filling.

Stay on top of W-4s

In order to file accurate payroll information with the IRS, companies need updated Form W-4s on file for every employee. This employee withholding allowance certification instructs employers on how much federal income tax to take out of each paycheck. While most companies do not require new W-4s to be filed each year, it is a good idea to consistently remind employees to review and update should their personal or financial situation changes.

RKL has a team of professionals dedicated to helping businesses prepare for and comply with payroll and 1099 reporting requirements. Contact one of our local offices with any questions or for assistance.

 

Contributed by Susan L. Smith, Advanced Tax Paraprofessional in RKL’s Tax Services Group. Sue has more than 30 years’ experience conducting payroll services and preparing individual tax returns for clients. 

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Posted on: February 21st, 2017

Is Your Company Prepared for a Sales Tax Audit?

Is Your Company Prepared for a Sales Tax Audit?As state governments cast a wider net to identify much-needed tax revenue, sales and use tax reporting has received greater attention. Last summer, the Pennsylvania Department of Revenue launched a desk review pilot program to remotely audit sales and use tax returns, and other states are also working to identify under-reporters or non-filers. Amidst this environment of increased scrutiny, business taxpayers can benefit from better understanding the audit process and proactively assessing their sales and use tax liability exposure.

Why sampling method matters

In a perfect world, all sales and use tax audits would consist of a detailed examination of every transaction that occurred during the audit period. In the real world, however, full transaction reviews are simply not possible due to the large volume of transactions, so state tax auditors rely on sampling to project liability and assess compliance.

Virtually all state sales and use tax auditors use some form of sampling on large corporate taxpayers, but auditors in recent years are trading the block sampling methods of the past for more advanced methods. The complexity of these newer sampling methods requires close scrutiny to verify the accuracy of the results and how they are projected against the entire population of transactions. Remaining engaged throughout the audit process and understanding the methods used can help taxpayers ensure the results are representative of their businesses.

How liability is identified

Most taxing agencies typically apply statistical sampling in sales and use tax audits. In certain cases, an auditor will also stratify the transaction population into groups based on a certain criteria. For sales and use tax audits, stratification is based on the dollar amount of the transaction. This process is intended to improve efficiency, preserve the validity of the sample population and offset the impact of extreme transaction values.

Once the sample transaction population is created and stratified if necessary, auditors examine it for errors like tax overpayments or underpayments. Errors identified in the sample population are projected to create an estimate of the errors in the general transaction population. Positive (overpayment) and negative (underpayment) errors are usually combined to yield a total net error; however, auditors are not obligated to identify overpayments or credits so the positive errors may not always be counted against the negative.

When being proactive pays off

Regardless of the method used, the auditor and the taxpayer must each evaluate the results of the sample and sample projection. It is the taxpayer’s right to challenge the audit outcome or assessment, including specific issues with the audit methodology. Unfortunately, most taxpayers do not have the in-house expertise or familiarity with sales and use tax audits needed to determine whether a challenge is warranted, and seek the counsel of an experienced state tax advisor like RKL.

Sales tax compliance is much more than knowing what tax rate to apply to a transaction – the reliability of a company’s record-keeping systems and the soundness of its financial procedures can also impact the outcome of a sales and use tax audit. Taxpayers who are proactive in managing compliance processes and using technology to increase the accuracy and realiability of transaction data can mitigate potential exposure and stress related to undergoing an audit.

RKL’s State and Local Tax professionals can conduct a sales and use tax process review for companies to better understand their level of compliance and identify improvements that will result in not only time savings but also expenses related to poor audit outcomes. Contact me with any questions about a process review or general inquiries about sales and use tax audits at ftobias@rklcpa.com or 717.394.5666.

 

 Frank J. Tobias, CGFM, Principal in RKL’s Tax Services Group. State and local taxes, Pennsylvania taxes, multi-state taxationContributed by Frank J. Tobias, CGFM, Principal in RKL’s Tax Services Group. He specializes in the area of multi-state planning and compliance, with extensive experience in all areas of Pennsylvania taxation.

