Repeal of 1099 Reporting Requirements on Small Business Transactions
The passage of health care reform in 2010 brought along with it a new requirement which would have impacted the recordkeeping practices for small businesses. The law required that businesses report all transactions greater than $600 on a IRS Form 1099 issued to the vendor. The law was to go into effect for tax year 2012. Many small businesses were encouraged to begin the practice in 2011 allowing sufficient time to implement new recordkeeping practices.
However, earlier this year, President Obama signed a law that removes the expanded 1099 reporting requirement set forth in the health care reform act. The repeal of this requirement will remove the huge recordkeeping burden, freeing up time for other business related activities.
Businesses are still encouraged to examine their current recordkeeping procedures to make sure they are in compliance with federal and state taxing authorities.
Updated New York State Sales Tax Collection Information
The New York State Department of Taxation and Finance has updated its information regarding business owners’ sales tax collection obligations.
Knowledge of the updated material along with understanding the obligations is crucial because a business owner can be held personally liable for sales tax obligations, and there are numerous criminal penalties for failing to comply with the requirements.
The updated information can be found in Publication 900 from the New York State Department of Taxation and Finance. Further, all business owners should consult with their accountants for information regarding the collection and remittance of state and local sales and use taxes.
The Department Of Labor Timesheet App
In response to the increased use of smartphones and the popularity of “apps”, the Department of Labor released an app for workers to independently track their hours worked, wages earned, and even breaks taken. A link to the app can be found at the Department of Labor, Wage and Hour Division’s webpage at http://www.dol.gov/whd/.
The Department of Labor believes that, “This app will help empower workers to understand and stand up for their rights when employers have denied their hard-earned pay.”
The release of this app may raise concerns for small business owners who find themselves in a situation where an employee is disputing time records.
It is important to remember that both the federal government and New York State have set forth recordkeeping requirements for employers. The requirements can be found in the Fair Labor Standards Act.
Additionally, New York State has its own requirements with respect to payroll recordkeeping. Each employer is required to maintain for not less than six years the following records for each week worked by its employees: rate of pay and basis thereof, whether paid by hour, shift, day, week, salary or piece; gross wages, deductions, allowances and net wages; and for non-exempt employees, regular hourly rate, overtime rate, number of regular hours worked and the number of overtime hours worked.
Increased Immigration Audits On Small Businesses
In the past couple of years, there has been a significant increase in the number of employer audits conducted by Immigration and Customs Enforcement, also known as ICE. ICE has been focused on identifying employers who hire workers not legally eligible to work in the United States.
All employers and employees are generally required to complete an I-9 form at the time of hiring which lists documents establishing eligibility for employment in the United States. Given the increased audits by ICE, it is important that all employers, including small businesses, make sure that their I-9 forms are properly completed, and that the correct procedures are put into place to ensure that accurate records are kept.
ICE recommends that employers review their practices and seek professional assistance if they are not knowledgeable about legal requirements. Sloppy recordkeeping can lead to fines for technical violations in the event of an audit.
If a review reveals that there are incomplete I-9 forms, employers should fill in the missing information and initial it with the date and time it was added. Finally, be sure to retain the I 9 forms for the legally required period of time.