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Human Resource UpdateNovember 2011

Holidays Ahead!

 

Another year is coming to a close. We have celebrated Thanksgiving Day with our families, and look forward to a joyous Christmas and the New Year. While the time between Thanksgiving and New Year's Day is longer than a month, this time of year always seems to go by faster than we expect.

 

There are things that we need to devote our attention to and get done by the end of the year. Some of these might be completing budgets, finishing discrimination testing, preparing for year-end financials, insurance renewals, open enrollments, AFTAP projections, retirement plan contribution decisions, salary increase guidelines, and preliminary incentive plan calculations.....to name only a few. All of this is compounded by vacation scheduling and parties.

 

Our friends in government like to get into the fray as well. Please see the article on New Jersey's new "Employer Obligations to Retain and Report Records". This is a six page posting that we understand may be reduced to fit onto a single 11" x 17" sheet of paper. 

 

If you were contemplating reclassifying any independant contractors as employees a new program called Voluntary Classification Settlement Program (VCSP) may benefit you. You can find more details in the article later in this issue.

 

With the military effort in Iraq winding down, and the economy hopefully showing signs of life, please remember to give preference to our veterans when hiring. New tax incentives have been enacted to help. Companies can claim a credit against taxes owed of as much as $5,600 for hiring veterans, and as much as $9,600 for hiring veterans with service-connected disabilities, if the veteran has been looking for work for six months or longer. The new law also provides as much as $2,400 for hiring a veteran who has been looking for work for one to six months.

 

The most important things to now remember are how fortunate we are and to celebrate with family and friends. If we may assist you with the completion of your year-end projects, please call.

 

An early Merry Christmas and Happy Holidays to you and your family!

 

Sincerely,

 

 

Michael F. Yates

President

 

If you find value in this newsletter please let us know. Feel free to call me with a comment and/or ask a question at any time (908-689-4200) or send me an email ([email protected]). We offer this timely information as another benefit of your relationship with our company. If you feel a friend or colleague would benefit from receiving our newsletter, please feel free to forward a copy. 

 

You can view all of our newsletters by clicking the 'newsletter archives' link at our company website www.mfyco.com.

 

In This Issue
MFYCO Facebook
Voluntary Classification Settlement Program
NJ Employer Obligation to Maintain and Report Records Notice
The DOL and Microsoft Corporation Partner to Help US Veterans
Buying a Christmas tree this year?
25 worst passwords of 2011
eLaws Quick Link
Plan Reporting Calendar
Track Government Spending
Terms of Use
 
Invitation to MFYCO Facebook
facebook 
Visit our page! 

 

Voluntary Classification Settlement Program

OVERVIEW

The Internal Revenue Service (IRS) has developed a new program, called the Voluntary Classification Settlement Program (VCSP) which permits taxpayers to voluntarily reclassify workers as employees for federal employment tax purposes. The VCSP allows eligible taxpayers to voluntarily reclassify their workers for federal employment tax purposes and obtain relief similar to that obtained in the current Classification Settlement Program (which is only available upon IRS examination).  The VCSP is optional and provides eligible taxpayers with an opportunity to voluntarily reclassify their workers as employees for future tax periods with limited federal employment tax liability for the past nonemployee treatment. To participate in the program, the taxpayer must meet certain eligibility requirements, apply to participate in VCSP, and enter into a closing agreement with the IRS.

BACKGROUND

Whether a worker is performing services as an employee or as an independent contractor depends upon the facts and circumstances and is generally determined under the common law test of whether the service recipient has the right to direct and control the worker as to how to perform the services.  In some factual situations, the determination of the proper worker classification status under the common law may not be clear.  For taxpayers under IRS examination, the current Classification Settlement Program is available to resolve federal employment tax issues related to worker misclassification, if certain criteria are met. The examination Classification Settlement Program permits the prospective reclassification of workers as employees, with reduced federal employment tax liabilities for past nonemployee treatment. The Classification Settlement Program allows business and tax examiners to resolve the worker classification issues as early in the administrative process as possible, thereby reducing taxpayer burden and providing efficiencies for both the taxpayer and the government.

In order to facilitate voluntary resolution of worker classification issues and achieve the resulting benefits of increased tax compliance and certainty for taxpayers, workers and the government, the IRS has determined that it would be beneficial to provide taxpayers with a program that allows for voluntary reclassification of workers as employees outside of the examination context and without the need to go through normal administrative correction procedures applicable to employment taxes.