 

 

 

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Posted on: February 14th, 2017

The Cost of Risky Employees is High. Here’s How to Reduce It.

 RKL’s Business Consulting team explains why pre-hire verification and vetting is a critical component of a company’s fight against fraud. Business is booming and you need to hire more staff, but bringing new employees on board is not without risk. Employers should ask themselves how well they know the person they are about to hire, particularly those whose positions entail the handling of financial, sensitive or confidential information.

According to the Association of Certified Fraud Examiners, 40 percent of fraud is carried out by employees in the accounting or operations department. This statistic begs the question: If a company is going to give an employee access to sensitive or financial information, shouldn’t that company also screen those individuals as thoroughly as possible prior to hiring?

There is no magic wand to wave to ensure a perfect hire, but there are several steps companies can take to strengthen pre-hiring screening and verification.

Conduct a background check

Long considered a standard part of the hiring process, more companies are skipping the background check to cut costs. This is a huge oversight, as a background check can uncover critical red flags and help companies eliminate unfit candidates right out of the gate.

Run credit and employment-related checks

Financial troubles rank high on the list of factors that drive an employee to conduct fraud, so a credit check can highlight such vulnerabilities. Employment and education-related verifications are also key to determining honesty about credentials and experience.

Send applicants for drug tests

Another time-consuming expense that is often passed over, drug tests are a proven method for filtering out applicants. Substance abuse is another risk factor for fraudulent behavior, and it can also create other operational risks for a business.

Dig deeper with references

It is important to obtain references from job applicants, but it is even more important to make the most of them. Take the time to go beyond the basic checklist of questions – asking open-ended inquiries and encouraging elaboration is a great way to get a sense of what the applicant is like as a colleague.

Maintain confidentiality and legal regulations

When using these methods to obtain information about applicants, it is critical to adhere to the legal or regulatory precedent in the employment arena, like the federal Fair Credit Report Act or the U.S. Equal Employment Opportunity Commission. There are many employment and hiring related issues subject to litigation, regulation and legislation, so be sure to develop policies and procedures that protect the rights and personal data of both employer and applicant.

Pre-hire verification and vetting is a critical component of a company’s fight against fraud and an important investment of resources. Companies can work with a human resources consulting or fraud prevention partner, like RKL, to avoid confidentiality issues or violations and develop a thorough employment screening process. Learn more about RKL’s fraud and forensic accounting services or contact me at 717.394.5666 or bnovis@rklcpa.com.

 

Bethany A. Novis, CPA/ABV, CVA, CFE, partner in RKL’s Business Consulting Services GroupContributed by Bethany A. Novis, CPA/ABV, CVA, CFE, a partner in RKL’s Business Consulting Services Group. Bethany specializes in fraud investigation, business valuation and litigation services. In addition to being a licensed CPA accredited in business valuation, she holds designations as a Certified Valuation Analyst (CVA) and a Certified Fraud Examiner (CFE).

 

 

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Posted on: February 8th, 2017

How Gov. Wolf’s 2017-18 Budget Proposal Could Impact Taxpayers

Pennsylvania Governor Tom Wolf today proposed his 2017-18 budget. RKL’s state and local tax experts analyze the proposal and how it could impact taxpayers.Against the backdrop of a current projected $700 million shortfall and a multibillion-dollar structural deficit, Pennsylvania Governor Tom Wolf yesterday delivered his budget proposal for Fiscal Year 2017-18.

Outlining his priorities for the upcoming fiscal year, Governor Wolf steered clear of suggesting broad-based tax increases in his proposed $32.3 billion General Fund budget (1.8% higher than the current fiscal year budget). Instead, he discussed a blend of targeted taxes, cost-cutting measures and functional consolidations to remedy Pennsylvania’s worsening financial situation.

