EMPLOYEE BENEFITS BLOG
EMPLOYEE BENEFITS BLOG
Insights on Employee Benefits and Executive Compensation
EMPLOYEE BENEFITS BLOG
Insights on Employee Benefits and Executive Compensation
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IRS Provides Additional Favorable Guidance on Recently Modified Voluntary Classification Settlement Program

by | Mar 21, 2013 |

by Jeffrey M. Holdvogt, Ruth Wimer and David Diaz

On February 27, 2013, the Internal Revenue Service (IRS) issued News Release IR-2013-23 to provide additional favorable guidance regarding modifications to the Voluntary Classification Settlement Program (VCSP) issued in Announcements 2012-45 and 2012-46 addressing worker classification issues.  The VCSP allows eligible employers to voluntarily reclassify their workers for federal employment tax purposes and obtain considerable “forgiveness” for previous non-employee treatment.  The IRS describes the program as a “low-cost option” for achieving certainty under the law by reclassifying workers as employees for future tax periods.

To read the full article, click here.



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IRS Releases Draft Revised Form 5300 and Instructions

by | Feb 26, 2013 | ,

by Anne S. Becker, Natalie M. Nathanson and Brian A. Benko

The Internal Revenue Service (IRS) recently released a draft revised Form 5300 and its instructions.  Form 5300, the Application for Determination for Employee Benefit Plan, is generally used to request an IRS determination that an individually designed retirement plan meets the requirements for tax qualification under Sections 401(a) and 501(a) of the Internal Revenue Code.  Because the draft revised Form 5300 contains numerous changes, plan sponsors and their advisors will need to carefully review the revised instructions, once they are finalized, in anticipation of submitting a Form 5300.  Although the IRS did not propose an effective date for the revised Form 5300, it could replace the current version effective for determination letter submissions filed as early as February 1, 2013 (i.e., effective for Cycle C filers).

To read the full article, click here.



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UK Employment Alert No 206: How to Terminate Employment and Exercise a Payment in Lieu of Notice Clause

by | Feb 12, 2013 |

by Sharon Tan and Paul McGrath

The UK Supreme Court has provided guidance about two issues of importance for employers wishing to dismiss a UK employee: 

What happens when an employer dismisses an employee in a manner that breaches the terms of the employee’s employment contract?  Is the employment relationship immediately brought to an end despite the employer’s breach, or does it continue?

If an employer wishes to rely on a payment in lieu of notice (PILON) clause, is it enough simply to make the payment of money required by the PILON clause, or is something more required?

To read the full article, click here.



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Employers Can Obtain Refund for Excess FICA Tax Paid as Result of Increased Excludable Limit for Transit Benefits

by | Jan 24, 2013 |

by Maureen O’Brien and Ruth Wimer

On January 11, 2013, the Internal Revenue Service published Notice 2013-8 providing a special administrative procedure for employers with respect to 2012 transit pass benefits. The American Taxpayer Relief Act retroactively increased the monthly transit benefit exclusion under Section 132(f)(2)(A) of the Internal Revenue Code for commuter highway vehicles or transit passes from $125 per participating employee to $240 per participating employee for the 2012 calendar year (the monthly transit benefit exclusion for parking remains at $240). The notice addresses employers’ questions regarding the retroactive application of the increased exclusion, which can result in both decreased FICA and federal income tax liability. Employers acting promptly, in many cases by January 31, may have less administrative burden in obtaining a benefit for themselves and their employees with respect to the retroactive increase for employer-provided transit benefits.

To read the full article, click here.



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April 15th Deadline for Filing FICA Refunds for Severance Pay

by | Jan 22, 2013 | ,

by Robin Greenhouse, Andrew Liazos and Ruth Wimer

Severance pay due to an involuntary separation from employment resulting from a reduction in force, plant shutdown or similar condition may be exempt from FICA taxes.  As we reported in September 2012, the U.S. Court of Appeals for the Sixth Circuit found in Quality Stores that severance pay is not required to be tied to continued eligibility for unemployment benefits in order to be exempt from FICA.  (Click here for more details regarding the Quality Stores decision.)  Shortly after this decision the Internal Revenue Service (IRS) requested that the Sixth Circuit reconsider its decision in an en banc review (i.e., a hearing before all judges on the circuit court).  Earlier this month, the Sixth Circuit denied this request.

