GTM Household Help BLOG

Mileage Rate Update

IRS Increases Mileage Rate for remainder of 2011 

(An excerpt from IRS.gov)

(June 23, 2011)  WASHINGTON — Earlier today the Internal Revenue Service announced an increase in the optional standard mileage rates for the final six months of 2011. According to IRS Commissioner Doug Shulman, the adjustment to the standard mileage rates is prompted by this year’s increase in gas prices. 

The rate will increase 4.5 cents to 55.5 cents a mile from 51 cents for all business miles driven from July 1, 2011, through Dec. 31, 2011.  

Typically, the IRS updates the standard mileage rates once a year; historically in the fall for the next calendar year. In acknowledgment of recent gasoline price increases, Shulman noted, "We (IRS) are taking this step so the reimbursement rate will be fair to taxpayers."

While gasoline is a significant factor in the mileage figure, other items such as depreciation and insurance and other fixed and variable costs, were contributing factors in the calculation of mileage rate increase.

The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.

The new six-month rate for computing deductible medical or moving expenses also increases by 4.5 cents to 23.5 cents a mile, up from 19 cents for the first six months of 2011.  However, the rate for providing services for charitable organizations is not set by the IRS, and remains at 14 cents a mile.

For more information on the new rates, please visit the IRS Newsroom or see Announcement 2011-40 on the optional standard mileage rates.

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At GTM we aim to provide access to the most comprehensive services & solutions available with better advice, better service and better value...for an easier life!

The items included in this update are informational only and are not meant to exclude the tax advice from an accredited representative.  Please consult GTM for more information and to determine how any item may apply to your personal tax scenario.

Important Changes To New York State Labor Law Under Wage Theft Prevention Act

On Tuesday, December 14^th, New York Governor, David Paterson, signed into law the Wage Theft Prevention Act.  Paterson was quoted as saying, “At a time when so many New Yorkers are living paycheck to paycheck, it is vital that we protect the right to receive their hard-earned pay and afford them every protection against wage theft.”

In essence, the new Wage Theft Prevention Act, or “The Act”, would institute a series of far-reaching measures which:

• Enact more stringent, transparent record-keeping and employee notification requirements
• Increase the amount of wages that can be recovered as damages for non-payment over and above lost wages – from 25 percent to 100 percent
  • Along with increasing protection for workers who speak up against exploitative employers
  • Create stronger collection, investigation and enforcement tools for State Department of Labor
  • Raise criminal penalties for wage violations; to up to a year in prison and $5,000 fine
  • Strengthen protections for whistleblowers in cases involving wage violations

In more detail, “The Act”, which goes into effect April 9, 2011, makes several changes to New York’s Labor Law, including:

• Amending requirements of employers to provide notices to employees hired on or after October 26, 2009; as well as information on exempt status, pay rates and structure of pay. (Section 195)
  • “The Act” further amended Section 195, adding a new requirement that employers provide all employees with such notices at the time of hire, as well as on or before February 1 of each subsequent year of employment. In addition to information previously required under Section 195, these notices now require new information, such the basis of pay rates (ie: hourly, shift, day, week, salary, piece, commission, or other); any allowances claimed as part of the minimum wage; as well as detailed employer contact information.
  • Further, the notice must be provided both in English and in the employee’s primary language. (The NYS Commissioner of Labor is tasked with creating non-English template notices.)
  • Employers must maintain these notices for six years.
  • An employee who does not receive such a notice within 10 days of hire may report this violation to NYS DOL; in effect bringing action against the employer to recover $50 per week not notified, up to $2,500.

• Information in wage statements— Employers are required to provide comprehensive pay statements each payroll period, specifying applicable dates that wages cover, employee/employer names, address and phone number, the rate or rates of pay and the basis thereof, gross deductions, allowances claimed as part of the minimum wage, and net wages. Non-exempt employees must be provided with statements that include the following additional information: the regular hourly rate or rates of pay, the overtime rate or rates of pay, the number of regular hours worked, and the number of overtime hours worked.