Let’s take a closer look at the main elements of Wolf’s proposal and what they mean for businesses and individual taxpayers.

Focused Spending

Governor Wolf’s main focus continues to be education spending. His budget proposal calls for an increase of $200 million in education spending, with the majority devoted to early childhood development and K-12 education. The Governor also continues to prioritize improving and expanding services for older Pennsylvanians and directing resources to combat the heroin and opioid addiction crisis that plagues the Commonwealth.

Cost Savings and Spending Reductions

Governor Wolf’s budget identifies a number of opportunities for cost savings and spending reductions that appear to have bipartisan support. The Governor’s budget identifies a proposed $2 billion in spending cuts, achieved through methods including:

  • Prioritizing agency expenditures and creating cost efficiencies;
  • Improved fiscal management;
  • Revenue enhancement;
  • Eliminating and reducing certain non-core programs;
  • Employee complement controls;
  • Consolidation and coordination of state services; and
  • Facility closures, lease management and facility downsizing.

These are just some of the ideas the Governor has proposed to achieve savings, but we will have to wait and delve deeper into the specific details of each proposal to get a true feel for just how realistic this $2 billion figure is.

Impact on business and taxpayers

In a stark contrast to his budget proposal from last year, Governor Wolf provided that he would not seek an increase in the personal income tax or any significant increase or expansion of the sales and use tax. Although there are no proposed increases to these two broad-based taxes, business and individual taxpayers should be aware of some of the Governor’s proposals that will have a direct impact on them, such as:

  • Increasing the minimum wage from $7.25 to $12 an hour;
  • Imposing a natural gas severance tax;
  • Closing “loop-holes” for insurers;
  • Reducing available tax credits;
  • Establishing uniform Net Operating Losses (NOL) provisions;
  • Eliminating tax “loop-holes” for certain sales and use tax exemptions including software and computer services, food sold to airlines, aircraft maintenance and repair; and
  • Adopting combined reporting; and
  • Reducing the corporate net income tax rate over several years to a rate of 6.49% by 2022.

Each of the items listed above require close scrutiny and raise a number of questions regarding this budget. What does the higher minimum wage mean for small business owners? How do the NOL provisions impact Pennsylvania’s ability to attract and keep businesses? How will changing the corporate net income tax system impact revenue in the short-term? These questions and more are issues we at RKL will be tracking closely as the budget process continues.

While it is important to understand what items are included in the budget address, it is equally important to be cognizant of those items excluded. The main driver behind the structural deficit is the rising cost of public pensions that Pennsylvania has been trying to resolve for a number of years. It is hard to imagine a budget that does not address such a prominent issue as pension reform.

The Governor’s address is the first move in the budget-balancing chess match that will play out over the coming months in the Capitol. RKL’s State and Local Tax Team will closely monitor state budget negotiations, just like all developments in state government, for potential impact on business and individual taxpayers. Readers with questions about the Governor’s proposal or Pennsylvania tax proposals should contact me at jskrinak@rklcpa.com.

 

Jason C. Skrinak, CPAContributed by Jason C. Skrinak, CPA, State and Local Taxes (SALT) Practice Leader for RKL’s Tax Services Group. Highly regarded throughout the region for his deep knowledge and expertise in SALT consulting, Jason has significant experience representing taxpayers before Pennsylvania’s Board of Appeals and Board of Finance and Revenue.

 

 

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Posted on: January 31st, 2017

OECD/G20 Base Erosion and Profit Shifting Project, Action 13: New Reporting Required for Multinationals

Action 13 is part of the Base Erosion and Profit Shifting initiative for large multinational entities. RKL’s tax team explains the reporting requirements. Not a week goes by without news of controversy surrounding the international corporate structure of a major U.S. firm, be it Apple, Starbucks or Amazon. Each company has come under scrutiny for placing rights to its intangible assets, such as trademarks and patents, in Ireland, Luxembourg or the Netherlands – countries with corporate tax rates significantly lower than the American levy of 35 percent.

