On May 31, 2018, the Internal Revenue Service (IRS) published a proposed rule that would expand the electronic filing requirement for a number of tax forms. Current IRS rules impose a 250-return threshold for mandatory electronic filing, which applies separately to each type of information return. However, the proposed rule would require:
- All information returns, regardless of type, to be taken into account to determine whether a reporting entity meets the 250-return threshold; and
- Any reporting entity subject to the electronic reporting requirement to file corrected information returns electronically, regardless of the number of corrected information returns being filed.
This proposed rule would impose mandatory electronic filing for significantly more reporting entities. According to the IRS, most forms are currently filed electronically. However, employers that don’t currently file electronically with the IRS should evaluate the number of information returns that they file to determine how this new standard could affect them.
Overview of Mandatory Electronic Filing
Existing IRS rules require reporting entities that file 250 or more information returns to file electronically. However, this 250-return threshold applies separately to each type of return. This means that each type of return is counted separately and not aggregated when determining whether the 250-return threshold applies.
These rules generally cover the following tax forms (among others):
- Form W-2 (Wage and Tax Statement);
- Forms in the 1094 series (including Forms 1094-B and 1094-C, the required transmittal forms under Section 6055 and Section 6056);
- Forms 1095-B and 1095-C (the required individual or employee statements under Section 6055 and Section 6056); and
- Forms in the 1099 series.
When the electronic filing rules were originally established, electronic filing was in the early stages of development and was not as commonly used as it is today. However, according to the IRS, significant advances in technology have made electronic filing more prevalent and accessible, in many cases making it less costly and easier for reporting entities than paper filing. The IRS asserted that most information returns are already filed electronically (approximately 98.5 percent in the 2016 tax year). As a result, the IRS no longer believes that determining the 250-return threshold on a form-by-form basis without aggregation is necessary to relieve taxpayer burden and cost.
Proposed Expansion of the Electronic Filing Requirement
Due to these advances in technology, the proposed rule would require reporting entities to count all information returns, regardless of type, to determine whether they meet the 250-return threshold and, therefore, must file the information returns electronically. Specifically, under the proposed rule, a reporting entity that is required to file a total for 250 or more information returns of any type covered by this rule during a calendar year will be required to file those information returns electronically.
|
Example: Company W is required to file 200 Forms 1099–INT (Interest Income) and 200 Forms 1099–DIV (Dividends and Distributions), for a total of 400 returns. Because Company W is required to file 250 or more returns covered by this rule for the calendar year, Company W must file all Forms 1099–INT and Forms 1099–DIV electronically. |
Corrected information returns are not taken into account in determining whether the 250-return threshold is met under the proposed rule. However, the proposed rule would also require corrected information returns to be filed electronically if the original information returns were required to be filed electronically.
According to the IRS, this rule change would help facilitate efficient and effective tax administration.
|
However, the rule change would require significantly more reporting entities to file information returns electronically with the IRS. Often, this involves working with a third-party service provider that offers information return preparation and electronic filing. |
Notably, though, the proposed rule does not change the existing regulations allowing reporting entities that are required to file returns electronically to request a waiver of the electronic filing requirement. As a result, electronic reporting waivers will still be available for reporting entities that properly request them. Electronic reporting waivers are intended to relieve the burden on reporting entities that lack the necessary data-processing capabilities or access to return preparers and third-party service providers at a reasonable cost.
Effective Date
The proposed rule is proposed to be effective once final regulations are issued and become applicable. However, to give reporting entities sufficient time to comply with the new rule, the proposed rule will not apply to information returns required to be filed before Jan. 1, 2019. Therefore, the proposed rule, if finalized, would generally be effective for:
- Information returns required to be filed after Dec. 31, 2018; and
- Corrected information returns filed after Dec. 31, 2018.
Read more
Self-driving vehicles may feel like something that will only be available in the distant future, but autonomous technology is already having an impact on the transportation industry. Many motor carriers are promoting new equipment to attract tech-savvy drivers, and advanced safety sensors are helping decrease accidents on the road.
