Updates to Nebraska Local Sales Tax

By Joshua A. Diveley.

The Nebraska Department of Revenue announced that beginning April 1, 2015, the following locations will implement a local sales and use tax:

  • Benedict (1.5%);
  • Callaway (1.0%);
  • Dakota County (0.5%);
  • Decatur (1.0%);
  • Elwood (1.0%);
  • Stanton (1.5%);
  • Upland (0.5%); and
  • Utica (1.5%).

Beginning April 1, 2015, the following cities and villages will increase their local sales and use taxes as follows:

  • Bancroft (1.5%);
  • Bassett (1.5%);
  • Burwell (1.5%);
  • Duncan (1.5%);
  • Fairbury (2.0%);
  • Howells (1.5%);
  • Minden (2.0%);
  • Nebraska City (2.0%);
  • Norfolk (2.0%);
  • Rushville (1.5%);
  • Wayne (1.5%); and
  • York (2.0%).

Also, beginning April 1, 2015, municipal boundaries for the following cities will be modified: Beatrice, Fairbury, Kearney, Lincoln, Neligh, Plattsmouth, West Point, and York. Additional information is available at:   http://www.revenue.nebraska.gov/salestax.html.

© 2014 Parsonage Vandenack Williams LLC

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Posted in Sales and Use Tax

Unbundling Fiduciary Fees

Recently, the Internal Revenue Service (IRS) issued final guidance on Internal Revenue Code (IRC) Section 67 as it pertains to a 2 percent floor for miscellaneous itemized deductions. This is important to fiduciaries of non-grantor trusts and estates because it will impact what fees can be deducted for the taxable year. The issue stems from several court cases, including a United States Supreme Court case, that placed confusion regarding the generally held notion that all fees and expenses associated with trust and estate administration were deductible.

The specific question pertains to a 2 percent floor and whether administration expenses, in aggregate, must exceed 2 percent of the adjusted gross income prior to being deductible. Before this confusion, a fiduciary could simply bundle all their administration expenses, classify it as such, and not concern themselves with the 2 percent floor. However, the various court interpretations have interjected confusion regarding fee bundling and whether each fee inside the bundle is subject to the 2 percent floor.

The guidance issued by the IRS attempts clarify the problem. Although the expenses can still be bundled, they must be bundled as expenses subject to the 2 percent floor and expenses that are not. This is much simpler in theory than in practice. Determining whether an expense falls into one category or the other remains tricky. Ultimately, this means that all expenses incurred by fiduciaries in the administration of a non-grantor trust or estate must be unbundled and classified. Although the IRS guidance lists specific expenses, it is not an exhaustive list. Unfortunately, there is not a perfect solution to this process and great care must be taken in the classification process.

© 2014 Parsonage Vandenack Williams LLC

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Posted in Estate Administration, Qualified Retirement Plans

Corporate Wellness Programs Receive Scrutiny From the EEOC

The United States Equal Opportunity Commission (EEOC) has filed a petition, their third in three months, regarding a corporate wellness program. The latest petition alleges that Honeywell International, Inc. violated the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) through the administration of workplace biometric screening.

The program is similar to those seen at companies across America. The employee receives health care discounts and other financial benefits for undergoing workplace biometric screening and choosing healthy lifestyles. The EEOC claims the program violates the law because it is an involuntary, non-work related, medical inquiry. Second, the EEOC alleges the employer is illegally inducing employees to provide family medical history. If the court views the program similarly, it would be a violation of the ADA and GINA.

It is unclear what this challenge will mean for corporate wellness programs.  In the short term, with the end of year approaching, it will unlikely have an immediate impact. However, it will be important to monitor the evolution of the challenges because it could  change how these programs must be administered or even whether these programs can be offered.

© 2014 Parsonage Vandenack Williams LLC

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Posted in Benefits, Health and Welfare Benefits

Nebraska Voters Approve Minimum Wage Increase

By Eric W. Tiritilli.

The 2014 midterm elections saw a number of significant races and ballot measures across the country.  One of particular importance to Nebraska employers is Initiative Measure 425 which sought to raise the minimum wage in Nebraska.  This measure passed by a large margin.

As a result, beginning on January 1, 2015, the minimum wage in Nebraska will rise from $7.25 per hour to $8.00 per hour.  Then, beginning on January 1, 2016, the minimum wage will raise to $9.00 per hour.  Nebraska was one of four states in the 2014 elections that passed measures to raise their state’s minimum wage.

© 2014 Parsonage Vandenack Williams LLC

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Posted in Employment Law, Starting a New Business, Wage Issues

2015 Wage and Investment Levels for Nebraska Advantage Act

Recently, the Nebraska Department of Revenue issued regulations to qualify for benefits under the Nebraska Advantage Act in 2015. The Nebraska Advantage Act, as amended in 2012, was designed to promote relocation of businesses to Nebraska, expansion of business currently in Nebraska, and general business investment within the state. In order to qualify for the tax benefits, the Department of Revenue issues annual investment and wage guidelines that must be met. The average annual wage and investment requirements for 2015 are as follows:

  • Tier 1: Investment of $1 million and a wage requirement of $23,979 for a minimum of 10 employees.
  • Tier 2: Investment of $3 million and a wage requirement of $23,979 for a minimum of 30 employees.
  • Tier 2 large data center: Investment of $1 million and a wage requirement of $23,979 for a minimum of 30 employees.
  • Tier 3: Wage requirement of $23,979 for a minimum of 30 employees.
  • Tier 4:Investment of $12 million and a wage requirement of $23,979 for a minimum of 100 employees.
  • Tier 5: Investment of $37 million.
  • Tier 5 renewable energy projects: Investment of $20 million.
  • (Super) Tier 6: Investment of $11 million and a requirement of 75 new employees; or an investment of $111 million and at least 50 new employees. The wage requirement is a minimum of $58,948.

