IRS has released a draft of the revised Form 941 because of new coronavirus-related employment tax credits and other tax relief.

One of the biggest mid-year changes: Line 13 now contains seven lines (Line 13a through Line 13g). And heads up: There’s the potential for confusion in these lines, IRS revealed in its May Payroll Industry Call.

What Payroll needs to know

Here are some additional ways Line 13 has expanded based on the April 2020 draft of the 941:

• 13a – total deposits for this quarter, including overpayment applied from a prior quarter and overpayments applied from amended forms filed in the current quarter
• 13b – deferred amount of employer share of Social Security tax
• 13c – refundable portion of credit for qualified sick and family leave wages from Worksheet 1, and
• 13d – refundable portion of employee retention credit from Worksheet 1.

IRS will keep taking comments on the revised Form 941 and its instructions. But the process is moving forward quickly. The Service has already received many questions on Line 13b, so you and your Payroll team can probably expect updated wording related to that line.

Need more information?

Premier Learning Solutions is offering a workshop, IRS Form 941 Changes Due to COVID-19 Tax Relief.

Live: Thursday, July 9, 2020 at 1PM (ET) Also available on-demand

Some of the topics it covers include:

• Coronavirus-related tax credits and relief you need to know (Employee Retention Tax Credit, Credit for Sick and Family Leave, and more)
• How to use 941-X forms to correct previously filed 941 forms
• Requirements and tips to accurately file Schedule B
• How to use form 7200 to get an advance payment of COVID-19 credits
• Reconciliation of form 941 and W-2s at year-end.

The speaker is Dayna Reum, who has been heavily involved in the payroll field for nearly two decades and is currently the Director of Payroll Operations at a major medical center in Chicago. She serves on the National American Payroll Association on the National Strategic Leadership Task Force, Government Affairs Task Force (PA Local tax subcommittee), and has received a Citation of Merit for her service along with being a Gold Pin member of the APA.

Click here for registration and more information.

The post IRS revises Form 941 mid-year due to the coronavirus appeared first on CFO Daily News.

It’s been two years since the Supreme Court ruled on the pivotal case South Dakota v. Wayfair, which gave states the ability to enforce tax collection on online sales.

Since June 21, 2018, phrases like “economic nexus,” “remote sellers” and “marketplace facilitators” have likely become staples in A/P and A/R vocabularies. You’ve seen states create laws for out-of-state sellers … change their thresholds … add more laws for marketplace facilitators … then change their thresholds again …

Bottom line: It’s been a whirlwind of a time for Finance. Tax compliance has become a trickier, riskier, higher priority.

Where things stand now

The good news is, though states are still tweaking economic nexus laws, the flood of legislative changes has slowed to a steady trickle. Here’s a roundup of where things currently stand that you can share with your team:

Remote sellers: Currently, 43 states and the District of Columbia require remote sellers to collect sales tax on purchases. The only states that don’t are those without state-level sales tax (Alaska, Delaware, Montana, New Hampshire and Oregon), plus Florida and Missouri.

But take note: Alaska has imposed collection requirements at the jurisdiction level. And it’s possible other states may do the same. Your team will also want to keep a close eye on Florida and Missouri, as bills for state-level collection requirements are regularly in the works.

Marketplace facilitators: After the sweep of remote seller legislation, states realized they could bring in more sales tax revenue by taxing marketplace facilitators, like Amazon and eBay.

As of now, 42 states and the District of Columbia have laws on the books for marketplace facilitators, too. This is another area your staff should watch closely, as straggling states may still want to add laws later.

What Finance can expect next

With online sales taxable in most places, states will now focus more on broadening the scope of taxable transactions, say the tax compliance experts at Avalara.

While most digital services are taxable in Europe and across other parts of the world, the U.S.’s laws on taxing digital services have been less common and more inconsistent. Some digital services that you may see sales tax legislation address soon, according to Avalara, are:

• streaming and download media
• Software-as-a-Service (SaaS)
• apps and games
• e-books and digital publications
• e-learning, and
• memberships to online clubs.

