January Reporting Reminders for Employers

 

January is the month in which employers are required to meet certain reporting obligations. Employers are reminded to do the following before the end of the month:

·        Determine the Social Security wage base to be used for the current year. For 2010, the Social Security tax applies to the first $106,800 paid to each worker.

·        File Form 941 with the Internal Revenue Service for the last quarter of 2009 by February 1. Deposit or pay any undeposited tax. (If the total is $2,500, you can pay it with the return.) If you have deposited the tax for the quarter in full and on time, you have until February 10 to file the return.

·        Match year-end wage data on the 2009 W-2s with the cumulative totals on the employer's quarterly Form 941. Make sure the totals balance.

·        Distribute the employee copy of the W-2s to all employees (by February 1). Note that each employer has until March 1 to submit a W-2 (Copy A) to the SSA on each employee, along with a W-3 Transmittal of Wage and Tax Statements. However, if you file Forms W-2 electronically, your due date for filing the forms will be extended to March 31.

·        File Form 940 for 2009 by February 1. If your undeposited tax is $500 or less, you can either pay it with your return or deposit it. If it is more than $500, you must deposit it. However, if you have already deposited the tax you owe for the year in full and on time, you have until February 10 to file the return.

Source: CCH

 

Healthcare Reform: What Now?

While the prospects of a healthcare overhaul are less certain now that Massachusetts elected a Republican to the Senate, Democrats still have options. If they are successful, the changes would have a significant effect on employers, even those that already offer healthcare coverage to employees.

What Are Democrats' Options?

• Pass the Senate-approved version. The House and Senate have passed different versions of healthcare-reform legislation. One option for Democrats is for the House to pass the Senate-approved version of the overhaul. In this scenario, the legislation would go to President Obama's desk without going back to the Senate. However, some House Democrats have already voiced resistance to following through with this approach.
• Push a compromise between House and Senate versions. Another option is for Democrats try to pass a compromise between the House and Senate versions of the legislation. This compromise legislation would have to be approved by the House and Senate, where Democrats need at least 60 votes (supermajority) to end debate and force a vote. With the election of Brown, Democrats have 59 votes. The least likely scenario is for Democrats to try to push through a current version of the healthcare overhaul before Brown takes the Senate seat. A Democrat has been filling the seat since Kennedy's death. However, President Obama already came out against such a strategy.
• Introduce a scaled-back version. A third option is for Democrats to propose new legislation that would at least get some Republicans on board.
• Retool existing legislation to avoid supermajority rule. A fourth option is for Democrats to strip the legislation of the provisions that require a supermajority's approval in the Senate. In this approach, Democrats would be able to pass the scaled-back legislation with a simple majority.

What Would an Overhaul Mean for Employers?

Both the House and Senate versions of the overhaul would have a substantial effect on employers. Here is a list of some of those provisions that would affect employers.

Employer mandate to offer health insurance. Both the House and Senate bills would, in effect, require employers to offer health insurance or pay a penalty to the federal government, but they go about it in different ways.

For example, the House-approved legislation (the Affordable Health Care for America Act) would require employers with more than $500,000 in revenue to pay a fee (8 percent of wages) into an insurance exchange if they don't offer a “Qualified Health Benefits Plan,” which is defined as one that offers a specific range of services and has an out-of-pocket maximum of $5,000 or less for individuals and $10,000 or less for families. The legislation would require that employers pay 72.5 percent of the cost the plan for individuals and 65 percent of the cost for families. The House legislation would prohibit annual and lifetime limits on coverage. Obviously, this legislation would have a significant effect on employers who offer no health insurance, but it would also affect employers that offer health coverage that doesn't meet the threshold to be considered a “Qualified Health Benefits Plan.” The House legislation has an additional requirement for employers to give certain employees a voucher. An employer would be required to provide a voucher to employees if they:

• Elect to purchase insurance through the exchange,
• Have incomes less than 400 percent of the federal poverty level, and
• Would have had to pay between 8 percent and 9.8 percent of their income for their share of the premium for their employer's plan.

The Senate bill, the Patient Protection and Affordable Care Act (HR 3590), would require an employer with more than 50 full-time employees to pay $750 per employee if the employer fails to offer health coverage and has at least one full-time employee receiving a premium assistance tax credit created by the legislation. The bill would also eventually prohibit lifetime and annual limits on coverage.

Automatic enrollment. Both versions of the healthcare legislation include provisions requiring automatic enrollment in an employer's health plan. The House-approved legislation would require that if an employer offers health coverage, the employer must automatically enroll employees in a plan with the lowest employee premium. The Senate-approved version would require that employers with more than 200 employees automatically enroll full-time employees in health coverage. Under the Senate version, employers would also have to pay a penalty if they require new employees to wait 30 or more days before enrolling in the employer's health plan. Both versions allow employees to opt-out of the coverage after automatic enrollment.

