California Payroll Report articles from July 2002

California Payroll Report archives from July 2002

Is educational assistance only for the young?(Esberg vs. Union Oil Company of California)(Brief Article)
July 21, 2002... Under California and federal law, employers may provide their employees with up to $5,250 a year in tax-free reimbursements for undergraduate and graduate-level courses. (See your January 21, 2002, issue for details.) But a recent California...

Wage-hour bills are still in contention.(pending bills)(Brief Article)
July 21, 2002... Hopefully, by the time you are reading this, the Governor and the state Legislature will have finally agreed on a new state budget (one without an income tax hike!). But while the annual budget negotiations have been stealing the limelight,...

IRS revises guide for public employers.(Brief Article)
July 21, 2002... The IRS has announced that the newly revised Publication 963, Federal-State Reference Guide, is now available. Last revised in 1997, this is the primary reference guide for the 90,000 state and local governments that face employment tax and...

Proper classification of exempt employees is an ongoing effort.
July 21, 2002... Misclassification of workers as exempt from overtime can cause enormous legal headaches and penalties under California law--was firms such as Starbucks, Taco Bell, Rite Aid, Pacific Bell, and Farmers Insurance have learned the hard way. The...

Job duties determine exempt status of retail managers.(Brief Article)
July 21, 2002... A major classification problem arises when a salaried manager--or assistant manager--works side-by-side with staff employees doing essentially similar work (for example, in a fast food restaurant or at a convenience mart). But, says Attorney...

Special handling is required for tip income reporting and withholding.(Brief Article)
July 21, 2002... In your last issue, we covered the recent U.S. Supreme Court decision against a California employer that had failed to adequately report its employees' tip income. We also reviewed tip-reporting compliance agreements offered by the IRS as...

Tip reporting from the employee's perspective.(Brief Article)
July 21, 2002... In any industry, employees who "work for tips" are often loathe to report this substantial portion of their income to the IRS--and to their employer. But while employees may see tips as under-the-table or "free" money, in actuality tips are...

U.S. Department of Labor wants to help employers survive the "Regulatory Jungle".(Brief Article)
July 21, 2002... U.S. Secretary of Labor Elaine L. Chao has announced a major new initiative to help employers better understand and meet their responsibilities to protect workers. The new policy will provide small businesses with better knowledge and tools...

IRS offers "fast-track" tax dispute resolution.(Brief Article)
July 21, 2002... After two years of testing, the IRS has opened its new Fast-Track Mediation Program to small businesses and self-employed taxpayers nationwide [IR 2002-80; 6/26/02]. While tax dispute resolution can take several months (or more) through the...

IRS Extends moratorium on stock option FICA and FUTA taxes.(Brief Article)
July 21, 2002... The Treasury Department and IRS are extending the moratorium on FICA and FUTA taxes for statutory stock options--incentive stock options (ISOs) and options under employee stock purchase plans (ESPPs). "We have decided to extend the moratorium...

Statutory Stock Options 101.(Brief Article)
July 21, 2002... Since it will now be a couple of years before statutory stock options lose their employment tax-favored status (if that is in fact the final result), you should know what all the fuss is about. [Note: A company grants employees the option...

Certain stipends are not taxable compensation.(biomedical research training programs)(Brief Article)
July 21, 2002... The IRS has ruled that stipends paid to participants in biomedical research training programs are not compensation and do not have to be reported as wages [LTR 2000226005]. A tax-exempt biomedical research organization had requested guidance...

What do you think about "phased retirement" plans?(Brief Article)
July 21, 2002... The IRS has recently become interested in "phased retirement" arrangements under qualified defined benefit plans. In general, these give employees who are at or near retirement age the opportunity for a reduced schedule or workload. The...

Health reimbursement arrangements get clearance from the IRS.
July 21, 2002... The Treasury Department and IRS have issued guidance that clarifies the tax treatment of health reimbursement arrangements (HRAs) in which the employer's health benefit arrangement provides for employee-controlled reimbursement of medical...