COVID-19’s impact

Another point that can’t be overlooked is how the coronavirus pandemic will influence your sales tax compliance. When the world was forced to shut down and businesses temporarily closed their buildings, online sales skyrocketed. Now, that means more companies may meet states’ collection requirements (e.g., $100,000 in sales or 200 separate transactions).

As a result, many companies will likely be grappling with these new sales tax collection requirements, wondering if they’ve triggered nexus and need to collect sales tax.

Your A/P team should keep this in mind as those online purchases come in, so it can stay on the same page as vendors and make sure sales tax is correctly applied. And your A/R team should be extra vigilant in monitoring where and when your company triggers nexus.

The post Sales tax, economic nexus: What you’re up against now appeared first on CFO Daily News.

In the past, that overtime compensation option wasn’t available for salaried non-exempt employees who earned bonuses and other types of incentive-based pay.

No more, thanks to the DOL’s latest update.

And experts say the change couldn’t come at a better time. The coronavirus pandemic has thrown companies and work schedules into chaos.

This new rule will allow employers to incorporate more flexible work schedules as many states and businesses start to re-open.

Here’s a breakdown of the new rule to ensure you benefit while keeping payroll in compliance.

These payments now OK with the fluctuating workweek method

The new rule gives your organization the green light to pay salaried non-exempt employees whose hours vary from week to week, even if they receive some sort of supplemental compensation, which can include, according to the DOL:

• bonuses
• premium payments
• commission pay, and
• hazard pay, which is something many of your peers may be offering for the very first time.
  

Now even if those payments are included, your company can pay them at 0.5 times the regular rate of pay for any overtime hours worked. After all, the hours have already been compensated at the straight time regular rate as part of the salary.

Of course opening this method up to these employees will likely bring down your company’s OT bill, since you won’t be paying time and a half.

Threats to your use of the fluctuating work week

Of course, there are some things to consider to keep your company in compliance with the final rules.

Remember, the salary must be high enough to ensure no one ever makes less than the federal minimum wage per hour.

But even if you stay in line with what the feds lay out, your state may pose an obstacle that keeps you from taking advantage of this new flexibility … or this method at all!

Pennsylvania and Alaska, for example, prohibit a fluctuating workweek pay arrangement.

Courts in New Jersey and New Mexico have ruled the use of the fluctuating workweek method is inconsistent and incompatible with their existing state laws.

California Labor Code limits the use of a fluctuating workweek and has different requirements for OT pay.

Other states restrict the types of employees allowed to work fluctuating workweeks. In Rhode Island, it’s a no-go for sales merchandisers or delivery workers; in Connecticut, you can’t use the method for retail employers.

The post New fluctuating workweek rules a win for employers appeared first on CFO Daily News.

At one company, a vengeful ex-employee hacked into his former employer’s system using a fake user account. Then he edited records to disrupt vital shipments.

For the company, this scam caused delays in the delivery of much-needed personal protective equipment. That threatened both its business reputation and the well-being of the people who needed the shipments.

Thwarting insider threats

CFOs have seen unknown criminals exploit the coronavirus pandemic for their phishing and identity theft scams. But this serves as a good reminder that the criminal could just as well be someone you know by name.

As much as you’d like to think the best of anyone who has worked for your company, you know all too well that insider jobs do happen – especially by disgruntled employees. And with all the layoffs, furloughs and cut hours occurring now, many companies have a whole new crop of unhappy employees who could try this very same thing.

So, to avoid scams, you’ll want to verify your company’s keeping a keen eye on its supply chain. Specifically, it’d be beneficial to share this story and check in with these teams:

• A/P: Remind your staffers how critical it is to secure supporting documentation and confirmation of delivery before paying for products.
• Purchasing and Shipping/Receiving: Solid communication is a key part of monitoring and spotting scams. Reiterate with these department heads how you all must watch incoming and outgoing shipments and deliveries – and speak up if anything seems fishy.
• IT: Want to stop unapproved personnel from getting into your systems in the first place? Double-check with IT that only authorized, current employees have access to your networks and systems.