  • Employers must maintain these statements for six years.
• Liquidated Damages — Section 198 was amended to increase liquidated damages from 25% under the current law, to up to 100% of the total amount of wages due. 
• Additional Anti-Retaliation Penalties — Section 215 was amended to allow the NYS Commissioner of Labor to order additional remedies in retaliation actions; including heavy penalties and other recourse.
• Levies — The limitations period for actions brought under the Labor Law is tolled from the latter of the date of the employee complaint to the Department of Labor or the date of the NYS Commissioner of Labor’s commencement of an investigation.

Following a national trend toward strengthening worker-protection, New York now joins several states and localities with wage theft changes this year such as: Maryland, Illinois, Massachusetts, Nebraska and Washington.  

Available for download on GTM.com are the NYS (LS54) Pay Rate Notice Form (for Hourly Employees) and the NYS (LS59) Pay Rate Notice Form (for Exempt Employees).

GTM will continue to monitor these Labor Law changes to provide clients with ongoing support for all of their employment needs.  Our dedicated customer service team is available to answer any questions that clients may have regarding “The Act” in general; or more specifically in regard to calculating rate of pay, overtime rate of pay, or reporting requirements as amended under Section 195; Simply call (518) 373-4111 or email customerservice@gtm.com.

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At GTM we aim to provide access to the most comprehensive services & solutions available with better advice, better service and better value...for an easier life!  With nearly 20 years of experience in the payroll services industry, New York-based GTM Payroll Services has been continually guiding and educating thousands of clients throughout the U.S. with services such as labor compliance, human resources services, workers' compensation and health insurance needs. 

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The items included in this blog are informational only and are not meant to exclude the tax advice from an accredited representative.  Please consult the experts at GTM or another professional tax adviser for more information and to determine how any item applies to your personal tax scenario.

Important Update for NYS Household Employers ~ NYS Domestic Workers' Bill of Rights Signed Into Law

On Tuesday, August 31 2010, NYS Governor Paterson signed the Domestic Workers Bill of Rights into law, which takes effect November 29, 2010.  The signing of the new law was to amend the labor law, the executive law and the workers' compensation law, in relation to establishing regulations regarding employment of domestic workers including hours of labor, wages and employment contracts.
 
The Domestic Workers Bill of Rights had many amendments, thus leaving out some proposed items passed by the Assembly as well as items that were passed separately by the Senate earlier this year. 

The final Domestic Workers Bill of Rights that was signed into law now establishes the following effective 11/29/10:

Labor Standards:

1. One day of rest every calendar week, waivable by the worker with pay for that day at the overtime rate of 1 and a 1/2 times their regular hourly rate. The day of rest will, whenever possible, coincide with the traditional day of religious worship.
2. After 1 year of work with the same employer, 3 days of rest per year at the regular rate of compensation.
3. It will be an unlawful discriminatory practice for any domestic employer to:

a)    engage in unwelcome sexual advances, requests for sexual favors or other verbal or physical conduct of a sexual nature to a domestic worker when:

i.    submission to such conduct is made a term or condition of the worker's employment;

ii.    submission to or rejection of such conduct by a worker is used as the basis for employment decisions; or

iii.    such conduct has the purpose or effect of unreasonably interfering with a worker's job performance by creating an intimidating, hostile or offensive working environment; or subject a domestic worker to harassment based on gender, race, religion or national origin, where such harassment has the effect of unreasonably interfering with work performance by creating a hostile working environment.

Wage and Hour

1. Consistent with the current law, Overtime pay after 40 hours of work per week for domestic workers who do not live with their employers.  And overtime pay after 44 hours of work per week for live-in domestic workers at a rate of 1 and a ½ times their regular hourly rate.  
2. Department of Labor is given wage and hour enforcement powers for domestic workers.