Proposed regs on split-dollar life insurance reflect earlier guidance.(Brief Article)
July 21, 2002... The IRS has proposed regulations on the federal income and employment taxation of split-dollar life insurance arrangements [REG-164754-01]. The proposed regs expand on the guidance issued earlier this year in Notice 2002-8. Split-dollar...

Supreme Court upholds IRS's tip estimation method.(Statistical Data Included)
July 7, 2002... Reversing a Ninth Circuit Court of Appeals decision, the U.S. Supreme Court has ruled that the IRS may use an aggregate--rather than employee-by-employee--method to estimate unreported tips and assess the employer's share of FICA taxes on...

IRS revises Federal-State Reference Guide.(Brief Article)
July 7, 2002... The IRS has announced that the newly revised Publication 963, Federal-State Reference Guide, is now available. Last revised in 1997, this is the primary reference guide for the 90,000 state and local governments that face employment tax and...

Back pay for federal employee does not include "lost" premium pay.
July 7, 2002... The Federal Circuit U.S. Court of Appeals has ended a virtual round-robin of decisions involving a back-pay award for a Treasury Department employee who had been disciplined, discharged, and ultimately reinstated. The Timeline ...

Tip reporting from the employee's perspective.(Brief Article)(Statistical Data Included)
July 7, 2002... In any industry, employees who "work for tips" are often loathe to report this substantial portion of their income to the IRS--and to their employer. But while employees may see tips as under-the-table or "free" money, in actuality tips are...

Agency's control over worker establishes employee status.
July 7, 2002... A recent ruling by the IRS reveals that even agencies of the federal government can be unsure as to whether a worker should be classified as an employee or an independent contractor. In this case, a federal agency asked the IRS to determine...

DOL wants to help employers survive the "regulatory jungle".(Brief Article)
July 7, 2002... Secretary of Labor Elaine L. Chao has announced a major new initiative to help employers better understand and meet their responsibilities to protect workers. The new policy will provide small businesses with better knowledge and tools to...

IWC considering $8/hr minimum wage.(Brief Article)
July 7, 2002... The Industrial Welfare Commission (IWC) has taken its first definitive step in its biennial review of the state minimum wage. The IWC has established a wage board to investigate--and possibly recommend--an increase in the minimum wage to $8...

Wage complaints cost California nursing home operator $1.1 million.(Brief Article)
July 7, 2002... The Pleasant Care Corporation (based in La Canada) has agreed to pay $1.1 million to settle a federal complaint alleging wage-hour and child-labor law violations in its 37 facilities in California and Arizona. The settlement is one of the...

U.S. Supreme Court overturns Ninth Circuit's tip estimates ruling.(Brief Article)
July 7, 2002... Reversing a Ninth Circuit Court of Appeals decision, the U.S. Supreme Court has ruled that the IRS may use an aggregate--rather than employee-by-employee--method of estimating unreported tips and assessing the employer's FICA taxes. (The...

IRS simplifies accountable plan rules for certain employers.(Brief Article)
July 7, 2002... Under the new Industry Issue Resolution program (see the article on page 7), the pipeline construction industry asked for clarification of the proper treatment of amounts paid to employees who provide welding and mechanics rigs. These...

Tip income compliance agreements provide safe havens.(Brief Article)
July 7, 2002... Employees are supposed to report their tip income (each month that it comes to $20 or more) to their employer. In turn, the employer is supposed to withhold FICA taxes (and pay the employer's share) on employees' tip income. But many...

DCSS says federal employees on tribal reservations are fair game.(Brief Article)
July 7, 2002... California's Department of Child Support Services (DCSS) has clarified the issue of income withholding from federal employees working on tribal reservations. The announcement was prompted by a memo from the Office of the Inspector General...

EDD updates Employer Tax Guides.(Brief Article)
July 7, 2002... The Employment Development Department (EDD) recently announced that it has made some corrections and updates to the 2002 versions of the California Payroll Tax Guide (DE 44P) and California Employer's Guide (DE 44) released earlier this year....

IRS makes it official: employee equipment allowances are taxable wages.(Brief Article)
July 7, 2002... The IRS has finally made official what it has hinted at in pronouncements for several years: Most payments to employees for providing their own equipment and tools are taxable wages. Such payments, ruled the IRS, generally do not meet the tax...