Extension of dependent coverage. Health plans would be required to provide dependent coverage for a longer period (up to age 26 under the Senate bill or up to age 27 under the House bill).

FLSA change for breastfeeding breaks. The Senate bill would amend the Fair Labor Standards Act to require that employers provide unpaid breaks for employees to express breast milk. The legislation would also require that employers provide a private location for employees to have these breaks.

Tax on “Cadillac” plans/tax on highly paid individuals . The Senate bill would create an excise tax on any “excess benefit” of employer-sponsored coverage. The legislation defines “excess benefit” as one that exceeds $8,500 for individual coverage and $23,000 for family coverage. While employees would be the ones who pay the tax, employers that rely on these plans to recruit and retain workers could be affected. The House bill would create a surtax for taxpayers with adjusted gross incomes of $500,000 or more ($1 million if filing a joint return).

Source: BLR

Fired for Insubordination or Age Bias?

A long-term Virginia executive had problems with a new CEO that took over in 2003. In turn, the new CEO had many problems with the exec, and he eventually fired him. But the exec was 58 at termination, and comments had been made about needing “a more energetic person” in his job.

What happened. “Edison” had been with Klockner Pentaplast of America (KPA) for 17 years when he was fired, having risen to the position of vice president of technology. KPA, which makes film for a variety of industrial purposes, was sold in 2001 and then again in 2007. The new CEO later testified that he admired Edison’s technical skills but disliked his leadership style. The two clashed repeatedly, initially over a commercial development plan that the CEO wanted and Edison scornfully refused to provide.

The CEO was then angered on a number of occasions when Edison disparaged some of his objectives and strategies, either directly to his face or to others behind his back. The last straw, the boss testified, was when, in Edison’s absence, the steering committee approved a salary freeze, and the CEO later found out that Edison strongly objected to it. The CEO tried to persuade Edison to support the plan and felt Edison lied to him about objecting. Fed up, the boss called Edison into his office on December 15, 2005, and fired him.

Replaced by a 45-year-old, Edison decided that the reasons he’d been given for his termination were a pretext for the true reason—age discrimination. He sued for violation of the Age Discrimination in Employment Act (ADEA), but a federal district court judge ruled for KPA and dismissed his case. He appealed to the 4th Circuit, which covers Maryland, North Carolina, South Carolina, Virginia, and West Virginia.

What the court said. This looks like a case of insubordination, not age bias. But judges struggled with two things: Edison had been given bonuses under the CEO, who had publicly praised him 2 weeks before firing him. And, Edison testified that the CEO told him at the termination meeting that he didn’t fit the “model” or “profile” of the “energetic” person needed in KPA. Furthermore, the boss had made notes during a task force meeting about KPA’s future to the effect that the company needed younger people.

To a jury, judges said, those comments could suggest age discrimination. So judges sent the case back to the district court for reconsideration. Inman v. KPA, U.S. Court of Appeals for the 4th Circuit, No. 08-1882, unpublished (10/22/09).

Point to remember: The CEO apparently gave Edison one set of reasons for the termination and the court an entirely different set. That’s bound to raise judges’ suspicions.      Source: BLR

 

Proposed Legislation Provides Refundable Tax Credit 

A bill (H.R. 4437) that would provide a refundable tax credit to businesses expanding their payrolls was introduced on January 13, 2010, by Reps. Bob Etheridge D-NC and Steve Kagen (D-Wisc) Called the Hiring Incentives to Reinvest and Incentivize New Growth (HIRING) Act of 2010, the bill would provide a 15 percent refundable tax credit to any business that expands their payroll by at least 3 percent in any calendar quarter of 2010, and a 10 percent refundable tax credit to any business that expands their payroll by at least 5 percent in any calendar quarter of 2011.

The HIRING Act could create 2.7 million private sector jobs in its first year and nearly 2 million jobs in its second year, at an average cost of $1,800 per job when economic growth effects are taken into account, according to the Economic Policy Institute, said Etheridge. The tax credit will be based on payroll and businesses will be rewarded for hiring new employees, increasing employee hours, or restoring employee pay. The HIRING Act would also provide tax credits quarterly, so a business would realize the tax benefit more immediately.

"Getting Americans back to work is a crucial part of fixing our economy as a whole," Etheridge said. "The HIRING Act will help create jobs for Americans who want to get back to work." Further strengthening businesses' ability to hire is a critical piece of the puzzle to address the economic downturn and push the American economy forward into prosperity, said Etheridge.

According to Etheridge, the HIRING Act has been endorsed by the Small Business Majority and grows out of a proposal by the Economic Policy Institute. In addition, the idea of a job creation tax credit has been supported by President Obama, Minority Leader Cantor and several Nobel-prize winning economists, he said.

The bill, which has eight cosponsors, has been referred to the House Ways and Means Committee.

Source: CCH