The post The latest coronavirus-related scam Finance must watch for appeared first on CFO Daily News.

Update 2: A court just ruled that the EEOC must continue its collection requirements until Jan. 31, 2020. The agency previously planned to stop as soon as it hit 72% of employers, but worker advocate groups balked and the court sided with them.

Update: The Sept. 30 deadline has come and gone, but the feds are going to keep on accepting pay data from employers.

The EEOC recently announced it won’t stop collecting data until it has enough data to be usable (by law that’s 72%). How long will that take? That’s anyone’s guess. As of Sept. 6, only 13% of eligible employers had filed.

So even if you missed the original deadline, you should still upload your data.

That pay data you broke down by job category, race, sex and ethnicity and sent to the feds by Sept. 30? You can rest easy. That’s the one-and-only time you’ll have to do it.

The EEOC just announced it will eliminate the Component 2 EEEO-1 reporting requirement. That’s after this year’s 2017 and 2018 pay data, that is.

The feds determined the burden on employers to collect all that info outweighs the value of what they learn from it.

This go-around employers were required to report data in two parts:

• Component 1 – the number of employees who work for you by job category, race, sex and ethnicity – was due May 31, while
• Component 2 – hours worked and pay data from employee W-2s broken down by race, ethnicity and sex – was due Sept. 30.

Seeking: Pay discrimination

The reason for the second component? To detect possible pay discrimination.

Specifically the feds wanted W-2 earnings because they include common pay elements such as: overtime pay, severance pay, shift differentials, non-production bonuses, year-end bonuses, holiday bonuses and tuition reimbursement.

But the amount of time and effort employers had to put in to meet this requirement was more than any inequities the feds could spot. So you will escape this fate going forward.

The post Feds kill future EEO-1 pay data collection requirement – UPDATED appeared first on CFO Daily News.

Small businesses were asked last month about their present cash reserves in the midst of the COVID-19 crisis.

And their responses can offer you a heads up on how long these companies can keep paying you.

Cash reserves: 3 months? 6? 12?

Here’s how long these businesses feel they can stay afloat with the cash they have on hand:

• 1-3 months: 26%
• 4-6 months: 26%
• 7-9 months: 8%
• 10-12 months: 7%
• more than 12 months: 13%, and
• don’t know: 16%.
  

The remaining businesses? They have already shut down.

Protecting your cash flow

With so many firms facing such a short lifeline, their cash flow woes could quickly turn into yours.

Make sure your credit and collection staff know this is not the time to let invoices go even a day or two past due.

But collecting might not be as straightforward a process as it used to be.

It’s likely taking a bit longer for your invoices to make it through customers’ payment processes these days. And while you and your team can’t do a whole lot about that, you can make sure you understand how things work now so you understand what you’re dealing with.

The folks at Baker Ing suggest in a new whitepaper that you send an email to your customers to ask just how their payment process has changed during the coronavirus crisis and what you need to do differently.

Maybe they’ve added an extra layer of approval for purchases. See if you can get that contact info for that individual so your team knows whom to reach to get a signature on your company’s invoices.

That way however long their cash reserves last, your company will keep getting paid.

The post New cash flow benchmarks: Small biz cash reserves appeared first on CFO Daily News.

Given the current circumstances, your team’s probably devoting most of its time to pressing tasks: processing invoices, cutting checks, appeasing employees’ and trading partners’ financial concerns. They may not have as much time to devote to due diligence tasks, like following up on payments and seeing what’s outstanding.

All the while, unclaimed property (UP) concerns slowly, quietly climb … until those fall reporting deadlines arrive. And suddenly, your finance team is scrambling to follow up on A/P payments, A/R credits, rebates, stocks and more.  