A great deal of attention has also been paid to so-called inversion transactions, whereby a large U.S.-based multinational merges with a smaller competitor in a lower-tax jurisdiction and relocates its headquarters, and much of its profits, resulting in a lower tax bill but few changes to its operations.

As a way of identifying and combatting these strategies, member countries of the Organization for Economic Cooperation and Development (OECD) and the G20 have been working since February 2013 to implement a 15-point Action Plan to combat “base erosion and profit shifting” (BEPS). The information reporting required by Action 13 is one of the more urgent and impactful pieces of the BEPS initiative for large multinational entities (MNEs), in its initial phase generally applying to companies with consolidated revenues in excess of €750 million (U.S. $850 million).

What is Base Erosion and Profit Shifting Action 13?

There are three main components to the documentation requirements of Action 13: the master file (MF), local file (LF) and Country-by-Country Report (CbCR), with participation in each varying by member state.

  • MF: The master file is a collection of relevant information on a multinational group as a whole, including organizational structure, financial statements and descriptions of supply chain, as well as financing, intercompany services and intangibles strategies.
  • LF: The local file will include very similar information to the MF, but on a country-specific level for each jurisdiction where the company has a presence. The LF also must include a description of transfer pricing assumptions, agreements and methodology.
  • CbCR: The country-by-country report is made up of two tables of data, grouped by country and entity. The first is used to identify the main business activities of each entity. The second will reflect quantitative data by country including revenues, profit before tax, income tax paid and accrued, stated capital, accumulated earnings, number of employees and tangible assets. MNEs with a parent company based in the U.S. will prepare and submit Form 8975 with its federal return to satisfy this requirement.

Action 13 documentation may serve as a roadmap to audits for taxing authorities, so care should be taken to ensure that all three parts work together to tell the same story. Reporting data that appears inconsistent could invite increased scrutiny.

When do BEPS rules take effect?

Implementation of the rules are effective in most countries for fiscal years beginning on or after January 1, 2016 (July 1, 2016 in the U.S.). While due dates for preparation and/or submission of the three components vary by country (as early as May 2017 for China and the Netherlands), most are due by the tax return due date or one year from the end of the fiscal year in question. There is also an obligation to notify taxing authorities in each country which entity is the parent of the MNE, generally by December 31, 2016.

Is my company responsible for reporting?

The primary responsibility for reporting rests with the multinational entity’s parent company. The CbCR will be reported to the taxing authorities in its home country, then sent to other nations under to-be-completed information sharing agreements. In the U.S., a multinational parent’s filing of Form 8975 with its federal return will allow the IRS to share the data with the applicable member countries. For most jurisdictions the MF and LF are to be maintained, but only submitted to authorities upon request. Penalties apply for MNEs that fail to maintain the files as required. While the parent is ultimately responsible, significant coordination will be required by personnel at the local entity level to gather and document the information required for the MF, LF and CbCR.

RKL’s Tax Services team is available to help companies determine if and how BEPS Action 13 impacts their reporting obligations. Contact your RKL advisor or one of our local offices to get started.

David W. Achey, CPA, MST, Manager in RKL’s Tax Services GroupContributed by David W. Achey, CPA, MST, Manager in RKL’s Tax Services Group. Dave specializes in business tax services including combined reporting, multistate and international issues, as well as accounting for income taxes. He has extensive experience working with small and medium-sized businesses as well as multinational companies, serving clients in industries ranging from industrial manufacturing and transportation to consumer electronics and pharmaceuticals.

 

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Posted on: January 23rd, 2017

Attention Employers: New Version of Form I-9 in Effect

Business team standing in cubicle smilingForm I-9, Employment Eligibility Verification, is a familiar document to employers and hiring managers. In order to increase the ease of electronic completion and minimize reporting errors, the U.S. Citizen and Immigration Services (USCIS) issued a revised version of Form I-9, which took effect January 22, 2017. The new form expires on August 31, 2019, so employers must be sure to use the updated version moving forward.

