Volume 2 – 2016
In Volume 2 of our 2016 newsletter, we highlight:
New Overtime Rule
Independent Peer Review
Destroy Confidential Information
IRS Increases Safe Harbor For Purchases
New Overtime Rule
The Fair Labor Standards Act (FLSA) issued by the U.S. Department of Labor (DOL) covers employee issues such as minimum wage, overtime, and child labor. The FLSA regulations were last updated in 2004. In 2014 the President directed the DOL to issue proposed changes to the salary level required for certain exempt employees. The DOL has been working for the past two years to update the overtime rules. The new rules were finally released on May 18, 2016.
“White Collar” workers can be exempt from overtime pay if they meet certain rules concerning job duties, responsibilities, and certain minimum pay. Exempt employees include executive, administrative, professional, outside salesmen, and specialized computer personnel. Under current law the salary threshold is $455 per week ($23,660 annually). The new rule set the salary level at $913 per week ($47,476 annually), which is equal to the 40th percentile of weekly earnings in the lowest wage census region. The new rule allows up to 10% of the new salary level to be paid in the form of nondiscretionary bonuses and incentive payments, provided these payments are made on at least a quarterly basis. The total compensation requirement to qualify for the highly compensated employee was increased from $100,000 annually to $134,004, which is based upon the 90th percentile for salaried workers.
In addition to the salary level, an employer must also consider an employee’s job duties to determine if they are exempt. Merely a job title or the fact that an employee is paid a fixed salary does not make them an exempt employee. The DOL did not make changes to the duties test but they are seeking comments on whether the duties test needs updating in the future.
All hospitals, schools, and state and local governments are subject to these rules. Certain small businesses are exempt from the rules if they are not engaged in interstate commerce and have annual gross receipts under $500,000. Interstate commerce includes the regular use of mail or telephones for interstate communication, and shipping or receiving goods through interstate commerce. It would also include the handling of credit card transactions that involve the interstate banking and finance system.
The salary level requirement does not apply to outside salesmen and certain professionals including doctors, lawyers, and teachers.
If a state adopts more stringent regulations, these standards would take precedence over the FLSA. The new rules will become effective on December 1, 2016 and will automatically adjust every three years with the first one being on January 1, 2020.
No one is going to win fame, recognition, or
advancement just because he or she thinks
it’s deserved. Someone else has to think so too.
Independent Peer Review
Hochschild, Bloom & Company LLP proudly announces that we have successfully completed another independent peer review of our accounting and auditing practice. This means that we have undertaken a major commitment to meet the highest professional standards and objectives of quality control in order to insure that the accounting and auditing work performed by the Firm is of the highest professional caliber.
The review concluded that the Firm complies with the stringent quality control standards set by the American Institute of Certified Public Accounts (AICPA) after making an independent assessment of the Firm’s quality control policies and procedures and inspecting a representative sample of the Firm’s documentation and reports for accounting and auditing engagements. The peer review team also inspected the Firm’s administrative files and interviewed professional personnel.
Michael D. Williams, CPA, our Firm’s Quality Control Partner, noted that this continues the long tradition of successful quality inspections that the Firm has had in a row since 1974.
By Michelle Lepper
The Missouri State Treasurer currently holds more than $600 million in unclaimed property for more than 3.5 million people. This money is considered restricted forever, meaning it never becomes property of the State, and an individual can claim it at any time. The average amount returned per claim is $300. Unclaimed property occurs for various reasons including a misspelled name, a divorce, address changes without prior notice, a post office error, etc.
Organizations have an obligation to report unclaimed assets to the Unclaimed Property Division of the State Treasurer’s office. First, you must notify the owner of the unclaimed property. If there is no response from the owner, the organization then reports and turns over any unclaimed property to the State. Failure to do so has stiff penalties. Organizations must also maintain and keep related records five years after the unclaimed prop-erty is reported.
The State Treasurer’s office is required to publish, in a newspaper of general circulation, a notice listing the reported unclaimed property. This notice includes the person’s name and last known address. They also must work with other state agencies to provide property owners a notice of their rights and responsibilities.
Individuals can search for unclaimed property held by the State of Missouri by searching the State’s website (https://www.treasurer.mo.gov/unclaimedproperty/main.aspx). Or to find out if other states may be holding your unclaimed property, search the national database. If your name appears on the list, check the box next to your name and follow the instructions given. You can also contact the Division by calling 573-751-0123 or contacting them by mail:
Office of Missouri State Treasurer
Unclaimed Property Division
P.O. Box 1004
Jefferson City, MO 65102
Destroy Confidential Information
In this day and age we all know the importance of keeping our personal information private. Many people now have shredders not only at work but also in their home or they use a shredding service. Be sure to always use a cross-cut or micro-cut shredder to destroy your sensitive trash. We want to keep savvy criminals from digging through our trash and stealing our confidential information.
Much has been said about deleting information off the hard drive of your computer before you get rid of it, but there are a number of other devices that also have confidential information stored in them. Some of the devices with memory storage include cell phones, fax machines, and digital copiers. These items remember all the information sent through them or store an image of the documents processed by it. Once you decide to replace these items or your contract with the company expires, you may decide to donate the item to charity or return it to the manufacturer. Make sure you destroy or erase the memory chip or hard drive before you get rid of the item. Check the owner’s manual or online for possible suggestions on the best way of deleting stored data files.
IRS Increases Safe Harbor for Purchases of
De Minimis Tangible Property
By Ashley Straatmann, CPA
The IRS recently raised the safe harbor threshold for deducting certain items of capital property from $500 to $2,500. This change applies to businesses that do not maintain an audited financial statement. (Businesses that maintain an audited financial statement are eligible for a safe harbor deduction up to $5,000.) The new threshold takes effect for businesses with tax years beginning on or after January 1, 2016. However, the IRS has noted that it does not intend to challenge the use of the higher threshold in tax years prior to 2016.
Under the tangible property regulations, a safe harbor deduction is allowed that applies to amounts spent to acquire, produce, or improve tangible property that would normally qualify as a capital item. The item must be substantiated by an invoice. The threshold is applied either per invoice or per item on the invoice. Businesses can still claim eligible deductions for repair and maintenance costs, even if they are in excess of the applicable safe harbor threshold amount.
This change may help reduce paperwork and recordkeeping for many small businesses. It will also allow businesses to take an immediate deduction for many expenditures instead of spreading the expense over many years through depreciation deductions.