ELIGIBILITY

The VCSP is available for taxpayers who want to voluntarily change the prospective classification of their workers. The program applies to taxpayers who are currently treating their workers (or a class or group of workers) as independent contractors or other nonemployees and want to prospectively treat the workers as employees. To be eligible, a taxpayer must have consistently treated the workers as nonemployees, and must have filed all required Forms 1099 for the workers for the previous three years. The taxpayer cannot currently be under audit by the IRS.

Furthermore, the taxpayer cannot be currently under audit concerning the classification of the workers by the Department of Labor or by a state government agency. A taxpayer who was previously audited by the IRS or the Department of Labor concerning the classification of the workers will only be eligible if the taxpayer has complied with the results of that audit.

COST

The taxpayer will pay 10 percent of the employment tax liability that may have been due on compensation paid to the workers for the most recent tax year, determined under the reduced rates of Internal Revenue Code Section 3509.

The amount due under the VCSP is calculated based on compensation paid in the most recently closed tax year, determined at the time the VCSP application is being filed.  Accordingly, the 10.68% effective rate applies under the VCSP in 2011 since the most recently closed tax year is 2010.  The 10.28% effective rate applies under the VCSP in 2012 since the most recently closed tax year is 2011.  The rate of 3.24% applies to compensation above the Social Security wage base in both situations. These effective rates constitute the sum of the rates as calculated under section 3509(a), and are made up of the following:

Description

3509(a) Percentage in 2011 (For compensation paid in 2011 up to the Social Security wage base)

3509(a) Percentage in 2010
(For compensation paid in 2010 up to the Social Security wage base) 

3509(a) Percentage in 2010, 2011, and 2012
(For compensation paid in 2010, 2011 and 2012 above the Social Security wage base)
 

Federal Income Tax Withholding 

1.5

1.5

1.5

EE Social Security Tax

.84

1.24 

0

ER Social Security Tax

 6.2

 6.2

0

EE Medicare Tax

.29

.29

.29

ER Medicare Tax

1.45

1.45

1.45

Totals

10.28

10.68

3.24

EFFECT OF VCSP

A taxpayer who participates in the VCSP will agree to prospectively treat the class of workers as employees for future tax periods.  In exchange, the taxpayer will not be liable for any interest and penalties on the liability; and will not be subject to an employment tax audit with respect to the worker classification of the workers for prior years. Additionally, a taxpayer participating in the VCSP will agree to extend the period of limitations on assessment of employment taxes for three years for the first, second and third calendar years beginning after the date on which the taxpayer has agreed under the VCSP closing agreement to begin treating the workers as employees.

Since the VCSP is limited to employment taxes it does not address the VCSP's impact on the employer's welfare and pension plans. Under the current rules, there is no special relief for benefit plans, so the impact of this change on the pension and welfare benefits should be considered before apply for the program.  For qualified pension plans (e.g., 401(k) Plan, Defined Benefit Plans, etc.), this change in employee classification may involve corrective contributions for improperly excluded workers or to correct minimum coverage violations which may arise.

The VCSP is limited to federal employment taxes and does not provide protection for other laws, such as state or Federal labor and employment law requirements, so careful consideration should be given to the possibility of other legal exposures prior to filing an application.

APPLICATION PROCESS

Eligible taxpayers who wish to participate in the VCSP must submit an application for participation in the program. Information about the VCSP and the application will be available on www.irs.gov. Along with the application, the name of a contact or an authorized representative with a valid Power of Attorney (Form 2848) should be provided. The IRS will contact the taxpayer or authorized representative to complete the process once it has reviewed the application and verified the taxpayer's eligibility. The IRS retains discretion whether to accept a taxpayer's application for the VCSP. Taxpayers whose application has been accepted will enter into a closing agreement with the IRS to finalize the terms of the VCSP and will simultaneously make full and complete payment of any amount due under the closing agreement.

 

The details of the VCSP were published on October 11, 2011 as Announcement 2011-64

Click here to go to the Voluntary Classification Settlement Program (VCSP) - Frequently Asked Questions.                   

Click here to go to IRS Form 8952.

Click here to go to the instructions for IRS Form 8952. 

  


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State of NJ - Employer Obligation to Maintain and Report Records Notice

 

The Employer Obligations to Maintain and Report Records is a new notice with posting requirements for NJ employers.  The Employer Obligations to Maintain and Report Records notice informs employees of the types of records an employer must maintain.  The six-page notice lists the recordkeeping requirements of the following New Jersey statutes: the Wage Payment Law, the Wage and Hour Law, the Prevailing Wage Act, the Unemployment Compensation Law, the Temporary Disability Benefits Law, the Family Leave Insurance Benefits Law, the Workers' Compensation Law, and the Gross Income Tax Act.