Used to verify an individual’s identity and employment authorization, Form I-9 is an important enforcement tool for several federal immigration laws. All U.S. employers must ensure proper completion of Form I-9 for each individual they hire within the country. Though most employers are aware of and adhere to this requirement, the release of the updated Form I-9 is a chance to stress the importance of compliance and share tips for correct usage.

How to complete Form I-9

  • Form I-9 consists of four pages. The first three pages are to be completed by the employee and employer, and the fourth page provides a list of acceptable documentation to use for proof of identity. All documents used must be current and cannot be expired.
  • The employee must complete Section 1 of Form I-9, entering information in each box. If there are any areas that the information does not pertain to that particular employee, the employee must enter NA in any boxes that are left blank.
  • The employer is responsible for completing Section 2 of the document. Please note, at that the top each section the employee’s first, middle and last name from Section 1 must be completed.
  • It is also the responsibility of the individual who verified the documents to complete the Certification Section of the form.
  • Section 3 is the responsibility of the employer, when a rehired employee’s name has changed or when the noncitizen, nonresident documentation of a current employee expires during the course of employment.
  • Employers are not required to keep copies of the identification provided, however, if you choose to keep copies, copies must be kept for all Form I-9s on file.

Proper completion of Form I-9 allows employers to stay in compliance with federal requirements and avoid penalties or audits. Companies with questions about I-9 compliance or the new version of the form may contact Lindsey M. Heist at lheist@rklcpa.com or 717.394.5666.

Contributed by Lindsay M. Heist, Human Resources Consultant. Lindsay assists clients with a variety of HR projects and issues, including employee development, benefits/payroll and performance management. She has consulting experience across a wide variety of industries, including financial services, manufacturing, warehouse distribution, property management and nonprofits.  

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Posted on: January 17th, 2017

Data: Increasingly Important to Post-Acute Care Payments

Data: Increasingly Important to Post-Acute Care PaymentsThe financial landscape for post-acute care (PAC) providers is shifting, with alternative payment models steadily replacing traditional fee-for-service models. The transition started in 2015, when the Centers for Medicare & Medicaid Services (CMS) announced its intention to tie 30 percent of all Medicare payments to alternative payment models – a goal it reached one year ahead of schedule. Now, CMS is closing in on its second goal: 50 percent of payments transitioned by the end of 2018.

Data to support care outcomes

The traditional fee-for-service models are based on sheer volume; alternative payment models are based on the value and quality of care. The change from fee-for-service to alternative payment models could have a major impact on financial performance if PAC providers are not well-versed in the new models and their requirements.

This is where data comes into the conversation. The availability of comprehensive data will help PAC providers support their outcomes of care and translate quality of care into more dollars for providers.

One alternative: Bundled payment model

There are many alternative payment models out there, but let’s take a look at one for an example of how data is key to successful compensation. The bundled payment model, currently being tested by CMS, provides one payment for the range of services a patient receives during one episode of care that may occur at multiple settings. Bundled payment arrangements are incredibly dependent on highly supportive cost and outcomes data, because each provider will have to produce data to demonstrate the outcomes yielded by different points of care. Data will also be essential to determining the internal cost of providing different levels of care.

Financial leaders of PAC providers confronted with a bundled payment model must compile substantial data to support the care provided in their settings, with the goal of demonstrating favorable outcomes and reasonable costs. Data will also help ensure that payments are properly divided between providers in these payment models. It will require collaboration between the financial and clinical aspects of care to ensure that expenses and treatment are clearly outlined and supporting data are assembled. This will go a long way to help PAC providers get their fair share when payments are allocated.

Focus on improving health outcomes

The United States is higher in per capital health care spending than other developed nations like England, Germany and Japan, yet U.S. life expectancy trails many other nations by several years. While the shift to alternative payment models may not rectify this statistical disparity, a focus on improved care and reduced costs is definitely progress.

