Presentation by Karin M. Smith, MBA, CFE, SFO at 1/19/2017 State & Local Government Conference

1. Keeping the DOL, IRS and
Others Away
Karin M. Smith, MBA, SFO, CFE

2. Trouble!
USCIS
DOL
IRS
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3. Alphabet Soup Group
DOL
•Wage and
Hour
•Classification
of
Employees
IRS
•Taxes
•Employee vs.
Contractor
USCIS
•Legal work
status
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4. US Citizen and Immigration
Services

5. US Citizen and Immigration Services
Completing the I-9 form
Section 1 – the employee must fill this section out. Section
must be completed in its entirety. Must check 1 of the 4
boxes provided on citizenship
Section 2 – the employer must fill out with documents
provided by the employee. Employer must use original,
unexpired documents to fill this out
Section 3 – employer must fill out only upon re-hire of
employee
NOTE: All documents must be unexpired. Names
should appear on Form I-9 exactly as they appear on
documents. No nicknames should be used.
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6. Preparing for an I-9 Audit
Print a roster of all current employees
Employer must have a completed I-9 form on all employees
hired after 1986
If the I-9 form needs to be redone, then make sure to use the
current date on the form and ensure it is a current form
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7. Department of Labor

8. Most Common Reasons for DOL Visit
Complaint from
one employee
Low Wage
Industries
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9. DOL Visits
Little advance notice
Seek specific information about audit
Records collection
Identify point person, legal counsel?
Exit interview
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10. Overtime
Paying Overtime
Recordkeeping system accuracy for all hours worked
Off-the-clock work
Rest and break periods
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11. FLSA Audit
Familiarity with all job titles maintained
Ability to explain which job categories are being treated
as exempt
Ability to explain any shift rates, how time is recorded,
how overtime is paid and what rounding rules exist
Knowledge of how employee-wage garnishments are
calculated
Knowledge of whether or how new employees are paid
for orientation and training time
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12. Self Audit DOL Risk Areas
Job descriptions
Job classifications
Time worked, time paid
Complete payroll records
Records retention
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13. Internal Revenue Service

14. Fringe Benefits – Taxable?
Group-term Life Insurance
Mileage – commuting miles
Company vehicle
Employee discounts
Education assistance
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15. Group-Term Life Insurance
Exclude cost
up to $50K
Must tax
above $50K
Rate x
Coverage over
$50K x months
IRS Publication
15B
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16. Mileage/Company Vehicle
Personal use of government-owned vehicles
Mileage – Qualified Non-personal Vehicle
• Commuting is taxable fringe benefit
• Recordkeeping and substantiation requirements do not apply
$1.50 rule - multiplying each one-way commute (that is,
from home to work or from work to home) by $1.50
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17. Employee Discounts
Services – no more than 20% can be
offered without the discount being taxed
Merchandise or other property –
generally excludable discount is the profit
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18. Education Assistance
 Excludable for any form of educational instruction or training that
improves or develops job-related capabilities of employee
 It cannot be for the purpose of helping employee meet minimum
educational requirements
 Exclude up to $5,250 during calendar year
 Education Assistance Program requires a written plan
• Sets rules for qualification
• Cannot favor highly compensated employees
• Not offered cash in lieu of benefits
 Pay for tuition, fees, supplies, textbooks, equipment
 Cannot include supplies or equipment employee is allowed to
keep at the end of the course
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19. Self-Audit

20. 1099-Misc. Errors
Employee vs. Independent Contractor
Wrong Year
Law Firms,
Medical Services
Downloading
Forms
Due Date
Employee
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21. W-2 Errors
SS# doesn’t match name
Wrong Year
Box 12 Codes
Downloading
Forms
Retirement
Block
Due Dates
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22. 1099-Misc. & W-2?
Carefully review work arrangements
Review work assignments
Clearly document the differences between employment
and contracted services
Work must be clearly different
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