News & Analysis as of

Wages Internal Revenue Service

Tips, Service Charges & Automatic Gratuities and Why You Should Care

by Ervin Cohen & Jessup LLP on

Most employers are familiar with the basics. A tip is a voluntary amount of money a guest leaves for an employee over the amount due for the goods sold or services rendered. ...more

Banking & Financial Services E-Note - December 2016

by Burr & Forman on

Last month, the IRS issued final regulations repealing its rule requiring that a Form 1099-C be filed whenever a financial institution (or certain other limited taxpayers) fails to receive payment on a debt for 36 consecutive...more

IRS Confirms California “Waiting Time Penalties” Are Not Wages For Federal Income Tax Purposes

A recent IRS information letter confirms that “waiting time penalties” paid under California law are not wages for federal income tax withholding purposes. Section 203 of the California State Labor Code imposes penalties on...more

IRS Provides Some Relief after Data Hacks

by Proskauer - Tax Talks on

Citing scary facts like the 16.6 million victims of identity theft in 2012 and the recent customer data security breaches at major U.S. companies, the IRS recently announced special tax relief for identity protection services...more

The Affordable Care Act’s Reporting Requirements for Carriers and Employers (Part 7 of 24): Mergers and Acquisitions

When it comes to mergers and acquisitions involving at least one applicable large employer (ALE), the substantive rules governing employer shared responsibility (under Internal Revenue Code § 4980H) and the corresponding...more

Employment Law - July 2015

The Impact of National Same-Sex Marriage for Employers - Why it matters: How will employers feel the impact of the U.S. Supreme Court’s decision in Obergefell v. Hodges? The landmark ruling that the Fourteenth...more

Employer Reimbursement of Employee’s Individual Medical Insurance May Subject Employer to Penalty

IRS Notice 2013-54 provides that an employer’s reimbursement of healthcare insurance premiums paid by an employee on an individual health insurance contract of the employee on a pre-tax basis (an “employer payment plan”) may...more

IRS Announces Impending Tighter Enforcement of Employer-Provided Meals, Fringe Benefits

by Franczek Radelet P.C. on

Internal Revenue Code § 119 allows employers to deduct 100% of the value of meals provided to employees when they are for the convenience of the employer, and they are furnished on the business premises of the employer. Meals...more

IRS Says It Will Penalize Employers Dumping Employees into Obamacare

by Cozen O'Connor on

Before the ink on the Affordable Care Act was dry, prudent employers were analyzing the law to identify ways to save money and avoid many of the punitive aspects of the law....more

Take 5 Newsletter: Five Hot Topics in Hospitality Law

by Epstein Becker & Green on

ACA Final Regulations Provide Rules for Seasonal Employees - On February 10, 2014, the Internal Revenue Service ("IRS") promulgated final regulations for the ACA's employer "shared responsibility provisions" in IRS...more

Can We Define "Full Time" To Mean Something Less Than 40 Hours Per Week?

by Franczek Radelet P.C. on

Q. Under the Fair Labor Standards Act (FLSA), do we have to define “full time” to mean 40 hours per week, or is that left to employers’ discretion? Can we maintain a 40-hour standard for wage and hour purposes, but have a...more

2014 Update for California Employers

by Allen Matkins on

While 2013 was marked by some novel and interesting judicial and administrative decisions, including Quicken Loans (in which the National Labor Relations Board invalidated certain common employee handbook policies), Vance v....more

Severance Payments: To Tax or Not to Tax, that is the Question!

by Baker Donelson on

On October 1, 2013, the U.S. Supreme Court agreed to hear the federal government's appeal of the Sixth Circuit Court of Appeals' decision in United States v. Quality Stores, Inc. (In re Quality Stores, Inc.), 693 F.3d 605...more

Entertainment Industry Payroll Companies Must Pay Up To FICA “Cap” On Behalf Of Each Producer For Whom An Individual Performs...

On September 10, 2013, in Cencast L.P. v. United States, 112 AFTR 2d 2013-xxxx (CA Fed. Cir. 2013), the United States Court of Appeals for the Federal Circuit ruled that Cencast Services, L.P., and a number of other...more

Take 5 Newsletter: Wage and Hour Update - October 9, 2013

by Epstein Becker & Green on

- IRS Will Begin Taxing a Restaurant's Automatic Gratuities as Service Charges Many restaurants include automatic gratuities on the checks of guests with large parties to ensure that servers get fair tips. This method...more

Serving Up Trouble: IRS Ruling on Automatic Tips

by BakerHostetler on

Restaurants and other employers in the hospitality industry are reminded that, as of January 2014, the Internal Revenue Service (IRS) will expect businesses to comply fully with its Revenue Ruling 2012-18. Among other things,...more

IRS Confirms its Position that Settlement Payments Allocated to Attorneys’ Fees are Not Wages

Employers frequently ask whether the portion of an employment-related settlement allocated to attorneys’ fees must be treated as wages and subjected to income and employment tax withholding and Form W-2 reporting where a...more

Labor & Employment E-Note - September 12, 2013

by Burr & Forman on

In This Issue: - A.F.L.- C.I.O. Seeks to Lure Nonunion Workers to Boost Ranks - Appeals Court Affirms Unions Can Organize Smaller Units - IRS to Begin Classifying Automatic Gratuities as Taxable Wages - More...more

Tax Law Blog: Is This the End of Automatic Gratuities?

by Davis Brown Law Firm on

Starting in January, the IRS will begin treating automatic gratuities as wages which are subject to payroll tax withholding. Many restaurants add the automatic gratuity to large groups to ensure the server is tipped...more

IRS Limits Losses Sustained by Trusts

by Baker Donelson on

Since 1986, Section 469 of the Internal Revenue Code has imposed limitations on the ability of most taxpayers to offset losses from activities in which they do not materially participate against wages and other non-passive...more

Supreme Court DOMA Decision—Part II: Wage Overstatements and Tax Refunds

In part one of this two-part series, “Supreme Court DOMA Decision — Part I: Fringe Benefits and Other Tax Implications,” I reviewed the fringe benefit and tax implications of the United States v. Windsor decision....more

IRS Says Class Action Settlement Incentive Awards in Wage Based Claims Are Taxable As Wages

by BakerHostetler on

On March 15, 2013, the IRS issued a private letter ruling responding to a request for a determination of whether incentive awards paid to class representatives under a settlement agreement resolving a class action suit...more

Federal Appeals Court Holds That Supplemental Unemployment Compensation Benefits Are Not ‘Wages’ Subject To FICA Taxation,...

by Pepper Hamilton LLP on

In an important recent decision, United States v. Quality Stores, Inc., et al., Case No. 01-1563, 2012 U.S. App. LEXIS 18820 (6th Cir. Sept. 7, 2012), the U.S. Court of Appeals for the Sixth Circuit held that supplemental...more

Misclassification of Workers: An Attempt to Save Could Cost Your Business A Bundle

by Pessin Katz Law, P.A. on

In recent months, many business owners have noticed that their classification of workers is being closely scrutinized by a variety of federal and state regulatory agencies. Whether a worker is classified as an “employee” as...more

IRS Issues Proposed Regulations for Employer-Shared Responsibility under ACA

by Baker Donelson on

On December 28, 2012, the IRS issued proposed regulations with respect to employer-shared responsibility regarding health coverage under the Affordable Care Act of 2010 (ACA). Employers are permitted to rely on these proposed...more

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