RKL’s Senior Living Consulting Group can help providers understand and prepare for the transition to alternative payment models. Contact one of our local offices today.

 

James M. Spencer, CPA, MBA, Manager in RKL’s Senior Living Services Consulting GroupContributed by James M. Spencer, CPA, MBA, Manager in RKL’s Senior Living Services Consulting Group. Jamie specializes in the preparation of financial models and analysis, including projections and forecasts, financial feasibility studies and transaction due diligence.

 

 

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Posted on: January 10th, 2017

Understanding Your Business Insurance Coverage

economic crisisBusiness insurance coverage can vary widely, so it can be challenging for owners and operators to decide how much or what is appropriate and necessary to protect their company from exposure to risk. Factors like coverage scope, type and cost are certainly important, but a key component of business insurance is a full understanding of what is covered and what is not. Far too often, however, this clarity around coverage is reached only after an insurance payout is less than expected or a claim is denied.

From coverage assumptions on the part of the business owner to confusion over policy terminology to fine print that is hard to read and harder to understand, there are many reasons why a business owner may ultimately feel disappointed by the final outcome of an insurance claim. Let’s take a look at one type of insurance in particular that often results in a disputed claim to help illustrate the challenges of managing business insurance coverage.

Disputed Claim Example: Business Interruption or Loss of Profits Coverage

Whether the insurance company refers to it as business interruption or loss of profits, this type of coverage is intended to provide financial support during a time when a business cannot operate as normal due to a covered incident like fire or water damage.

The tangible damage to the business, like ruined inventory, broken equipment or building damage, is covered under the property insurance policy. The business interruption or loss of profits claim, however, is calculated using the fixed costs incurred and profits lost while the business operation was out of commission. There are several factors that make this claim difficult to quantify:

  • Measurement of lost profit: The method by which lost profit is calculated is often times not clearly spelled out in the policy or is presented too simplistically. Many businesses see monthly net profits fluctuate, particularly when seasonal revenues are involved, so basing the lost profit calculation on historical earning trends will produce different results than a current snapshot of the profits at the time of the business interruption. The difference in these measurements is subjective and can be controversial.
  • Fixed vs. variable costs: In general, business interruption coverage applies to fixed costs but not variable, or avoidable, costs. This can create differences of opinion when the overall cost structure is reviewed line by line as to whether certain costs, like payroll or employee benefits, are fixed and therefore eligible to be included in the damage claim.
  • End date of the interruption period: Both the business owner and insurance company usually have a clear and agreed upon date on which the business interruption started. What is often less clear, however, is the date when that period ends. Standard policy language typically defines the interruption ending when “the damaged property is physically repaired and returned to operations under the same condition that existed prior to the disaster,” which is also a subjective matter.

Business Insurance Analysis Can Help Create Clarity

Given all the subjectivity and complexity involved with insurance coverage, what is a business owner to do? One surefire way to get a more comprehensive grasp on coverage is to conduct regular, periodic reviews of the overall business insurance program. Business owners should be sure to ask the following questions during their reviews:

  • What types of policies are in-force?
  • How much coverage does the business have?
  • When do the polices expire?
  • What premiums are being paid?
  • Is there a clear understanding of what each policy actually covers?
  • How would the insurance company quantify a covered claim?
  • Does the business have the necessary supporting documentation for claims?
  • Are coverages and policy limits adequate based on current and future business plans?
  • Based on our current and future business plans, are our coverages and policy limits adequate?
  • Are there any identified coverage gaps to consider filling?

 The importance of conducting a routine and thorough business insurance analysis cannot be understated. It helps business owners ensure their companies are adequately protected against the unexpected. Business owners don’t have to go it alone, however; a trusted business advisor like RKL can help with the review process. Contact your RKL professional or one of our local offices today for more information on this topic or for assistance reviewing your business insurance coverage.