Insurance

a)    Disability Insurance to part time domestic workers. *  

*According to the ACTs summary provisions' Disability Insurance was listed as it would be required for Part time domestic workers.  However when GTM contacted the NYS Workers Compensation Board, who enforces disability and workers' compensation insurance requirements, they said the law had not actually changed and it is still a 40 hour minimum before domestic employers are required to have disability and workers compensation insurance.  We will continue to monitor this to see if that opinion changes.

GTM recommends that all NYS employers review these changes and make changes to their current employment agreements and handbooks by or on November 29, 2010.

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At GTM we aim to provide access to the most comprehensive services & solutions available with better advice, better service and better value...for an easier life!  With nearly 20 years of advocacy for the professionalism of the household employment industry, New York based, GTM Payroll Services has been continually guiding and educating thousands of clients throughout the U.S. with services for household employment such as "nannytax", labor compliance, human resources help, workers' compensation and health insurance needs.  Additionally, Guy Maddalone's How To Hire A Nanny: A Household HR® Handbook (Sourcebooks/Sphinx Legal, 2006) has helped set the standard for any family interested in learning how to be a compliant and successful employer.  

GTM will continue to monitor this landmark legislation to provide ongoing support to aid you with all of your household employment needs.

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The items included in this blog are informational only and are not meant to exclude the tax advice from an accredited representative.  Please consult the experts at GTM or another professional tax adviser for more information and to determine how any item applies to your personal tax scenario.

New York State Senate Passed The Domestic Workers Bill Of Rights

FOR IMMEDIATE RELEASE GTM Poised To Aid Domestic Staffing Agencies & Household Employers   JUNE 3, 2010– (Albany, NY) – Earlier this week, the New York State Senate passed the Domestic Workers Bill of Rights (S2311D) making New York the first state in the nation to move forward with new standards of worker protections for more than 200,000 employees in New York’s household employment industry.   A long-time advocate for the advancement and professionalism of the household employment industry, GTM recently highlighted Senator Savino, the first Senate Sponsor of the legislation, who stated, “They (domestic workers) are our companions to the elderly, housekeepers, and nannies and provide crucial services to those who employ them.  They should be afforded the same rights, respect, and dignity as the rest of workforce in our State.”   Every year, thousands of new families enter the market and take advice from ill informed friends and colleagues who believe you don’t have to pay taxes on workers or abide by labor standards.  This belief and consequential actions are of detriment to those working in households, who are all left penalized by lack of work history and benefits.  As noted in the Senate debate, hundreds of thousands of New Yorkers are able to do their own jobs and keep their families functioning only because they rely on the labor of nannies and caregivers.   GTM Founder and CEO, Guy Maddalone said, “After years of the industry promoting best practices and still only seeing a small percentage of compliance, it appears New York has now decided to take more extreme measures.”  He further stated, “It will be interesting to see how these new measures will impact tax and labor compliance.”   With nearly 20 years of advocacy for the professionalism of the household employment industry, New York based, GTM Payroll Services has been continually guiding and educating thousands of clients throughout the U.S. with services for household employment such as “nannytax”, labor compliance, human resources help, workers’ compensation and health insurance needs.  Additionally, Guy Maddalone’s How To Hire A Nanny: A Household HR® Handbook (Sourcebooks/Sphinx Legal, 2006) has helped set the standard for any family interested in learning how to be a compliant and successful employer.    More information on this important legislation can be found on the New York State Senate website (www.nysenate.gov).  For more information on our tax, payroll, HR and insurance services, visit the household employment experts at GTM.com.

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GTM’s expertise in the household employment and business services arenas enable us to offer the information, services, tools and resources our clients need. For a FREE – No Obligation Consultation for your household or business, contact GTM at 800.929.9213today!  Or chat LIVE with one of GTM’s professional Tax & Payroll Specialists at www.GTM.com.

At GTM we aim to provide access to the most comprehensive employee benefit plans & solutions available with better advice, better service and better value...for an easier life!

