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Wage & Hour Scrutiny, IRA Option, Tax Evaders

Berdon advisors 03.19.2015 | eVisor

Business Advisory

Change is Driving Increased Wage and Hour Compliance Scrutiny

Federal and state departments of labor, along with enforcement agencies, are increasing their investigations of employers who fail to comply with wage and hour laws.  Employers need to be aware that several recent legal developments are driving this increase in scrutiny. They are:

  • Amendments to the New York Wage Theft Prevention Act,
  • The gradual elimination of the tip credit and other allowances,
  • The narrowing of overtime exemptions under the Federal Labor Standards Act, and
  • The Ryan1 decision which triggered an increase in wage-based claims by employees against employers.

Failing to comply with wage and hour laws exposes employers to significant financial liability not only from government investigations, but also from lawsuits brought by employees.  Employers may also suffer damage to their reputations which can, in turn, adversely impact business.  In this new environment, employers should take steps to establish practices that help ensure compliance.

 

1Daniel Ryan, Respondent, v. Kellogg Partners Institutional Services, Appellant, Court of Appeals of New York, Decided: March 27, 2012.

Personal Wealth  

Making Required IRA Distributions to Qualified Charities May Become an Option  

Since 2011, Congress has regularly approved extensions to the qualified charitable distribution (QCD) provisions. Under QCD provisions, individuals age 701/2 and older can make tax-free distributions of up to $100,000 per year from their individual retirement plans to public charitable organizations.  These contributions count towards the individuals' required distributions.  While the provisions expired at the end of 2014, Congress may once again reinstate them retroactively.  Seniors who are charity-minded may want to factor this option into their planning.    

Questions?  Contact your Berdon advisor, Scott Ditman, CPA/PFS, at 212.331.7464 | sditman@berdonllp.com, or Marco Svagna, CPA, at 212.331.7644 | msvagna@berdonllp.com.  

Security  

Telltale Signs That Something is Phishy  

With the tax season in full swing, phishing emails may be even more prevalent. Scammers attempt to acquire your information such as usernames, passwords, and credit card details, by masquerading as a trusted source in an email or other electronic communication.  As a reminder, the IRS does not initiate contact with taxpayers by email, texting, or any other social media. Try as they might, phishing scammers almost always leave clues that indicate the email is not what it seems. Here are some common mistakes:

  • The email is addressed to you, but sent to many people.  Check the 'To:' and 'cc:' fields.
  • The introduction is too informal or odd. (e. g., Hello + your last name!)
  • You find poor/extra spacing and formatting.
  • The company name or bank may be familiar, but you do not do business with it.
  • You can identify spelling errors, bad punctuation, and mistakes in grammar.
  • The web address (URL) is fake.  Most web browsers will allow you to hover your mouse on the link to see if the address matches the link that was typed in the message. Be careful not to click on the URL.   The IRS suggests that you forward scam emails to it at www.irs.gov/uac/Report-Phishing.  

Questions? Contact your Berdon advisor or Saul Brenner at 212.331.7630 | sbrenner@berdonllp.com.  

International Tax  

Search for Offshore Tax Evaders Targets Express Delivery Services  

FedEx, UPS, DHL, and a many other delivery services have received IRS "John Doe" summonses to provide information on U.S. taxpayers who have preserved their anonymity by using Sovereign Management & Legal Ltd. (Sovereign) for their offshore accounts and assets.  

Sovereign enables taxpayers to form and administer anonymous corporations, accounts, and entities offshore.  The company's services include maintaining and operating offshore structures, mail forwarding, virtual offices, and re-invoicing. Sovereign uses FedEx, UPS, and other delivery services for client correspondence and engages Western Union to transmit funds. The massive "John Doe" assault by the IRS will allow the Service to obtain records from these delivery companies and identify those U.S. taxpayers who used Sovereign's services to control their foreign accounts and entities.  

Questions? Contact your Berdon advisor or Saul Brenner at 212.331.7630 | sbrenner@berdonllp.com.