John S. Stoner, CPA, CVAContributed by John S. Stoner, CPA, CVA, partner and leader of RKL’s Business Consulting Services Group in the Lancaster office. John provides a wide range of business consulting services, including business valuation, financial analysis, litigation support, merger/acquisition assistance and business succession planning to business clients.

 

 

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Posted on: December 21st, 2016

2017 Payroll Reference Guide & 2016 1099 Worksheet

As another year draws to a close, your RKL team has compiled payroll and other tax-related information to help you manage your 2016 reporting requirements and plan for 2017. To improve convenience and ease of use, we’ve formatted this information into a handy reference guide for payroll information.

Here are a few things to keep in mind this year:

  • W-2 New Filing Due Date: The new due date for filing W-2s and W-3s with SSA is now January 31, 2017.
  • 1099-MISC New Filing Due Date for Nonemployee Compensation: The new due date for reporting non-employee compensation (Independent Contractor) on 1099-MISC, box 7 with IRS is now January 31, 2017 when you file using paper forms and electronically. All other types of 1099s are due February 28, 2017 if filed using paper or March 31, 2017 if filed electronically.
  • Pennsylvania Electronic UI Tax Payments: Effective January 1, 2017, for any quarter when a Pennsylvania employer accumulates a total liability of at least $5,000 the employer must pay those amounts electronically. After an employer is required to pay these amounts electronically the employer must pay unemployment tax electronically for all subsequent quarters regardless of the total unemployment related liabilities.

If you would like RKL to help you prepare your 1099s, please complete this worksheet to start the process.

As always, the RKL team is happy to help with filing or answer any questions you may have. Please don’t hesitate to contact us!

Posted on: December 20th, 2016

Health Reimbursement Arrangements Available to Employers Once Again

The 21st Century Cures Act revives a popular tool related to employer-provided health benefits. RKL’s tax team explains the impact for certain small businesses.News coverage of the 21st Century Cures Act, passed with large bipartisan support and signed into law by President Obama on December 13, 2016, primarily focused on the provisions that increase funding for medical research and expedite approval of new drugs and medical devices. For certain companies, however, the law also revived a popular tool related to employer-provided health benefits.

The Affordable Care Act currently prohibits a previously common practice of small employers (fewer than 50 full-time employees or equivalents) to reimburse employees who purchased private, individual health insurance coverage. Small employers typically used a Health Reimbursement Arrangement (HRA) to fund employees’ purchase of nongroup plans or reimburse them after the fact.

The 21st Center Cures Act now permits small employers that do not offer group health coverage to employees to instead offer HRAs, starting in 2017. The law places certain requirements on these HRAs, and also caps employer contributions at $4,950 for single employees and $10,000 for family coverage. It also spares small employers who offered a standalone HRA to employees prior to January 1, 2017, from the previous IRS penalty for using this reimbursement method.

Uncoupling the HRA from employer-provided health coverage gives small businesses more flexibility in designing employee benefit packages. Employers should keep in mind that HRA reimbursements will only be tax-free if the employee’s individual or family health coverage meets “minimum essential coverage” as defined by the ACA, and receiving a reimbursement via an HRA may impact the employee’s eligibility for or level of tax credit.

 With 2017 just around the corner, many employees have already designed their benefits program for the next calendar. Furthermore, it is unclear whether this provision would survive any future legislative changes related to health care under the new administration. For the time being, however, employers should consider this new option and how it might support their benefits program moving forward.

For more details on the HRA requirements or to find out how this legislation will impact your company’s employer-provided health benefits, contact your RKL advisor or one of our local offices.

Ethel A.M. Nawrocki, CPAContributed by Ethel A.M. Nawrocki, CPA, Principal in RKL’s Tax Services Group. Ethel has 25 years’ experience providing tax, accounting and consulting services to the manufacturing, wholesale, distribution, construction and real estate rental industries.

 

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