Over 30 automakers and technology companies are working to make trucks fully autonomous, and many states have already passed self-driving legislation that allows for testing on public roads. But, even though this technology offers motor carriers a way to increase efficiency and improve safety, there are a number of topics your business needs to consider before adopting self-driving trucks.
The Different Levels of Automation
Most of the technology used in autonomous vehicles is an evolution of common safety features that use vehicle-mounted cameras and sensors, such as automatic brakes, lane departure systems and blind spot alerts. However, self-driving technology takes this concept a step further by having these systems work together to perform some or all driving functions.
Because there are multiple self-driving systems in development that offer different levels of autonomy, most companies use a system developed by SAE International to classify levels of autonomous vehicles. Levels 0-2 mainly define limited control systems that are commonly available in consumer and commercial vehicles:
- Level 0: No automation – The driver performs all driving tasks, but automated system issue warnings may be present.
- Level 1: Driver assistance – The vehicle and driver may share control in limited circumstances, such as adaptive cruise control and parking assistance. However, the driver must be ready to retake control at all times.
- Level 2: Partial automation – The vehicle has combined automatic functions (such as controlling acceleration and steering simultaneously), but the driver must be constantly engaged and aware of the surrounding environment.
Levels 3-5 define vehicles that are commonly referred to as autonomous or self-driving:
- Level 3: Conditional automation – A driver must still be present, but doesn’t have to monitor the environment. However, they must be ready to take control at all times and with no notice.
- Level 4: High automation – The vehicle can perform all driving functions under certain conditions, and switching control back to the driver may be optional.
- Level 5: Full automation – The vehicle can perform all driving functions at all times.
How Can Self-driving Trucks Help Carriers?
Self-driving trucks could help motor carriers address a number of common issues:
- Safety – Properly functioning self-driving systems operate without the chance of human error and can react to changing traffic patterns faster than a regular driver.
- Driver shortage – Regulations likely won’t allow vehicles to operate without a driver in the near future. However, the technology will attract applicants who don’t want to spend long stretches of time in full control of a commercial truck.
- Increased efficiency – Autonomous technology can give carriers real-time information on location, maintenance status and traffic patterns in order to increase efficiency and better manage fleets.
- Cost reductions – Motor carriers can reduce costs by sending autonomous trucks on more fuel-efficient routes or by platooning the vehicles together to reduce air drag.
What Risks Does This Technology Present?
Although autonomous technology is advancing rapidly, there are still a number of risks and obstacles to overcome before the vehicles can be widely adopted:
- Public perception – Advanced sensors generally make self-driving trucks safe, but recent high-profile collisions and fatalities during tests have lowered the public’s opinion of the technology.
- Long-term employment – Autonomous technology will help to attract new drivers in the near future, but some experts believe that fully independent vehicles may someday eliminate millions of jobs.
- Liability – The liability of an accident involving human-driven vehicles is fairly easy to judge. However, self-driving trucks bring a nonhuman factor into the equation that makes it difficult to determine if an operator, technology developer, manufacturer or other party is at fault for an accident.
- Compliance – Individual states, cities and jurisdictions currently manage laws regarding the testing and use of self-driving trucks, making interstate commerce more complicated. However, the FMCSA recently requested feedback on the regulations that would have to be updated, modified or eliminated to safely allow for the use of autonomous vehicles. Key questions discussed by the agency include the following:
- How will motor carriers ensure automatic systems are functioning properly?
- What changes, if any, should be made to distracted driving regulations?
- How will enforcement officials determine a vehicle’s SAE classification level, and would easily identifiable classification signage negatively affect other drivers?
- How should a driver’s hours of service be recorded when using an automated driving system?
Considering Your Options
As self-driving vehicles continue to develop, your business should carefully consider how both the advantages and risks of this new technology will impact its operations. Contact us at 831-661-5697 today for help analyzing your unique risk exposures.
Read more
Ticks and Lyme Disease
Lyme disease is a bacterium that’s often carried by mice and other small rodents. The disease can be transmitted to humans if they’re bitten by a tick that previously fed off an infected animal.
Different types of ticks live in the United States and while some can transmit diseases, others are only a nuisance. In general, infected blacklegged ticks can transmit the bacterium that causes Lyme disease.