The Quality Stores decision creates a clear split with the U.S. Court of Appeals for the Federal Circuit.  In light of the Sixth Circuit’s denial, the IRS will likely file a writ of certiorari with the Supreme Court of the United States seeking a reversal of the Quality Stores decision.  For now, the IRS is refusing refund claims outside of the Sixth Circuit and taking no action with respect to refund claims within the Federal Circuit (states within the Sixth Circuit are Kentucky, Ohio, Michigan and Tennessee).  For now, employers should continue withholding FICA taxes on severance pay that is not tied to unemployment benefits.

Employers that have made severance payments due to reductions in force, plant shutdowns or similar conditions should consider filing protective FICA tax refund claims.  Only a limited period of time is available to file.  In general, the statute of limitations for tax refund claims is three years.  As a result, April 15, 2013, is the due date for taxpayers for filing a refund claim with respect to the 2009 calendar year.  A refund claim cannot be filed with respect to severance payments made before 2009.

Filing a protective claim is relatively simple to do.  It is not necessary that the protective claim include exact calculations and employee consents for the refund filing.  This information and the required employee consents can be provided at a later time in a supplemental filing.  It is recommended that all employers file protective claims, particularly with respect to severance payments made to employees located in the Sixth Circuit.

If a FICA tax refund has been filed and the IRS has issued a notice of claim disallowance, the taxpayer must either (i) bring suit to contest the disallowance within two years after the issuance of this notice or (ii) obtain an extension of the time to file such a suit with the IRS—this process can be initiated by filing IRS Form 907, Agreement to Extend the Time to Bring Suit.



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McDermott Launches German Employment Law Blog

by | Jan 15, 2013 | ,

Focused on companies doing business in Germany, we are please to share McDermott has launched, The McDermott Blog ArbeitsRecht* (McDermott Employment Law Blog).  The blog provides insights and important updates on individual as well as collective German labor law issues.  It gives practical advice on how to deal with works councils and updates on legislative and court developments with regard to review of clauses in employment contracts, bonus and company car arrangements, rights and obligations of works councils and unions, specially protected employees, part time and fixed term employment, non-compete obligations, anti-discrimination and employee’s protection against dismissal. 

Visitors can follow this blog at https://www.mwe-blogar.de/.  *Please note all content is in German.



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IRS Guidance Favorably Modifies Voluntary Worker Classification Settlement Program

by | Jan 7, 2013 |

by Diane M. Morgenthaler, Ruth Wimer and David Diaz

One year ago the Internal Revenue Service (IRS) published Announcement 2011-64, which provided a Voluntary Classification Settlement Program (VCSP) for employers to treat their workers as common law employees rather than independent contractors only on a prospective basis.  Now the IRS has issued two new announcements that favorably modify and expand the VCSP.  Because certain favorable tax relief is available only for applications filed before June 30, 2013, employers should review quickly their worker classification issues in light of this new guidance.

To read the full article, click here.



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Workplace E-mail Monitoring in Germany

by | Jan 2, 2013 | ,

by Volker Teigelkötter and  Bettina Holzberger

In 2009, the German public was shaken by several scandals that revealed a number of international companies systematically, continuously and comprehensively monitored their employees’ personal data.  This included spying on employees’ private bank accounts and secretly observing employees in their offices via hidden video surveillance.

Even though the general Federal Data Protection Act (the BDSG) was effective at the time, the German Government came to the welcome conclusion that it was necessary to implement a data protection act dedicated to the particularly sensitive relationship between employers and employees, with the primary objective of protecting employees and their right to privacy.

To read the full article, click here.

 



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UK Employment Alert: European Court of Human Rights Finds That Greater Protections Are Required For The Political Beliefs Of UK Employees

by | Dec 6, 2012 |

by Katie Clark and Paul McGrath

The European Court of Human Rights (ECtHR), in Redfearn v United Kingdom [2012] ECHR 1878, has held that employment law in the United Kingdom does not adequately protect individuals from dismissal as a result of their political beliefs or affiliations.  The UK has been given two options to address this failing.

To read the full article, click here.



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