In an interview with CNBC (videos below), Speaker of the House John Boehner (R-OH) said “The House is going to act to extend the current tax rates. Whether we make them permanent or extend them for a year — that debate is still up in the air.” He said the House will vote on these measures before the November elections. This is a continuation of assurances Mr. Boehner made on the subject in early April. However, he also noted that the House can’t do this alone and “It's time for the United States Senate to do their work.”

The reestablishment of the expired and expiring tax extenders is an important step to providing certainty to companies that hire. Understanding that employers are facing an indeterminate economic environment – an environment in which it is difficult to effectively plan for and execute effective business and tax strategies – Mr. Boehner said, “I used to be a small employer. If I saw conditions like this, I'd be [a]hoarding case and sitting on my hands. And that's exactly what business people here in the United States are doing. We need to reduce the uncertainty."

The Solution? “Deal with the tax code, deal with the debt, and stop the regulatory onslaught coming out of the administration.”

I-9/E-Verify

By: Dave Fowler

As you may have heard, on March 27, 2012 USCIS published a new proposed Form I-9 in the Federal Register. The posting is open to public comments through May 29, 2012. The new proposed Form I-9 is now a two-page form with Section 1 on one page and Sections 2 and 3 on a second page. The Form I-9 plus the acceptable document list and instructions is now a total of nine pages long, up from five pages. I encourage you to review the new proposed Form I-9 and provide your comments. You do not need to identify yourself or your employer to comment. You can do it anonymously if you prefer.

You can also obtain information on the new proposed Form I-9 at the USCIS web site by going to USCIS Seeks Public Comment on Revisions to Employment Eligibility Verification Form I-9.

Click here to access the new proposed Form I-9 in the Federal Register.

Comments Due: May 29, 2012 11:59 PM ET

Federal Register: www.regulations.gov

Agency: USCIS

Document ID: USCIS-2006-0068-0012

To Comment:

1.       Go to www.regulations.gov

2.       Enter USCIS-2006-0068-0012 in the search box,

3.       Agency Information Collection Activities: Revision of an Existing Information Collection, Comment Request will display.

4.       Click Comment Now.

For reference, below are the comments I submitted.

1.       Enhanced instructions are good. However, the following information should also be provided.

a.       Address – specify which address is to be entered if the employee and/or preparer/translator does not live in the U.S. and has an international address.

b.      E-mail and Telephone Number – indicate who (e.g., USCIS, ICE, DOJ OSC) will use this information, for what specific purposes it will be used, for what specific purposes it will not be used, that the information will be submitted to DHS if the employer uses E-Verify, and what an individual is to do if the information changes.

c.       Preparer/Translator – the instructions on Form I-9 and in the Handbook for Employers (M-274) must be clear and consistent.

The M-274 indicates that the Preparer/Translator block should be completed ONLY if someone does all of the following:

1.       reads the form to the employee, AND

2.       assists the employee in completing Section 1, AND

3.       has the employee sign the form.

The Form I-9 indicates that the Preparer/Translator block should be completed if someone does just one of the following:

1.       the employee need the instructions or responses translated, OR

2.       someone other than the employee fills out the information blocks, OR

3.       someone with disabilities needs additional assistance.

                                                               i.            M-274 states the following: “If the employee cannot complete Section 1 without assistance or if he or she needs Form I-9 translated, someone may assist him or her. The preparer or translator must read the form to the employee, assist him or her in completing Section 1, and have the employee sign or mark the form in the appropriate place. The preparer or translator must then complete the Preparer and/or Translator Certification block on Form I-9.”

                                                             ii.            Form I-9 states the following: “The Preparer/Translator Certification must be completed if the employee requires assistance to complete Section 1 (e.g., the employee need the instructions or responses translated, someone other than the employee fills out the information blocks, or someone with disabilities needs additional assistance). The employee must still sign Section 1.”

2.       Section 1 – Specify who (employee, employer, preparer) may enter or modify information in Section 1 and under what circumstances.

a.       For example, a preparer can be the employer. So, can the employer (i.e., preparer) make changes to Section 1?

b.      How/where does the employer enter the employee’s SSN on Form I-9 for E-Verify purposes when at the time of hire the employee has applied for a SSN, but the SSN has not been issued?

c.       How/can the employer remediate Section 1 if errors are found during an internal audit? (e.g., incorrect and missing information)

3.       Examining Documents – Specify if the employer must be in the physical presence of the employee when examining document.

4.       Copying Employee Documents – Specify that copying employee documents for E-Verify Photo Matching purposes does not require the employer to copy documents for all employees.

5.       Receipts – Specify what the employer should do if the employee provides other acceptable documentation in place of the actual document pertaining to the receipt. For example, should the employer complete a new Form I-9 using the documents the employee provides?

6.       Paperwork Reduction Act – The current Form I-9 estimates 12 minutes per response and the proposed I-9 estimates 13 minutes per response. An increase of 1 minute is not enough time to read and understand the four pages of instruction added with the proposed form. The table below shows that the number of minutes per response should be closer to 20 minutes than 13 minutes.

Minutes               Pages    Average Minutes per Page          Form I-9                                              

12                           5                              2.4                                          Expires 8/31/2012

13                           9                              1.4                                          Proposed (DHS minutes)

21.6        9                              2.4                                          Proposed (calculated minutes)

7.       The proposed Form I-9 is twice the size of the current form (two pages vs. 1 page), which doubles the storage space required to maintain the forms by either paper or electronic means.

8.       The proposed Form I-9 increases the cost to employers by doubling the costs for paper, ink, hardware, storage, staples/paper clips, shipping, and destruction (when a new form replaces the existing form).

