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Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees under the Fair Labor Standards Act
The final ruling was announced on May 18, 2016, by President Obama and Secretary Perez regarding overtime regulations. In brief, the final rule centers on updating the compensation levels for Executive, Administrative and Professional workers who are classified as exempt. The changes are effective December 1, 2016. The linked article provides a summary of the changes. https://www.dol.gov/whd/overtime/final2016/
Provisions of the Final Rule
- Sets the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region.
- Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally.
- Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.
Additionally, the Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.
 Contact: Jessica Zych,
jzych@hawkinsashcpas.com
608.793.3104
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Understanding the law, rules and impact of state and local sales tax (SALT) can have a huge impact on your business, which is why we hired an expert to help our firm as well as our clients. Tanya Binning joined our firm with years of experience working with the Department of Revenue conducting sales tax audits. Tanya went through the government's extensive training program to build a solid base of specific knowledge in SALT.
Tanya has already begun working with clients on reverse audits, audit defense, utility studies to maximize manufacturing exemptions, sales tax assistance, and exemption certificate compliance. She will be a regular contributor to our monthly newsletter and has plans for other market trainings.
You can reach Tanya Binning at tbinning@hawkinsashcpas.com or 715.748.1353
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When the internet was created, nobody imagined it would become as great as it has today. Businesses now have a new way of selling products to consumers, and as always the new way comes with a complicated sales tax system. The main question that always comes up with talking about internet sales is the following: "When do I collect and remit sales tax in other states?"
When Amazon opened its doors, the company probably did not imagine it would have its fingers in a lot of different pots. The newest dabble is fulfillment by Amazon (FBA). The FBA service has now opened a business up to nexus in other states. How you may ask? Well, let's start with explaining what nexus is. Nexus Nexus can be defined as the connection or link with a state. When it comes to sales tax, a link to the state must be "physical." However, "physical" does not just mean having real property in a state; it can also include inventory, rented equipment and employees. Now that nexus has been explained for sales tax purposes, let us take a look at what FBA really is. The following steps relate to FBA: - A business will need to set up a FBA account with Amazon.
- A business will then need to create a listing of all products it is selling.
- All of the products will need to be prepared for shipping.
- Once the products are prepared, they will be shipped to Amazon.
- When customers order your product, Amazon will pick it from its warehouse, pack the product and then ship it to your customer's doorstep.
- Amazon provides customer support on all the products you sell.
The question now becomes, how do I know if I have nexus? Once a business has shipped its products to Amazon, nexus is now established between you and the state where your product was shipped. Nexus has been created because you now own inventory in that state. By owning inventory in another state, you are now required to collect and remit the sales tax for that state plus the one you have established residency in. The following states have fulfillment centers: Arizona, California, Connecticut, Florida, Indiana, Kansas, Kentucky, Maryland, Massachusetts, Nevada, New Jersey, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and Washington. If your product gets shipped to any of the above states, nexus has been established.
 Author: Tanya Binning, MSA
tbinning@hawkinsashcpas.com
715.748.1353
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"Federal Student Tax" Scam 
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A new tax scam is directed at college and university students and involves what's called a "federal student tax."
Scammers are directly calling students telling them they owe a "federal student tax." Something that does not exist. Scammers are persistent, referencing personal information and demanding payments and/or additional personal information. When students do not comply they threaten to call the IRS, local authorities, etc.
You should never give a caller payment over the phone or additional information. The best thing to do is hang up. Know that the federal student tax does not exist and that the IRS does not make these types of calls.
If you or a student you know receives one of these calls, make sure it is reported to the IRS.
 Contact: Jeffrey W. Dvorachek, CPA
jdvorachek@hawkinsashcpas.com
920.684.2545
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IRS Announces Resolution To Problem That Resulted In Erroneous Failure-To-Deposit Penalties
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IRS has announced on its website that it has resolved the programming error that caused some monthly and daily deposits of taxes that were made timely by Apr. 18, 2016, but after Apr. 15, 2016, to be considered as paid late even though April 15 was a federally observed legal holiday (Emancipation Day) in the District of Columbia.
Background
The 2016 federal tax deposit deadline for monthly and daily tax deposits was extended to Apr. 18, 2016, since Apr. 15, 2016 was a holiday in the District of Columbia.
On May 10, IRS announced that, in some instances, taxpayers were assessed failure-to-deposit penalties as a result of a programming error that treated some monthly and daily deposits of taxes that were made timely by April 18, but after April 15, as paid late.
IRS announces resolution of the error. IRS says that its systems have been corrected and that impacted taxpayer accounts will be updated. No taxpayer action is required. Taxpayers who received a notice of a failure-to-deposit penalty as a result of this error will receive follow-up correspondence indicating that they do not owe a penalty. Taxpayers who received a notice indicating that their deposit was made incorrectly but that IRS waived the penalty will not receive any follow-up correspondence.
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