Symptoms of Lyme disease typically develop within two weeks of a tick bite and can include fevers, chills, swollen lymph nodes, neck stiffness, fatigue, headaches, and joint or muscle aches.
To avoid contracting Lyme disease, do the following:
- Wear light-colored clothing, including long-sleeved shirts and pants when in wooded areas. Tuck pant legs into socks or boots and keep long hair tied back.
- Wash your body and clothing after all outdoor activities.
- Look periodically for ticks if you’ve been outdoors, especially if you’ve been in wooded areas or gardens.
- Remove ticks within 24 hours to greatly reduce the risk of contracting Lyme disease.
- Check your pet’s coat if it’s been in an area known for ticks.
Remember to consult your health care provider as soon as you experience Lyme disease symptoms. If possible, send any ticks that you’ve removed to a public health laboratory in your area. Click here to learn more.
Keeping Mold Out of the Home
A mold problem in the home can cause serious health effects, especially for young children, the elderly, those who suffer from allergies or asthma, and those with prior respiratory conditions. Mold can cause eye irritation, nasal stuffiness, shortness of breath, wheezing and infections in the lungs.
Though most molds grow outdoors, they can get inside a home through open windows and doors, air conditioning systems, pets, clothing and shoes. Try these prevention tips to keep mold out of your home:
- Clean up any water damage or flooding thoroughly and immediately.
- Use a dehumidifier and a wet-dry vacuum to remove water quickly.
- Remove carpeting that can’t be dried out within 48 hours. If your carpet was contaminated by sewer water or a flood, it needs to be replaced.
- Repair basement cracks so that moisture can’t seep in.
- Use a dehumidifier or air conditioner to reduce indoor moisture, especially during humid months. Empty the drip pans in your air conditioner, refrigerator and dehumidifier on a regular basis to prevent water buildup.
- Fix plumbing leaks immediately. Mold will begin to grow within 24 to 48 hours after a leak forms.
Protecting Your Vehicle from Hail
Hail can strike anywhere and at any time, causing major damage to your vehicle. When a hailstorm occurs, take the following precautions to keep you and your vehicle safe:
- Don’t get out of your vehicle if you’re driving during a hailstorm. If you can pull over to the side of the road, do so safely.
- Park your car on an angle so that the hail hits the front of your car. This protects your side and rear windows, which aren’t made of reinforced glass.
- Find covered parking to protect your car, like a parking garage or awning. If you live in a hailstorm-prone area, it may be a good idea to purchase or build a covered parking solution for your home, like a metal canopy or garage.
- Use blankets or a hail car cover. These items can be very effective in protecting vehicles from damage, especially if you’re far away from shelter.
- Locate a body shop that you trust to make any necessary repairs. Discuss the extent of the damage with the body shop and your insurance broker.
Hotel Safety Tips
Hotels provide a home away from home whenever you travel. However, hotels aren’t always safe, and vacationers are at risk of things like break-ins, fires and natural disasters.
The following are some general hotel safety tips to keep in mind to protect yourself from a variety of risks:
- Check reviews for security concerns. Guest reviews can provide information on the area’s crime level and steps the hotel takes to protect guests.
- Use hotels that restrict access to guest floors.
- Check your room lock to confirm it’s working properly. Make sure that the door has a deadbolt and keep it locked whenever you’re in the room.
- Lock away valuable items you won’t be carrying with you in the room’s safe. This can include things like money, jewelry, laptops or other electronics.
- Be wary of people that come to the door claiming to be hotel staff.
Read more
STATE RESOURCES
California Department of Industrial Relations
www.dir.ca.gov/dlse/dlse
WagesAndHours.html
Publications
The DIR has published the following materials regarding wage and hour laws in the state:
Poster
Employers can use this DIR model poster to satisfy their posting requirements.
On April 30, 2018, the California Supreme Court adopted a new test for classifying workers as independent contractors for purposes of the California wage orders. In Dynamex Operations West, Inc. v. Superior Court, the Supreme Court ruled that employers must use a three-part “ABC test” to establish whether a worker may be properly classified as an independent contractor for this purpose.