Federal Minimum Wage Rates To Increase In July

Under the Fair Labor Standards Act (FLSA), the federal minimum wage for covered nonexempt employees will increase to $7.25 per hour, effective July 24, 2009.

The federal minimum wage is the minimum amount per hour an employer (households and businesses (most business labor types) must pay their employees unless the state of employment has a higher state minimum wage or local prevailing wage. In that case, where an employee is subject to both the state and federal minimum wage laws, the employee is entitled to the higher minimum wage rate.

More information on this increase can be found on the U.S. Department of Labor website. And for more information on tax, payroll and HR services, visit the experts at GTM.com.

COBRA Answers for Employers

Please be advised - The IRS is implementing tax-related provisions under the new American Recovery and Reinvestment Act of 2009 as quickly as possible.

• COBRA: Health Insurance Continuation Subsidy. The IRS has provided extensive guidance online for employers, including an updated Form 941, as well as information for qualifying individuals.
• Payroll Checks Increase This Spring. In relation to the Making Work Pay Tax Credit, the IRS has issued new withholding tables for employers (Notice 1036). The IRS asks that employers begin using these new tables as soon as possible, and no later than April 1, 2009.

GTM Payroll Services encourages all clients to maintain proper supporting documentation for the COBRA credit claimed. Such documentation includes, but is not limited to:

• Information on the receipt, including dates and amounts, of the assistance eligible individuals’ 35 percent share of the premium.
• In the case of an insured plan, copy of invoice or other supporting statement from the insurance carrier and proof of timely payment of the full premium to the insurance carrier required under COBRA.
• In the case of a self-insured plan, proof of the premium amount and proof of the coverage provided to the assistance eligible individuals.
• Declaration of involuntary termination, including the date of the involuntary termination (which must be during the period from Sept. 1, 2008, to Dec. 31, 2009), for each covered employee whose involuntary termination is the basis for eligibility for the subsidy.
• Proof of each assistance eligible individual’s eligibility for COBRA coverage at any time during the period from Sept. 1, 2008, to Dec. 31, 2009, and election of COBRA coverage.
• A record of the SSN’s of all covered employees, the amount of the subsidy reimbursed with respect to each covered employee, and whether the subsidy was for one individual or two or more individuals.
• Other documents necessary to verify the correct amount of reimbursement.

This documentation must be maintained, but is not be required to be submitted to the IRS.

A few general items you need to be aware of regarding the new recovery package:

Could the new law affect 2008 tax returns?  Generally, no. The new law does not have any major impact for the vast majority of individuals preparing their 2008 tax returns due April 15. Instead, these changes will largely impact 2009 tax returns filed next year, in 2010. Taxpayers should continue to prepare their 2008 tax returns as they normally would.

There are a few limited areas in the law that could impact 2008 tax returns. For some small businesses, changes in the net operating loss provisions could affect 2008 tax returns. 

Where can I find more details on the tax provisions of the recovery law?  The IRS will be providing more details on this web site as they become available. Currently a summary of the key provisions is currently available from the Senate Finance and House Ways and Means committees, as well as information available in the SSA/IRS Newsletter for Employers (Spring 2009).

COBRA Information for Employers

Under the American Recovery and Reinvestment Act of 2009, certain individuals who are eligible for COBRA continuation health coverage, or similar coverage under State law, may receive a subsidy for 65 percent of the premium. These individuals are required to pay only 35 percent of the premium.

The employer may recover the subsidy provided to assistance-eligible individuals by taking the subsidy amount as a credit on its quarterly employment tax return. The employer may provide the subsidy — and take the credit on its employment tax return — only after it has received the 35 percent premium payment from the individual.

