News & Articles

Technology May Help Solve Your Staffing Needs

Posted on Fri, Mar 29, 2019

When you think of "crowdsourcing," you probably think about people trying to raise money for a charitable purpose from friends, acquaintances and like-minded people on the Internet. But in the world of recruiting, crowdsourcing has now caught on in a big way.  

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Tags: Employers, Technology, Recruiting, Artificial Intelligence (AI)

Win the Salary Game

Posted on Wed, Sep 13, 2017

Salaries are a tough expense for most businesses. You want to hold them down but reining them in too tightly doesn't always work well. Good employees can often go elsewhere and replacing them can cost your company a bundle.

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Tags: Employers, Salary

IRS Guidance on Leave-Sharing Programs to Help Hurricane Harvey Victims

Posted on Mon, Sep 11, 2017

The IRS recently announced special tax relief for leave-based donation programs set up by employers to assist victims of Hurricane Harvey and Tropical Storm Harvey.

Basics of Employer Programs

Under a leave-based donation program, an employer can allow its employees to forgo their vacation, sick, or personal time off in exchange for cash payments made by the employer to charitable organizations. Under IRS regulations, leave-based charitable donations are ordinarily included in the donating employee's income. In addition, the opportunity to elect such contributions raises the concern that eligible employees might be taxed on income that could have been donated because the ability to make the contribution triggers "constructive receipt."

IRS Relief

The new IRS guidance addresses both concerns:

  • Cash payments that employers make to qualified tax-exempt organizations in exchange for vacation, sick, or personal leave that their employees elect to give up won't constitute income to the employees if the payments are made before January 1, 2019, for the relief of victims of Hurricane Harvey or Tropical Storm Harvey.

    Such payments don't need to be included in Box 1, 3, or 5 of the employee's Form W-2.
  • The opportunity to make a leave donation won't result in constructive receipt of income. Employees who participate in these programs can't deduct the value of the donated leave on their income tax returns. Reason: Such deductions would involve "double-dipping" because the donated time off already would have been excluded from their incomes.

    Employers cannot claim a charitable deduction for the value of the forgone leave. However, they will be permitted to deduct the contributions as trade or business expenses without regard to the charitable contribution restrictions under the tax code.

This guidance closely resembles the relief for leave-based donation programs that the IRS has issued after other recent disasters, including last year's severe storms and flooding in Louisiana and Hurricane Matthew.

If you need more information about leave-based donation programs, consult with your EHTC Tax Advisor or employee benefits advisor.

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Tags: Employers, IRS, Charitable Donations

Fine-Tune Marketing Efforts by Eyeballing the Competition

Posted on Mon, May 15, 2017

Chances are, you know who your business rivals are. But do you know what they're up to?

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Tags: Employers, Competitive Strategy

Become a Winner by Avoiding These 5 Mistakes

Posted on Wed, May 10, 2017

Establishing a winning position in the marketplace is obviously critical to your company's success. The position, however, must be based on a sustainable competitive advantage.

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Tags: Employers, Competitive Strategy

Employer Can Have Info about Whether Misclassified Workers Paid Tax

Posted on Fri, May 05, 2017

The U.S. Tax Court recently ruled that federal law doesn't prohibit an employer looking to reduce its tax liability on misclassified workers from receiving information on whether the workers paid tax on the income.

Background

Businesses often prefer to treat workers as independent contractors to lower their costs and administrative burdens. But the IRS may challenge an employer's classification. If an employer erroneously treats an employee as an independent contractor, the IRS may reclassify the worker. The employer could owe unpaid employment taxes, as well as interest and penalties, and may also be liable for employee benefits that should have been provided but were not. So, it's important to get worker classification questions right.

Facts of the Recent Case

As part of an audit, the IRS reclassified many of the independent contractors in a New Mexico Native American tribe as employees. The tribe sought to avail itself of the relief provided in the Internal Revenue Code, which allows an employer who fails to deduct and withhold the tax on wages to escape tax liability if it can show that the workers paid income tax on their earnings.

To gather this information, the tribe asked each worker to complete IRS Form 4669 "Statement of Payments Received," but it didn't get the form back from many former workers who had moved, and from other workers who lived in hard-to-reach areas.