Worker Classification
Whether a worker is covered by a particular law or is entitled to receive a particular benefit often depends on whether the worker is an employee or an independent contractor. In general, employment laws, labor laws and related tax laws do not apply to independent contractors.
For purposes of federal labor and employment laws, no standard test has emerged to determine the true character of an independent contractor relationship. In fact, employers may have to apply various tests to determine how issues of employment benefits, workers’ compensation, unemployment compensation, wage and hour laws, taxes or protection under Title VII of the Civil Rights Act, the American with Disabilities Act (ADA), and the Family and Medical Leave Act (FMLA) affect their workforces.
In addition, employers should be aware that state and local variations of these tests may apply in certain situations.
California Wage Orders
Several federal laws regulate wage and hour requirements. California law also imposes state wage and hour requirements. When federal and state laws are different, the law that is more favorable to the employee will apply.
The Industrial Welfare Commission (IWC), part of the California Department of Industrial Relations (DIR), established wage orders to enforce and administer California’s wage and hour requirements throughout the state. Because the IWC is no longer in operation, the Division of Labor Standards Enforcement (DLSE) currently enforces the wage orders.
In total, there are 17 California wage orders, plus a minimum wage order, that California employers must comply with. Each wage order covers a separate industry and imposes requirements relating to minimum wages, work hours and basic working conditions (such as meal and rest periods) for California employees.
Overview of Dynamex v. Superior Court
In Dynamex v. Superior Court, the California Supreme Court was asked to determine what standard applies under California law for purposes of determining whether workers should be classified as employees or as independent contractors under the California wage orders. In this case, a group of delivery drivers sued their employer, Dynamex, arguing that the drivers had been misclassified as independent contractors, rather than employees. The delivery drivers claimed that, due to this misclassification, Dynamex violated Wage Order No. 9 (the applicable order governing the transportation industry), as well as various sections of the California Labor Code.
Prior to 2004, drivers working for Dynamex who performed similar pickup and delivery work as the current drivers were classified as employees. In 2004, however, Dynamex adopted a new policy and contractual arrangement under which all drivers are considered independent contractors, rather than employees. Dynamex argued that, in light of the current contractual arrangement, the drivers are properly classified as independent contractors.
The Supreme Court’s ruling—The “ABC Test”
Historically, courts have applied a multifactor balancing test in determining whether a worker is an employee or an independent contractor. However, the California Supreme Court abandoned the traditional balancing test, and instead adopted a new three-part test that California employers must use when determining whether a worker can be classified as an independent contractor for purposes of the wage orders.
This three-part test is commonly referred to as the “ABC test” due to its three factors to consider. Under this test, a worker is properly considered an independent contractor to whom a wage order does not apply only if the employer establishes that all of the following are true:
- That the worker is free from the control and direction of the employer in connection with the performance of the work, both under the contract for the performance of the work and in fact;
- That the worker performs work that is outside the usual course of the employer’s business; and
- That the worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed for the employer.
This test generally favors a determination that workers are employees, rather than independent contractors. The ABC test presumes that all workers are employees and allows workers to be classified as independent contractors only if the employer demonstrates that the worker in question satisfies each of the three conditions.
Impact on Employers
Employers that employ independent contractors in California will want to ensure that their workers are properly classified under the new ABC test adopted by this ruling. As a result, these employers should review their employment relationships and contractual arrangements to evaluate the impact that this ruling may have on their business.
Employers in California should also keep in mind that this ruling applies for purposes of the California wage orders only. Other existing worker classification tests continue to apply for federal law purposes.
More Information
Contact Scurich Insurance for more information on wage and hour laws in California.
Read more
On April 30, 2018, the Occupational Safety and Health Administration (OSHA) announced it will require all establishments affected by the electronic reporting rule to submit their 2017 data to OSHA by July 1, 2018.
This announcement clarifies the requirement for establishments in states with an OSHA-approved plan. These establishments must submit electronic reports, regardless of whether the state has ratified or incorporated the electronic reporting rule into its OSHA state plan.
