Local Spas Receive $70,000 in Fines

DHS Supplemental Proposed Rulemaking For No-Match Rule

Civil Fines Increased for Immigration Violations

Coffee Co. Penalized for Taking Employee Tips

Employers May Scan and Shred Returned Forms W-2.

Small Business Tax Workshop, Lesson 2 - Recordkeeping

WineCountryHR - Meeting in Carneros May 8

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Local Spas Receive $70,000 in Fines
Seven Napa day spa owners received fines totaling $70,000 this week for state labor law violations. Spa owners misclassified spa employees as independent contractors, said state labor officials who also conducted sweeps of nail salons, day spas and beauty salons in San Francisco, Sonoma, Contra Costa and Alameda counties.

In Napa, day spas were fined between $2,500 and $24,500. The spas were cited for failing to carry worker’s compensation insurance, failing to provide itemized deductions for items such as Social Security on paychecks, or both, according to the State Division of Labor Standards Enforcement.

The state investigators came unannounced March 20 and March 21 demanding to see checkbooks, appointment logs and other papers as clients watched.

“It was absolutely frightening,” said Tanya Wigger, Napa Valley Day Spa owner, whose fines totaled $24,500.

Kate King, President and CEO of the Napa Chamber of Commerce, said, 'It is difficult for business owners to know all the ins and outs of labor laws. After all, labor law digests fill two books 600 to 700 pages each.'

King and spa owners said state officials should give people an opportunity to come into compliance before issuing fines. She suggested a 30-day window would help. Businesses have 15 days to appeal.

According to state records, Napa businesses cited in the sweep included: Amanda’s Massage and Bodycare: $15,000; Emerald Day Spa: $6,000; Napa Valley Spa Services — or Luxe Skin Spa and Boutique — $11,000; Paris Day Spa: $6,250.

DHS Supplemental Proposed Rulemaking For No-Match Rule
March 21, 2008: The U.S. Department of Homeland Security (DHS) released today a Supplemental Proposed Rulemaking for the No-Match Rule previously issued on August 15, 2007. This rulemaking addresses three issues cited in a decision of the U.S. District Court for the Northern District of California enjoining the August 2007 No-Match Rule. This Supplemental Proposed Rulemaking provides a more detailed analysis of how DHS developed the No-Match policy and will help responsible employers ensure that they are not employing unauthorized workers.

'We are serious about immigration enforcement. The No-Match Rule is an important tool for cracking down on illegal hiring practices while providing honest employers with the guidance they need,' said Homeland Security Secretary Michael Chertoff. 'This supplement specifically addresses the three grounds on which the district court based its injunction. We have also filed an appeal and are pursuing these two paths simultaneously to get a resolution as quickly as possible.'

The rule does not create new legal obligations for businesses. It simply outlines clear steps an employer may take in response to receiving a letter from the Social Security Administration indicating that an employee’s name does not match the social security number on file. If the business follows the guidance in the No-Match Rule, comprising various actions to rectify the no-match within 90 days of receiving the letter, they will have a safe harbor from the no-match letter being used against them in an enforcement action.

Civil Fines Increased for Immigration Violations
As a further disincentive to hire illegal aliens, the Department of Homeland Security has partnered with the Department of Justice to increase civil fines on employers by approximately 25 percent, which is the maximum they can do under existing law. This action was one of the 26 administrative reforms announced in August and is intended to change behavior and hold unscrupulous employers accountable for their actions. The biggest increase raises the maximum civil penalty for multiple violations from the current $11,000 to $16,000. These changes are effective for violations occurring on or after March 27, 2008.

Coffee Co. Penalized for Taking Employee Tips
March 21 (Bloomberg) -- Starbucks Corp., the largest U.S. coffee-shop chain, must pay $105 million in penalties because the company's supervisors in California take a share of servers' tips, a state judge ruled.

Judge Patricia Cowett of the San Diego Superior Court issued the ruling March 19 in a letter sent to lawyers, according to David Lowe, an attorney for Starbucks servers.

Under California law, employers are prohibited from taking employees' tips, he said. The suit was filed in 2004 on behalf of 100,000 Starbucks 'baristas' in about 1,400 stores.

'This whole case was about restitution,' Lowe said. 'It was about requiring Starbucks to repay the baristas for the money it had taken from the tip pool to pay the shift supervisors.'

Cowett determined in February that Seattle-based Starbucks was liable for the tips. Based on that ruling, she blocked the company from sharing the tips based on 'uncontroverted' testimony that it 'continues to utilize the distribution of tips from the tip pool to compensate shift supervisors as well as baristas,' according to Cowett's letter.

