Five Reminders for Employers to Kick Start 2017
February 15, 2017
There have been several changes for employers already in 2017. We've rounded up 5 important updates or changes impacting employers today.
- A new Form I-9
- Updated ERISA fines under TITLE 1
- Misclassified independent contractors
- Updated guidance for employer shared responsibility reporting
- Key Employee Officer classification change
A new Form I-9
A new Form I-9 (the employment eligibility verification form) has been published and must be used as of January 22, 2017. This form is for all new hires or employees whose employment authorization must be re-verified under existing immigration laws. These forms are required to be completed within 3 days of employment.
The Form I-9 is available as a fillable PDF and it must be printed and signed.
Updated ERISA fines under TITLE 1
The DOL has issued an annual adjustment of civil monetary penalties for benefit-related violations. Regulations issued in 2016 established the catch-up amounts for future adjustments and they must be made by January 15th of each year, starting in 2017.
Some of the increases include:
- Failure to file Form 5500 - the maximum penalty increases from $2,063 to $2,097 per day, that the form is late
- Group Health Plan Penalties
- The penalty for failing to provide the Summary of Benefits and Coverage (SBC) for Group Health Plans increased from $1,087 to $1,105 per failure
- The penalty for violations of GINA (Genetic Information Nondiscrimination Act of 2008) increased from $110 per participant per day to $112
- The penalty for failing to disclose the availability of Medicaid or Children's health insurance program (CHIP) increased from $110 to $112 per participant per day
- Failure to provide 'requested documentation' to the Department of Labor - the fee has increased from $147 to $149 per day
Although DOL audits continue to increase, the DOL has not automatically imposed the maximum penalty in the past and doesn't plan to change its enforcement policy. Visit www.gpo.gov to learn more on the penalty increases.
Misclassified independent contractors
The IRS began auditing employers in 2016 to determine if independent contractor relationships were actually misclassified, W-2 employees. Audits focusing on these independent contractors will continue in 2017. Misclassification of W-2 employees as contractors could include significant fines and penalties, as well as back taxes, back wages and attorney fees. Companies should perform a comprehensive self-audit of each independent contractor to ensure that the affected worker has been assigned a proper 1099 classification.
In addition to fines and penalties, this misclassification can affect an Applicable Large Employer (ALE) in their reporting for the employer shared responsibility reporting documents. An inaccurate report of FTE count, evaluation of their status for premium tax credits, etc. could result in additional penalties and fees.
Updated guidance for employer shared responsibility reporting
Although the ACA rules are under scrutiny with the new administration, employers need to remain compliant with existing regulations. This includes the updated guidance for the employer shared responsibility reporting for ALEs. These reports notify the IRS of the benefits employers offer and allow the IRS to determine if the employees receiving the premium tax credit are valid.
Employers need to plan for the deadlines of the employer shared responsibility reports. For 2016 reporting ALEs must:
- Provide a completed Form 1095-C to any employee who was full-time at any time during the 2016 calendar year, by March 2, 2017.
- File Forms 1094-C and 1095-C with the IRS by February 28, 2017, if filing on paper or March 31, 2017, if filing electronically. Regulations under Section 6081 address extensions of time to file information returns.
In addition to the filing deadlines, there has been an inflation adjustment for the assessable payment under section 4980H from $2,000 to $2,260. The assessable payment under section 4980H(b) increases from $3,000 to $3,390. This payment is based on the number of FTEs who have received an applicable premium tax credit or cost-sharing reductions.
Visit www.irs.gov for more information on the employer shared responsibility reporting.
Key Employee Officer Classification change
As you begin to work with your clients on their 2017 Non-Discrimination testing, please note there is a change in the classification of key employees. Key Employee Officer is defined as receiving annual compensation over $175k, up from $170k in 2016. The Highly-Compensated Employee definition does not change and remains at $120k.
Visit our Blog for more information on future regulation changes and updates or receive information directly to your inbox by signing up below. For questions regarding how these updates impact your business, it may be best to contact your tax or legal counsel.