• How will an employer be reimbursed for the COBRA subsidy that it has provided to eligible individuals?  The COBRA subsidy amount is reimbursed by being claimed as a credit on the Form 941. The Form 941 has been revised to allow for this credit.
• How does an employer claim the credit for the COBRA subsidy?  The credit is claimed on Line 12a of the January 2009 revision of the Form 941, which was posted on the IRS website on Feb. 20. In addition, the Form 941 filer also needs to include the number of individuals provided COBRA premium assistance on Line 12b.
• Is the employer required to provide the COBRA subsidy?  The subsidy requirement applies to group health plans that are subject to the Federal COBRA continuation coverage requirements or to similar requirements under State law. If you are an employer with such a plan and you receive a 35 percent payment from an assistance-eligible individual, you are required to make the remaining 65 percent payment.
• What if the employer’s group health plan is self-insured?  Do the subsidy requirements apply? Yes, the subsidy requirements apply to all plans subject to the COBRA requirements, including self-insured plans. In that case, the employer must provide the COBRA coverage if the assistance eligible individual pays 35 percent of the otherwise required premium. The remaining 65 percent is treated as a payment of payroll taxes by the employer maintaining the plan.
• Is the employer required to claim the credit on Form 941 for the quarter during which the COBRA subsidy is provided to assistance eligible individuals?  No. Instead of claiming the credit on Form 941 for the quarter during which the COBRA subsidy is provided, the employer may generally choose to claim the credit on Form 941 for a later quarter in the same calendar year.
• Alternatively, if the employer has not claimed the credit on the original Form 941 for the quarter during which the COBRA subsidy was provided, the employer can file Form 941X for that quarter. In all cases, however, if an employer chooses to reduce its payroll tax deposits during a quarter by the amount of subsidy provided during the quarter (or during a previous quarter), it must claim the credit for that subsidy amount on Form 941 for the quarter during which its payroll tax deposits were reduced. In addition, of course, an employer may not claim credit for the same subsidy amount on Form 941 for more than one quarter.
• Is there a specific date when employers can no longer take this credit?  An individual can be eligible for the COBRA subsidy based on an involuntary termination of employment that occurs as late as Dec. 31, 2009 (the qualifying event), and the subsidy can apply for up to nine months of COBRA coverage, which generally begins shortly after the qualifying event.  It is therefore expected that eligibility for the subsidy will be exhausted by the end of 2010 and Form 941 for the fourth quarter of 2010 will be the last time to take the subsidy credit.

GTM's Business Resource Center offers clients and partners with valuable tools and resources needed to help address your tax and payroll needs.

Quick Links for Businesses

• Publication 15 Circular E, Employers Tax Guide
  
• Publication 15 T - New Wage Withholding & Advanced Earned Income Credit Payment Tables (NEW for 2009*)
• Tax & Payroll Responsibilities
• Tax Calendar
• Tax Calculator

More information on the COBRA subsidy, and answers to common questions, are available from the U.S. Department of Labor and the IRS Newsroom. 

At GTM we aim to provide access to the most comprehensive services & solutions available with better advice, better service and better value...for an easier life!

The items included in this blog are informational only and are not meant to exclude the tax advice from an accredited representative.  Please consult a professional tax advisor for more information and to determine how any item applies to your personal tax scenario.

Top 5 Reasons For Paying The “Nanny Tax”

 Top 5 Reasons For Paying The “Nanny Tax”

5. Establishing a legally compliant and professional arrangement with your household employee benefits both of you.

a.     Appropriate payments to household employees, including those to a person who cleans your house, might qualify for the child-care credit. That’s a dollar for dollar credit if you qualify.

b.     It helps your employee establish work history, credit, U.S. citizenship, and other benefits. A legal employee can take advantage of Social Security and Medicare benefits, and may be eligible for unemployment compensation and the Federal Earned Income Credit.

4. Not reporting payments to household employees could cost you big bucks in terms of penalties and interest should you get caught.
   
   
   1. Employers who do not pay legally risk the chance of an audit, which can be costly and very time-consuming. There is no standard penalty. Penalties are determined by the IRS based on its analysis and the severity of each case.

3. Not paying social security taxes, assisting with withholding, or meeting state requirements for workers’ compensation and health insurance (as applicable) isn't just cutting through administrative hassles, it's illegal!
   