Establishments in all states, including those with an OSHA-approved state plan, should prepare to submit electronic reports by July 1, 2018. Affected establishments can accomplish this by:
- Becoming familiar with the requirements in the electronic reporting rule; and
- Transitioning their OSHA records to an electronic format approved by the Injury Tracking Application (ITA).
OSHA Electronic Reporting
OSHA’s electronic reporting rule was issued in 2016. The rule requires establishments to report data from their injury and illness records to OSHA electronically if they:
- Are already required to create and maintain OSHA injury and illness records and have 250 or more employees;
- Have between 20 and 249 employees and belong to a high-risk industry; or
- Receive a specific request from OSHA to create, maintain and submit electronic records, even if they would otherwise be exempt from OSHA recordkeeping requirements.
The electronic reporting rule applies to establishments, not employers. An employer may have several worksites or establishments. In these situations, some establishments may be affected while others are not.
To determine whether an establishment is affected, employers must determine each establishment’s peak employment during the calendar year. During this determination, employers must count every individual that worked at that establishment, regardless of whether he or she worked full-time, part-time, or was a temporary or seasonal worker.
OSHA-approved State Plans
The final rule required OSHA-approved state plans to adopt the electronic rule or “substantially identical” requirements within six months of the final rule’s publication date.
|
All Employers |
| California
Maryland
Minnesota
South Carolina
Utah
Washington
Wyoming |
|
Public Employers |
| Illinois
Maine
New Jersey
New York |
This means that OSHA-approved state plans have the authority to adopt reporting requirements that go above and beyond what is required by the federal rule. For this reason, establishments located in OSHA-approved state plan jurisdictions should consult with their local OSHA offices to make sure they are satisfying all electronic reporting requirements.
The OSHA-approved state plans shown on this map have not yet adopted the requirement to submit injury and illness reports electronically.
As a result, establishments in these states were not required to submit their 2016 data through the reporting website in 2017. However, OSHA has now clarified that they must submit their 2017 data in 2018.
Read more
Business owners face a variety of risks unique to their specific type of business. Choosing appropriate insurance coverage is key to ensuring that the business remains lucrative, especially when any of those risks become reality. A business owners policy (BOP) takes some of the guesswork out of choosing insurance and can make it easier to safeguard your business.
A BOP bundles several types of coverage in one package, similar to the way a homeowners policy works, but is designed for small and midsized businesses. Not only does it help businesses cover all their risks, but it can also save money, since the bundle of services typically costs less than the cost of all the individual coverages combined.
Risks Covered by BOPs
BOPs are packaged for businesses that generally face the same type of risks. For example, a restaurant BOP can be designed and packaged differently than a manufacturing BOP.
Typically, a BOP covers a business’s equipment and merchandise while also covering everything that a general liability policy covers. It also covers equipment, furniture and supplies in up to five separate locations, including rented and leased equipment.
Exclusions
Although a BOP is a convenient insurance option for small to midsized businesses, it does not cover professional liability, auto insurance and workers’ compensation. Workers’ life, health and disability coverage is also excluded.
For those exclusions, business owners can purchase separate coverage to add to the BOP. Other risks that a BOP does not cover include the following:
- Business interruption
- Crime
- Legal obligations as a result of any harm caused to others as a result of faulty business operations
Good Candidates for a BOP
A BOP may be a smart choice for businesses that have the following characteristics:
- A physical location, whether home-based or outside the home
- Assets that can be stolen, including products, cash, furniture and digital property
- A high risk for lawsuits
- Less than 100 employees and $5 million in sales
The following types of businesses frequently purchase BOPs to protect from losses not covered by general liability insurance:
- Manufacturers
- Religious organizations
- Apartments
- Restaurants
- Technology consultants and solutions providers
- Wholesalers
- Retailers
Eligibility
Small to midsized businesses need to meet specific criteria to be eligible for a BOP. When determining eligibility, insurers consider factors that include the type of business, size of its primary location, class of business and revenue.
Premiums for BOPs are based on eligibility factors, as well as financial stability, building construction, security features and fire hazards.
When purchasing business insurance it’s important to obtain the right amount. Contact Scurich Insurance for guidance as to whether a BOP is a logical choice for your business.
Read more