Other incentives built into the same law have been updated to require a $12.33/hour minimum to qualify for the Nebraska Advantage Rural Development Act and $1,154/week maximum to qualify for the Nebraska Advantage Microenterprise Tax Credit Act.

© 2014 Parsonage Vandenack Williams LLC

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Posted in Starting a New Business

Can Franchise Agreements Be Terminated or Not Renewed?

A Business FAQ with Mark A. Williams.

The simple answer is yes, franchise agreements can be terminated and that is pretty scary for somebody that owns a franchise business. The more complicated answer is that you have to look at your franchise agreement. Usually there are provisions in there that cover the renewal of the franchise and what happens if it is terminated.

There is also state and federal law that apply to franchises. In some states, the franchisor might not just be able to terminate your franchise even if the franchise agreement says they can.

Yes, franchise agreements can be terminated, they can be not renewed, but in almost every circumstance, whether it is by your franchise agreement or whether it is by law, you have some rights to renew and you need to make sure you pay attention to those rights when you get into a franchise relationship.

© 2014 Parsonage Vandenack Williams LLC

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Posted in Business Transactions, Franchising

Federal Contractors Take Note – The Minimum Wage Will Rise to $10.10 in 2015

By Eric W. Tiritilli.

The Department of Labor recently issued a final rule raising the minimum wage for employees working on new covered federal contracts to $10.10 beginning on January 1, 2015.  A “new” contract is one that results from a solicitation issued on or after January 1, 2015, or that is awarded outside of the solicitation process after January 1, 2015.  On January 1, 2016, and annually after that, the minimum wage will be increased in an amount determined by the Secretary of Labor.

Violation of the new Department of Labor rules on minimum wage for covered federal contractors can lead to serious penalties including the withholding of payments due to the contractor to pay wages due to employees and, potentially, debarment.  The Department of Labor notes that the new minimum wage requirements will affect approximately 200,000 workers in the United States.

© 2014 Parsonage Vandenack Williams LLC

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Posted in Employment Law, Rulings, Wage Issues

What Law Governs When a Customer in Another State Buys My Product Over the Internet?

A Business FAQ with Mary E. Vandenack.

If you sell products over the internet, it is important to be aware that you are going to be subject to the laws and regulations of the state that you are located in, the states that you are selling in, and certain federal laws. There are going to be laws that govern your relationship with the persons who are buying your product, and there will be laws impacting you from a tax perspective so you are going to want to become familiar with each. It’s extremely important to give a lot of attention to your website terms and conditions. There are certain things that you can cover in those terms and conditions. You cannot get out of the application of different federal and state laws in those terms and conditions, but you can engage in certain aspects of control.

© 2014 Parsonage Vandenack Williams LLC

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Posted in Business Management, Sales and Use Tax, Starting a New Business

IRS Announces 2015 Retirement Plan Limits

By Joshua A. Diveley.

The IRS has announced the inflation adjusted limits applicable to retirement plans for 2015. Some of the key adjustments for defined contribution plans (including 401(k), 403(b), 457 and profit sharing plans) include:

  • The maximum salary deferral limit is raised from $17,500 to $18,000
  • The additional catch-up contribution deferral limit is raised from $5,500 to $6,000
  • The maximum annual addition to the plan (excluding catch-up contributions) is raised from $52,000 to $53,000
  • The maximum covered compensation for an employee is raised from $260,000 to $265,000
  • The compensation threshold to be considered a “highly compensated employee” (absent a top-paid group election) is raised from $115,000 to $120,000

A copy of the IRS release with additional adjustments affecting retirement plans is available here.

© 2014 Parsonage Vandenack Williams LLC

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Posted in Individual Income Tax, Qualified Retirement Plans

What Is the Difference Between an Employee and an Independent Contractor?

A Business FAQ with Mark A. Williams.

An employee is somebody that you pay wages to, you withhold taxes from them, and you provide them benefits. An independent contractor is one where you pay them a set amount of money and they have to withhold their own wages.

In a business, it is important to be able to recognize when can I pay someone as an employee versus when can I pay them as an independent contractor. There are a lot of different tests depending on certain questions:

  • Do I have to provide workers comp?
  • Do I have to pay unemployment?
  • Do I have to withhold taxes from them?

Generally, I say to people that if you control what they do and tell them you have to be in my office and use my computer, you have to be here at 8 o’clock, you have to leave at noon, that sounds like an employee. And generally if you say to them, “Go get this done sometime over the next couple of weeks,” that sounds like an independent contractor. But really, you have to look at the facts and circumstances to make that determination every time.

© 2014 Parsonage Vandenack Williams LLC

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Posted in Employment Law, Employment Tax, Wage Issues
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