Keep in mind now

Of course, you know that if your team prioritizes unclaimed property now, during the summer months, it won’t be hit with compliance problems when fall reporting deadlines roll around.

Here are a few quick tips from True Partners Consulting that Finance can use to keep unclaimed property top of mind, especially during these difficult times:

1. Start with research. Since each state’s reporting requirements vary, have your top team members do a little research to see if anything’s changed since your last reporting cycle. Their research should include the types of files Finance must produce, the method of file transfer, any required attachments, negative reporting requirements, etc.
2. Update those policies. As state laws and business procedures change, so must your policies. Your UP policies should spell out your company’s reporting requirements, summarize your current reporting process, list an “Escheat Coordinator,” point out all business areas where UP may be found and outline updated record retention rules.
3. Kick-start with a meeting. Whether it’s on video call or in person, schedule a team meeting before fall begins. Review your updated polices, the 2020 compliance calendar and each department’s responsibilities. You can also get any newer employees acclimated with UP and answer specific questions.
4. Keep the momentum. Next, it can help to hold brief meetings before each major process step approaches (e.g., a call one week before the due diligence mailing period begins to verify everyone’s ready). Have your finance team set up calendar reminders for these quick check-ins, so they aren’t forgotten in the long term.

Need more information?

Premier Learning Solutions is offering a workshop, Unclaimed Property Compliance: Best Practices for Post-Pandemic Escheatment.

Available on-demand

Some of the topics it covers include:

• how to handle uncashed checks, credit balances and gift cards in the current climate
• legislative updates that impact your escheatment reporting obligations
• best practices for efficient escheatment reporting, and
• notification requirements and strategies for success for all parts of the escheatment process.

The speaker is Dr. Jim Castagnera, Esq., whose 36 years of experience in law includes a decade with a prestigious Philadelphia law firm, three years as a general counsel for an econometric forecasting firm, and 23 years as Rider University’s Associate Provost and Legal Counsel of Academic Affairs.

Click here for registration and more information.

The post Unclaimed property: The compliance concern sneaking up this summer appeared first on CFO Daily News.

• Notice 2020-29, and
• Notice 2020-33.

Here’s what you need to know about the Section 125 plan changes to help employees out during this difficult time and keep your benefits program in compliance.

IRS Notice 2020-29 offers more flexibility on several fronts, including:

More choices

This year, employees can make mid-year elections for health coverage, health flexible spending accounts (FSAs) and dependent care assistance programs. That means eligible workers can enroll in your health plan if they aren’t participating.

Already enrolled? They can modify their coverage by selecting a different plan.

Note: Employees can now also discontinue their health coverage. But they must certify — in writing — that they’ll be enrolling in another health plan not sponsored by you.

More time

Employees can apply unused amounts remaining in a health FSA or dependent care assistance program for expenses incurred for those same qualified benefits through Dec. 31, 2020.

More relief

This new notice retroactively pushes back earlier-granted relief for high deductible health plans for COVID-19 expenses and a temporary telehealth exemption. They’re now effective starting Jan. 1, 2020.

More money to carry over

You have one more new administrative change for your finance team to handle. Notice 2020-33 green lights you to let employees carry over up to $550 in unused health FSA amounts without penalty. That’s a $50 increase over the original 2020 limit.

All of these Section 125 plan changes need to be pushed out to employees as quickly as possible. So you’ll want to huddle with your team to determine the best way to communicate them.

The post IRS green lights new mid-year Section 125 plan changes appeared first on CFO Daily News.

The latter want your company at their beck and call, ready to help them and calm their worries at the drop of a hat.

And in these tumultuous times, with cash flow being such a major concern, you know that some vendors and customers may need even more reassurance and hand-holding than normal.