 

On or before December 7, 2011, all New Jersey employers must post the notice in a conspicuous place and provide each individual employee with a hard copy or an emailed version of the notice.  To meet the posting requirement, you may place the notice on your company internet site or your company intranet site that is used exclusively by employees and to which all employees have access.  To meet the individual distribution requirement, you must provide a hard copy or an e-mailed copy of the notice to each person hired after November 7, 2011 when hired.  (Employees hired prior to November 7, 2011, must receive the notice by December 7, 2011.)  Failure to comply with the distribution and posting requirements carries a fine of up to $1,000, in addition to possible criminal penalties.

 

 

The DOL and Microsoft Corporation Partner to Help US Veterans

 

 

On November 9, 2011, the US Labor Department and Microsoft Corp. joined together to provide veterans with vouchers for no-cost training and certifications that can lead to important industry-recognized credentials.  (As far as we can tell the program only applies to post 9/11 veterans.)  The voucher program will serve the veterans in Seattle, Washington; San Diego, California; Houston, Texas; Northern Virginia and Jacksonville, FL.

 

Each area will receive 1,000 vouchers per year for two years, totaling 10,000 vouchers.  Microsoft will provide in-person support to ensure that the recipients succeed in the training and certifications.  Additionally, the local workforce systems will help connect the veterans and their spouses with potential employers in their areas.

 

For information on the voucher program contact David Roberts at (202) 693-5945.  For information on a number of new tools geared towards helping post-9/11 era veterans, including Veterans Gold Card, the "My Next Move for Veterans" website and the National Resource Directory's Veterans Job Bank, click here.

 

 

Buying a Christmas tree this year? Here are some tips to help you keep it looking beautiful for the whole season.

  • Buy your live tree early as cut trees dehydrate and you can do more at home to keep your tree fresh.
  • Check to see how fresh the tree is by running your hand along a branch to see if the needles are soft and remain attached. If the needles shed easily, do not buy that tree.
  • When you get home, do not bring the tree inside right away. Keep the tree where it's cool (outside or in the garage.) Cut the tree trunk and sit it in a bucket of water.
  • When you are ready to decorate the tree, cut the trunk and place it in the stand and immediately fill the stand with water. Make sure to let the tree sit for a day undecorated to allow the branches to settle.
  • Add water every one to two days to keep your tree fresh.

Make sure to inspect light sets prior to placing them on the tree. If worn, replace with a new set. Never overload electrical circuits and always turn off the tree lights when leaving the house or when going to bed. Try to recycle your tree at the end of the season.

 

Call: 908-689-4200 to contact a
MFYCO professional consulting associate.
happypeople

 

Forbes just released the 25 worst passwords of 2011. If yours is on this list, go change it now!

 

1. password

2. 123456

3.12345678    

4. qwerty

5. abc123        

6. monkey

7. 1234567

8. letmein

9. trustno1

10. dragon      

11. baseball

12. 111111

13. iloveyou

14. master

15. sunshine

16. ashley

17. bailey

18. passw0rd

19. shadow

20. 123123

21. 654321

22. superman

23. qazwsx

24. michael

25. football

 



 What would you like to see in a future issue?

Contact our office with your suggestions.

 

 
 
 
Plan Reporting Calendar
 



2011 FILING DUE DATES FOR
CALENDAR YEAR PLANS
 
This calendar is not intended to be an exhaustive listing of every due date under the Code or ERISA, but rather reflects some of the most common due dates.

View Calendar 


 
about MFYCO ...

  • Michael F. Yates & Company, Inc. can help you with a variety of services ranging from retirement plans to providing results-oriented survey instruments, training and development programs for your employees. Our products and services are intended to help you maximize the effectiveness of your Human Resources function.
     
  • These products and services incorporate our years of experience so that you receive rapid results and exceptional value. From onsite consulting, to strategic business integration, to Web enablement, we understand how Human Resources can be applied to solve your problems and achieve your goals. As a result, we can help you get the most out of your investment and turn your most precious resource into a competitive advantage.
     
  • We offer Consulting, Retirement Planning, Pension and 401(K) both qualified and non qualified Plans, Welfare Plans, Communications, Computer Systems, Executive Plans, Compensation, Mergers, Acquisitions, Divestitures and Other Services. 
     
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Take the Michael F. Yates & Company, Inc. challenge!

Call us today ... 908-689-4200 



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 How to Track Government Recovery Spending

 

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