Keeping the DOL, IRS and Others AwayKarin M. Smith, MBA, SFO, CFE

Trouble!

USCIS

DOLIRS

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Alphabet Soup Group

DOL

• Wage and Hour

• Classification of Employees

IRS

• Taxes

• Employee vs. Contractor

USCIS

• Legal work status

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US Citizen and Immigration Services

US Citizen and Immigration ServicesCompleting the I-9 formSection 1 – the employee must fill this section out. Section

must be completed in its entirety. Must check 1 of the 4 boxes provided on citizenship

Section 2 – the employer must fill out with documents provided by the employee. Employer must use original, unexpired documents to fill this out

Section 3 – employer must fill out only upon re-hire of employee

NOTE: All documents must be unexpired. Names should appear on Form I-9 exactly as they appear on documents. No nicknames should be used.

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Preparing for an I-9 Audit

Print a roster of all current employees

Employer must have a completed I-9 form on all employees hired after 1986

If the I-9 form needs to be redone, then make sure to use the current date on the form and ensure it is a current form

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Department of Labor

Most Common Reasons for DOL Visit

Complaint from one employee

Low Wage Industries

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DOL Visits

Little advance notice

Seek specific information about audit

Records collection

Identify point person, legal counsel?

Exit interview

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Overtime

Paying Overtime

Recordkeeping system accuracy for all hours worked

Off-the-clock work

Rest and break periods

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FLSA Audit

Familiarity with all job titles maintained

Ability to explain which job categories are being treated as exempt

Ability to explain any shift rates, how time is recorded, how overtime is paid and what rounding rules exist

Knowledge of how employee-wage garnishments are calculated

Knowledge of whether or how new employees are paid for orientation and training time

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Self Audit DOL Risk Areas

Job descriptions

Job classifications

Time worked, time paid

Complete payroll records

Records retention

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Internal Revenue Service

Fringe Benefits – Taxable?

Group-term Life Insurance

Mileage – commuting miles

Company vehicle

Employee discounts

Education assistance

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Group-Term Life Insurance

Exclude cost up to $50K

Must tax above $50K

Rate x Coverage over $50K x months

IRS Publication 15B

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Mileage/Company Vehicle

Personal use of government-owned vehicles

Mileage – Qualified Non-personal Vehicle• Commuting is taxable fringe benefit

• Recordkeeping and substantiation requirements do not apply

$1.50 rule - multiplying each one-way commute (that is, from home to work or from work to home) by $1.50

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Employee Discounts

Services – no more than 20% can be offered without the discount being taxed

Merchandise or other property –generally excludable discount is the profit

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Education Assistance Excludable for any form of educational instruction or training that

improves or develops job-related capabilities of employee

It cannot be for the purpose of helping employee meet minimum educational requirements

Exclude up to $5,250 during calendar year

Education Assistance Program requires a written plan• Sets rules for qualification

• Cannot favor highly compensated employees

• Not offered cash in lieu of benefits

Pay for tuition, fees, supplies, textbooks, equipment

Cannot include supplies or equipment employee is allowed to keep at the end of the course

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Self-Audit

1099-Misc. Errors

Employee vs. Independent Contractor

Wrong Year

Law Firms, Medical Services

Downloading Forms

Due Date

Employee

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W-2 Errors

SS# doesn’t match name

Wrong Year

Box 12 CodesDownloading

Forms

Retirement Block

Due Dates

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1099-Misc. & W-2?

Carefully review work arrangements

Review work assignments

Clearly document the differences between employment and contracted services

Work must be clearly different

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