The tribe filed a lawsuit against the IRS asking the tax agency to provide information about whether 70 workers had reported the income on their personal income tax returns and paid their tax liabilities. If so, the IRS would have to reduce the tribe's liability for failing to collect and pay withholding tax on the income.

The Law

The tax code provides a general rule that returns and return information should be kept confidential. The term "return information" includes the amount of an individual's tax payments. The IRS argued that the tax code prohibits the disclosure of information on the workers' income to the tribe.

There are, however, a number of exceptions to the general rule. One of those exceptions, states that: "A return or return information may be disclosed in a Federal or State judicial or administrative proceeding pertaining to tax administration, but only...(B) if the treatment of an item reflected on such return is directly related to the resolution of an issue in the proceeding; [or] (C) if such return or return information directly relates to a transactional relationship between a person who is a party to the proceeding and the taxpayer which directly affects the resolution of an issue in the proceeding."

The Court's Ruling

The Tax Court concluded that the tax code did permit the disclosure of the tax return information requested by the tribe. It analyzed the code in pieces. First it asked: "What is a transaction relationship?" The court stated that to "transact" means simply "to carry on business." Citing a large number of cases that looked at that question, it added that the wide variety of business relationships that other courts have held are transactional relationships led it to hold that the relationship between an employer and his worker is one that pertains to the carrying on of a business.

Second, the court asked whether the return information that the tribe was asking for "directly relate[d]" to this relationship. The court concluded that it did since whether the tribe's workers paid their tax liabilities in full is likely to show whether the workers considered themselves to be independent contractors or employees, and thus directly related to the workers' relationship with the tribe.

Finally, as to the issue of whether the return information affected the resolution of an issue in the proceeding, the court stated that it did. "If the Tribe's workers did indeed pay their tax liabilities, then the Tribe's Code Sec. 3402(d) defense would be proved and would be entirely resolved," it explained. (Mescalero Apache Tribe, 148 TC No. 11, 4/5/17)

The Implications

The court's ruling could have wide-reaching effect because it can be difficult for businesses to obtain a signed Form 4669 from a worker because:

  • IRS audits often take place years after the relevant payroll tax returns are filed,
  • A business may have high turnover and not be able to locate workers, and
  • Even if a business does locate workers, they may not want to fill out the IRS forms — especially if they no longer work for the business.

Therefore, this court ruling could often make the difference between the business being forced to pay the withholding tax even when the worker has already paid the corresponding income tax, and the business not having to make that payment. If your business is involved in a payroll audit, your tax professional may request that the IRS provide information on the workers' relevant tax payments. This court ruling can be used as support for this request.

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Tags: Employers, IRS, Independent Contractor

IRS Updates FAQs on Certain ACA Provisions

Posted on Mon, Jan 23, 2017

The Trump Administration and the Republican majority in Congress plan to repeal and replace the Affordable Care Act (ACA) in the coming months. In the meantime, however, employers must continue to comply with the existing rules for 2016, including the information reporting requirements and shared responsibility provisions.

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Tags: Affordable Care Act (ACA), Employers, HRAs

Build Teams for Growth and Success

Posted on Wed, Jan 11, 2017

Teamwork. It's a common enough term these days, and well-known companies such as General Electric, 3M, Texas Instruments and Federal Express have been using it to their advantage for decades. Now an increasing number of businesses have taken up team building for growth, efficiency and competition.

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Tags: Employers Hiring, Employee Investment, Employers, Employee

Seven Strategies for Better Results with Employees

Posted on Mon, Sep 19, 2016
Successful managers and supervisors know how and when to be assertive. They communicate their needs in a way that earns them respect and gets results.

Let's say you need a budgeting project done by Friday. Here are seven strategies to help improve your assertiveness skills so you can get more done:

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Tags: Employers, Employees, Communication

Guard Against Age-Bias Suits When Downsizing

Posted on Mon, Aug 08, 2016

While a bad economy may be one of the biggest reasons companies downsize, there are other reasons, including mergers and acquisitions, changes in management, and outsourcing.

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Tags: Employers, Americans with Disabilities Act, Downsizing