The SSA temporarily stopped issuing the letters in 2009 when the Department of Homeland Security (DHS), under pressure from both unions and business groups, withdrew its Final Rule on how to deal with no-match letters.

The program was resumed on March 22.

Employers are now left to determine what to do in the absence of any guidance from the government when they receive no-match letters. The quandary becomes even worse when the SSA decides—as it often does—to turn over the names of the no-match individuals to the Internal Revenue Service (IRS) and/or to the United States Citizenship and Immigration Service (USCIS).

Another challenge: The recently revised M-274 Handbook for Employers issued by DHS makes no mention of how to respond to no-match letters, even though Immigration and Customs Enforcement (ICE) agents routinely ask for no-match letters when they conduct Form I-9 audits.

Complicating matters more is the fact that these letters are often sent to the chief financial officer (CFO), a tax preparer, or even an outside accounting firm and not to the human resources department, which is responsible for I-9 employment verification.

The best defense is a good offense, so employers should ensure that their I-9 process is as thorough and error-free as possible. Then if a no-match letter arrives, that individual's I-9 form should be revisited, checked for human errors, and reverified—at the very least.

Fortunately, Personnel Concepts publishes a comprehensive guide to employment verification. Get your copy of our I-9 Compliance Kit today and be fully prepared for any audit or eventuality.

According to consulting firm Towers Watson, nearly one-quarter of Fortune 100 companies offer hybrid plans, and it is estimated that nearly one-third of all participants in defined-benefit plans belong to the hybrid variety.

One of the longstanding complaints about such plans is that they discriminate against older workers, but the IRS regulations make it clear that these hybrids cannot discriminate. The regs also clear up confusion regarding the "market rate" at which plan sponsors must set the interest rate for hybrid accounts.

The firm Towers Watson is predicting that more companies will take a look at hybrid pension plans now that the IRS has cleared up confusion about implementing the plans.

You can keep up with this and other developments in the field of workplace benefits with a subscription to Personnel Concepts' Benefits Law Quarterly, which comes as part of our HIPAA Compliance Poster Subscription and Newsletter package.
 Get yours today.

Previously, this requirement had applied only to self-insured plans, but come the New Year, it was to apply to all non-grandfathered plans.

Just a few days before Christmas, however, the Internal Revenue Service (IRS) announced that it would not be enforcing this nondiscrimination provision, as it is called, nor levying fines. Instead, it would commence a public commentary period running through March 11, 2011.

The agency added that the provision would still be enacted at a future date, but at the start of the next insurance plan year (effectively Jan. 1, 2012, for most companies).

Employers, keep your workforces informed of relevant provisions and obligations of PPACA by purchasing and posting Personnel Concepts’ Health Care Reform Employee Information Poster.

For instance, the limit for 401(k), 457(b) and 403(b) plans remains unchanged at $16,500, with health savings accounts (HSA) holding steady at $3,050 for individuals and $6,150 for families.

In addition, the IRS left the maximum income for FICA tax purposes unchanged at $106,800, meaning that no Social Security taxes will be paid past that amount.

You can stay up to date on all benefit changes with Personnel Concepts’ Benefits Law Quarterly, which comes along with your purchase of the HIPAA Compliance Poster Subscription and Newsletter. Get yours today.

Plans also call for adding another 90 inspectors to the Wage and Hour Division (WHD) after the addition of 250 in fiscal 2010. WHD inspectors check out employee claims of unpaid overtime, minimum wage violations and other wage disputes.

Along with the Internal Revenue Service (IRS), which is auditing 6,000 businesses in the next three years over the misclassification of employees, DOL agents also will be looking for cases of employers labeling employees independent contractors to avoid their share of payroll taxes (as well as paying benefits).

Another trap: Employers often misclassify employees as exempt when in fact they are non-exempt and subject to overtime pay. Avoid this trap by getting a copy of Personnel Concepts’ FLSA Overtime Rules Compliance Kit and then properly classifying–and paying–your employees.

The Employment Tax National Research Project (NRP) will start by auditing 2,000 firms this year, and at the end of three years will have completed what appears to be a line-by-line audit of 2007 and 2008 tax returns for the 6,000 companies under its microscope.

The five areas to get the most attention are classification of workers (employees or independent contractors); fringe benefit arrangements; executive compensation arrangements; back-up withholding; and Form 1099 compliance.

Though not directly related to IRS requirements, Personnel Concepts’ Manual of Record-Keeping Requirements will help you stay in compliance with all other federal employment regulations.

If the IRS discovers personnel listed as independent contractors who are in fact company employees, the results could be costly. The firm could owe large sums in past taxes and fringe benefits–retroactively applied.

The last time the IRS launched a worker classification audit in 1984, it estimated that 15 percent of all employers misclassified some 3.4 million workers. That’s a lot of loot in back taxes and health insurance/retirement payments.

With an estimated 10.3 million independent contractors in the U.S., that 15 percent today potentially represents 1.54 million misclassified workers. The IRS could hit a gold mine, but with the audit focusing on just 6,000 businesses over the next three years, it would take a lot of willful employee reclassifications to really ring up the IRS cash registers.

For the answer to what takes that long, think April 15.

Yup, it takes all of us and our tax preparers and accountants and whoever else is involved 7.6 billion hours each year to comply with our tax filing requirements. To do that much work, it would take 3.8 million full-time employees. And the cost of complying each year comes to $193 billion.

I’m not making these figures up. In fact they come from the IRS itself, in the person of Nina Olson, who is the national taxpayer advocate for said IRS.

Wanna find a nice loophole? No problem, just be prepared to read 3.7 million words in the tax code!

Have a happy April 15, folks.

Goes like this: Constructive receipt prevents people from gaming the system, say by performing work in late 2008 and asking to be paid in 2009 to reduce tax liability by shifting it forward. This is a no-no, but obviously it’s pretty easy to get away with if you’re billing others for goods or services and not being paid wages.

Now, this would/could apply to the AIGers if they returned the bonuses with the understanding that they’d re-recieve them when times are better.

The ball is now in the IRS’s court. Let’s see if the Obama/Geithner IRS is a vindictive one.