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New for the 2017 filing season, the employer deadline for Forms W-2 and 1099-MISC to be submitted to the IRS has changed. The new filing deadline is now the same as the due date for employers to issue these forms to recipients, January 31.
Last month, the IRS issued Notice 2016-66, which classifies a significant number of micro- captive arrangements as “Transactions of Interest.”
Under this Notice, these arrangements are now subject to detailed reporting obligations. In addition, captive insurance companies, insured parties and certain owners, and other involved parties and advisors (including captive managers) are required to meet certain disclosure and recordkeeping requirements.
By January 30, 2017, parties that have entered into these “Transactions of Interest,” potentially going back to 2006, will have to file a disclosure statement with the IRS detailing the circumstances surrounding their involvement in the captive arrangement. The disclosures will be utilized by the IRS for various purposes including potential guidance and enforcement.
Failure to file a complete and accurate disclosure statement can present a stiff penalty. Taxpayers will face a penalty of 75% of the decrease in tax as a result of the transaction, with a minimum penalty of $10,000 and a maximum penalty up to $50,000.
Captive managers and other advisors are subject to a $50,000 penalty for each failure to file and a penalty of $10,000 per day after the 20th day of not filing an information list requested by the IRS.
Given these stiff penalties, it is critical that those affected by this Notice pay close attention to the specific requirements imposed.
We hope this information has been helpful to you, and if you have questions about how this notice may affect you, please contact your Whalen & Company representative.
Sources:
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Last week, a federal judge blocked The Department of Labor’s (DOL’s) new federal overtime rule.
Employers have just a few weeks left to prepare for the changes that The United States Department of Labor (DOL) issued in May.
The DOL issued the final update to its proposed “Overtime Rule” which was a revision to the Fair Labor Standards Act.
The salary threshold for white collar exemptions will be increased to $47,476 from the current threshold of $23,660, effective December 1, 2016, affecting 4.2 million U.S. workers.
Key Overtime Rule Changes:
The DOL is proposing the following ways for businesses to comply with these changes:
According to the DOL, this exemption threshold has not been updated since 2004 and was due to be revised as “President Obama directed the Secretary of Labor to update the FLSA’s overtime pay protections and to simplify the overtime rules for employers and workers alike.”
For more details on this update rule, check out the DOL’s Overview and Summary and Small Business Guide.
We hope this information has been helpful to you. If you have questions about how the proposed overtime rule affects your business, please contact your Whalen & Company representative.
The proposed regulations define a new and expanded class of “disregarded restrictions.” If finalized in their current form (and upheld by the courts), they will have a very significant and limiting effect on the benefits of transfers of interests in certain entities to family members for estate and gift tax purposes. These are likely be finalized in early 2017, however, legislation has recently been introduced that could potentially overturn these proposed regulations.