   
   1. Every fiscal quarter of sitting, housecleaning, nanny-ing, personal assistant-ing, or under-the-table anything - doesn't count toward the employee’s Social Security benefits unless the Nanny Tax has been paid.   

2. Opening the door to other legal issues, avoidance of “paying on the books” could result not only in IRS penalties, but state issues should your employee or former employee ever file for disability benefits.
   
   
   1. The best route is to make payroll taxes a condition of employment.

1. If you ever run or are appointed to political office, you can unequivocally state with a clear conscience that you legally abide by, and are compliant with, the Nanny Tax....
   
   “Next Question Senator?”

  

For more information, consult IRS publication 926 (available online at www.GTM.com), or for a FREE – No Obligation Tax Consultation, contact GTM at 800.929.9213 today! Or chat LIVE with one of GTM’s Tax & Payroll Specialists at www.GTM.com.

Thirty-three in region accused of drawing unemployment benefits while working

New York State Unemployment Division announces new kind of sting. 

The Albany Times Union, reported that thirty-three Capital Region residents have been charged with swindling more than $116,000 in unemployment benefits, officials said Monday.   The men and women were nabbed as part of a statewide crackdown targeting alleged cheats who collect unemployment after they obtain new jobs.

Employers pay into the unemployment system and are assessed a rate based on their company's payment history and experience rating.  When former employees draw on the unemployment account the employer's Unemployment account balance decreases and as a result could potentially trigger a higher rate on future payrolls.   For more information on this or for payroll services for businesses and households contact GTM Payroll Services at www.gtm.com

New York Governor Signs Bill to Further Regulate PEO’s

New York Governor, David Paterson, signed A10850 on 7/8/2008 to strengthen the state's regulation of professional employer organizations, which are businesses that administer payroll, workers' compensation, benefits, and other human resource services for employers. The new law creates fines of up to $3,000 for a first violation, and a fine of up to $5,000 for each following violation by a PEO.

Businesses using PEO’s should continue to understand their risks of using such services.   In recent memory, PEO’s have damaged its reputation with unethical behavior forcing government to regulate them. PEO’s become the employer of record on behalf of their business client, whereas with a payroll company the business client remains the employer of record while outsourcing their payroll check calculation and tax filing requirements to the payroll company.   

Many advantages exist for companies to maintain the employer of record status and to use a creditable payroll service, like GTM Payroll Services.  When searching for a payroll company, businesses and households should look for items such as how long the company has been in business, its SAS70 certification, customer references as well as its standing in the community.  For more information, contact GTM Payroll Services www.gtm.com 

INA International Nanny Association Conference

Last month was the INA (International Nanny Association) conference in New Orleans, Louisiana.  As attendees of the conference, we were able to meet with many of the new agencies that are up and coming, as well as reconnect with old friends in the field.  The INA conferences offer professionals in this industry of household employment the opportunity to network, to discover better and easier ways to achieve their goals, and offers training to nannies and agencies alike.  Nannies, like all professionals, can belong to associations that assist them in their career goals, in being better nannies.  There are still many people today who do not acknowledge being a nanny as a profession, but rather as something that a woman does while waiting for something more lucrative, or after retiring from their real job. Much of this attitude comes from the past, when mothers stayed home with their children and the only time others took care of them, besides family, was when they hired a babysitter.  Yet today’s caregivers are so much more.  They are professionals who allow others to continue pursuing their careers and dreams, while fulfilling their own dream of lovingly and knowledgably caring for and influencing a generation of children.  The proper nanny has training on a variety of issues, teaches the child both for school and for life, and may well be an active member in an association that can help to guide them through difficult issues as well as providing knowledge and support throughout their career.  We were thrilled at the number of new attendees that we were able to meet at this year’s conference, and we look forward to building lasting relationships with them while we all pursue our goals.  For more information on hiring and retaining the best in household help, visit our website at www.gtmassociates.com.