That said, your finance team’s time is precious, and you don’t want constant calls and queries from trading partners to hinder their productivity. To help, share these tips adapted in part from accounting pro Nellie Akal on how A/P and A/R can manage more high-maintenance vendors and customers without shelling out too much time:

1. Establish clear standards

If your company doesn’t provide specific working hours, communication methods or turnaround times, especially when so many people are still working from home, your trading partners won’t know you have any restrictions or expectations.

Listing details in contract terms, onboarding packets or an FAQ web page could help keep communication controlled. And if vendors or customers ignore your standards, your team has something they can quickly refer them to (e.g., a page number in the contract, a link to your FAQ page).

2. Define what ‘urgent’ means

Some queries are as simple as “When will my invoice be paid?” Others may be more urgent, like “There was a huge pricing error on the invoice we sent!”

But A/P and A/R shouldn’t leave it up to your trading partners to decide what constitutes an emergency, Akal says. For some more worrisome vendors or customers, it could help to spell it out with concrete examples.

Also, your finance department may want to set varying communication standards for nonurgent versus urgent situations. For example, you could encourage trading partners to send a query in the portal if it’s not an urgent issue and to make a direct call or email to a supervisor if it is an urgent issue. That way, your team can tackle the most pressing queries in a timely matter and address additional queries as time permits.  

3. Track your activity

Once you have clear standards and communication methods outlined, you want to verify that they’re being put to good use in A/P and A/R. By tracking customer service metrics, your finance team can see how effective their rules and habits are – and where they may need some work. You could encourage your team to track things like:

• how many queries A/P and A/R each receive (and how many are urgent)
• the most common types of queries, and
• the average time it takes to resolve a basic query.

With that data, plus evidence of how things change over time, your team’s ability to manage its trading partners will continuously improve.

The post Successfully managing your trading partners – even during difficult times appeared first on CFO Daily News.

Business email compromise (BEC) has been one of the most formidable foes your finance department has faced in recent years. And scammers are jumping on the current crisis to worm their way into your systems.

No company can afford a costly loss from fraud right about now.

Here’s what you need to know to protect your company and your cash from fraudsters looking to capitalize on the global pandemic. 

Coronavirus-angled phishing attacks

For a BEC scam to work, a criminal must gain access to your company systems so they can study your org chart, how emails from execs sound, your payment patterns, etc.

And they do that through a phishing attack.

Phishing attacks have exploded in recent months, all using the coronavirus as the hook to get people clicking. In fact, both IRS and the Department of Justice have issued warnings to both businesses and consumers.

Why’s it working? The pandemic has people so panicked that they’re more willing to open emails and click links from unverified sources to get promised information. Especially when it allegedly comes from the World Health Organization or the Centers for Disease Control and Prevention.

A single employee clicks on a link from a phony company purporting to sell masks or a text telling them someone they’ve come into contact with has COVID-19, and the door has opened for a BEC scam.

So you want to launch an educational blitz on all the different types of coronavirus scams out there.

Have IT take the lead and encourage them to be specific. They should push out examples of specific attacks: what scam emails look like, the language they use.

Because the attacks are evolving every day, this should be an ongoing campaign.

It will also help to have managers and even you and your CEO to push things out to explain exactly what kind of information or action you’d never ask for in an email.

Your best business email compromise defenses now

Granted that list might look different than it did just a month or two ago, which is exactly why crooks are jumping on this so aggressively.

After all, your company is likely making “a flurry of unusual financial transactions” during the current crisis, reminds the National Association for Credit Management, including:

• expedited orders
• canceled deals, and
• refunds.

Any one of these could be an opportunity for a fraudster to impersonate you or another member of the management team and request a quick payment.

Now add that your A/P or A/R staffers can’t just stroll down the hall and verify whether that transaction was really originated by that person, putting your company at greater risk.

Urge your team to stay in close contact, pick up the phone and tap tech safeguards like a virtual private network or single login systems on strictly company laptops for all transactions.

The post Coronavirus opens the door to more business email compromise scams appeared first on CFO Daily News.