Supervisors are 'precluded from sharing in tips from the tip pool,' the judge wrote.

Starbucks, which said it would appeal, argued supervisors 'deserve their fair share of the tips,' according to a statement from spokeswoman Valerie O'Neil.

California law allows employees to pool tips, Lowe said, though supervisors, managers and owners --anyone with the authority to oversee or direct other workers -- can't be paid out of the pool.

Cowett ruled Starbucks improperly distributed as much as $87 million to its supervisors, according to the letter. After adding 7 percent in annual interest, Starbucks must repay its servers more than $105 million, Lowe said. News story credit: wineandhospitalityjobs.com

Employers May Scan and Shred Returned Forms W-2.
Employers May Scan and Shred Returned Forms W-2. Employers may fulfill the IRS regulatory requirement to keep undeliverable W-2 Forms by scanning the IRS and employee copies (copies B and C) and shredding the originals, IRS Chief Counsel tells American Payroll Association. This is supported by Revenue Procedure 97-22, found in the Internal Revenue Bulletin 1997-13. Questions regarding this revenue should be directed to the Office of Assistant Commisioner. The telephone number is (202) 622-5480. Click to Read Procedure 97-22, go to page 9.

Small Business Tax Workshop, Lesson 2 - Recordkeeping
You must keep receipts, sales slips, invoices, bank deposit slips, cancelled checks, and other documents to substantiate items of income, deductions, and credits.

Recording these items will help you pay only the tax you owe.

Good records can help you identify sources of receipt, you may receive cash or property from many sources.

Unless you have records showing the sources of your receipts you may not be able to prove that some are non-business or non-taxable.

Prevent omission of deductible expenses.

You may forget expenses when you prepare your tax return unless you record them when you pay them.

Establish earnings for self-employment tax purposes.

Your records should show the amount of earnings reportable for self-employment tax purposes.

Self-employment tax is explained later when we talk about business tax returns, and explain items on your income tax return.

If IRS examines your income tax return you may be asked to support the entries on your return with sales slips, invoices, receipts, bank deposit slips, cancelled checks and other documents.

These items of support are necessary for you to have adequate and complete records.

Recordkeeping rules require that you keep adequate documentary records or sufficient evidence to support your own statements.

Make sure you keep receipts and a log or diary for: deductions you take for travel, transportation, entertainment and business gift expenses, and any deduction you take for certain business property.

Your records must support the claimed amount, the time and place, the business purpose, and your business relationship to any other persons involved.

If your records are incomplete they may not support your deductions.

If you lose your records due to circumstances beyond your control such as by flood or earthquake, you may substantiate a deduction by reasonable reconstruction.

May I get a receipt please? Let's see, amount $24, time 4:30 p.m., location, International Airport. Business purpose, new product meeting. Business relationship, client.

For more information about recordkeeping see Publication 583, Starting a Business and Keeping Records. Always keep your business records available for examination by the IRS.

How long do I have to keep all this stuff?
You must keep your records as long as their contents may be material in the administration of any Internal Revenue Service law. Usually the statute of limitations for an income tax return expires three years after the return is due or filed or two years from the date the tax is paid, whichever is later. To support items of income or deduction on your tax return, you must keep records until the statute of limitations for that return expires. But in many cases you must keep records indefinitely.

For example, if you change your method of accounting, records supporting the necessary adjustments may be material for an indefinite time.

Another example, you must keep records relating to the basis of property for as long as they are material in determining the basis of the original or replacement property.

That's a lot to remember. Is it written down anyplace? You can find records retention timeframes in Publication 583, table 3. As with most IRS publications you can access Publication 583 at irs.gov. And if you have employees, then you have to keep employment tax records too.

You must keep all employment tax records for at least four years after the date on which the tax return becomes due or the tax is paid, whichever is later.

Need more information?
Publication 15, Employer's Tax Guide has answers to most employer tax questions.

A copy of your most recent return helps you compute and prepare future tax returns.

If you need to correct what is on file the copies help you prepare an amended return and for the benefit of your heirs, previously filed tax forms may be helpful to the executor or administrator of your estate.

WineCountryHR - Meeting in Carneros May 8
WineCountryHR - HR roundtable is a group comprised of HR professionals. The purpose is to keep updated on current laws and issues in the area of Human Resources.

Lunch meetings are the second Thursday of every month at 12:30PM:
May 8 - The Boon Fly Cafe: 4048 Sonoma Highway (Highway 12)
June 12 - CANCELLED

Required workplace posting: http://www.dir.ca.gov/WP.asp

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