9.       For employers and agents who scan paper Forms I-9 the proposed Form I-9 increases the level of difficulty and related costs by requiring a minimum of two pages instead of one to be scanned.

10.   The proposed Form I-9 increases the employer’s level of difficulty for completing the form by:

a.       Increasing the amount of information to be entered,

b.      Requiring the employer to switch between pages to verify information in Section 1 with information entered Section 1 (e.g., name, SSN, birth date, Alien #, I-94 #, etc.)

11.   The proposed Form I-9 increases the employer’s cost when an employee must be reverified multiple times since the process requires the employer to copy two pages instead of one.

12.   The proposed Form I-9 increases the employer’s liability and training costs since now there are two pages to the form and the chances of the employer losing one of the pages is increased.

13.   The proposed Form I-9 increases the level of difficulty for internal and external audits since there is more paper for the auditor to process.

14.   The proposed Form I-9 increases the employer’s and the employee’s risk of a breach of privacy and security by collecting unnecessary employee information (phone and email) in Section 1, which makes the government appear to be promoting a ‘big brother’ presence.

15.   There is a separation between the Form I-9 and E-Verify that is not made clear to the employer or the employer. The employer does not normally provide Forms I-9 to the federal government. Therefore, the federal government will not receive phone number and email addresses for employees unless the employer:

a.       Uses E-Verify. Even if the employer uses E-Verify, the employer is only required to use E-Verify for all new hires in a participating location. Therefore, it’s possible that not all employees will have the potential for the federal government to know their phone number and/or e-mail address. This is or at least gives the appearance of the process being unnecessarily invasive and potentially discriminatory.

b.      Is audited by ICE. In this case, only employees subject to the audit and optionally entered their phone number and/or e-mail address in Section 1 will allow the federal government to know this information.

16.   Is the plan to update E-Verify to prompt for the employee’s phone number and email address? If so, is the employer obligated to enter such information if it is populated on the Form I-9? Or, can the employer opt to not enter such information?

17.   There is no reason for DHS to collect an employee’s phone number and/or e-mail address on Form I-9 unless the federal government intends to pro-actively use such information to an employer’s detriment. For example, absent an employee inquiry the federal government has no need to contact an employee about the employee’s immigration status. The employee will have knowledge of their immigration status based on a) successful completion of Form I-9, b) the fact that the employee is still working, c) the fact that the employee received an E-Verify TNC, d) genuine documentation issued by the federal government, e) the employee’s use of E-Verify Self Check.

18.   There is no reason for DHS to collect an employee’s phone number and/or e-mail address on Form I-9 to provide such information to allow DOJ/OSC contact employee regarding an issue because the employee should first contact DOJ/OSC to register compliant or submitting a question before DOJ/OSC would get involved. The employee can provide their phone number and/or e-mail address to DOJ/OSC upon registering a complaint or submitting a question. There is no purpose other than pro-active action for this information to be collected prior to the employee contacting DOJ/OSC.

19.   There is no process defined for individuals to update the federal government when phone numbers and/or e-mail addresses change as they commonly do. This means that the information, if collected by the federal government, is not necessarily current or reliable. So, is the federal government going to be collecting and retaining obsolete information? Phone numbers and/or e-mail addresses can be periodically recycled as they are changed. This means that the information retained by the federal government may actually relate to an individual other than the individual for whom it was originally captured.

20.   Does the federal government intend to validate the employee’s information including phone number and/or e-mail address when submitted to E-Verify and afterward for confirmation?

21.   What about the entry of international phone numbers on Form I-9? Is this permitted? If so, what additional information is required for international phone numbers? The Section 1 filed for phone number is too small to accommodate an international phone number.

22.   Are there any limitations on the type of email address that can be entered? For example, can the employee be held liable for entering invalid data or data that changes over time? Can the employer pre-fill the phone number and/or e-mail address in Section 1 with the employee’s company information if the employer issues phones and/or e-mail addresses to employees?

23.   It should be noted that the Form I-9 and E-Verify are being more closely aligned. Therefore, since E-Verify requires that the E-Verify case number be entered on Form I-9, the Form I-9 should have a space for the E-Verify case number in Section 2 and Section 3 (for rehires).

24.   Will there be any changes to the E-Verify Tentative Nonconfirmation (TNC) documents to include the additional information being added in the proposed Form I-9?

25.   The following font and text inconsistencies on the proposed Form I-9 should be addressed.

a.       More vertical room should be provided to the fields in Section 1 to allow for remediation.

b.      The term (optional) when referring to E-Mail Address and Telephone Number should be italicized ‘(optional)’to be consistent with the format of any other parenthetical on the form.

c.       The phrase ‘if applicable’ in the Maiden Name field should be an italicized parenthetical to be consistent. (e.g., Maiden Name (if applicable))

d.      The vertical position lines in the U.S. Social Security Number field should be shorter to facilitate remediation within the field.

e.      It should be anticipated that the field size for E-Mail Address and Telephone Number will be inadequate to accommodate the information to be entered. At least the E-Mail Address field and perhaps both fields should be positioned on a separate line.

f.        Every parenthetical should be consistent in the use of italics.

g.       The use of the triangle arrow instead of a colon should be consistent for all fields on the form rather than what appears to be random use.

h.      The use of field names in all sections should be standardized (above the field, in the field, and the use of a colon after a field name) and consistent to reduce confusion.

i.         In Section 2, the phrase ‘month/day/year’ for entering the expiration date for an alien should be ‘mm/dd/yyyy’ to be consistent with similar fields on the form.

j.        In Section 1, the Date of Birth field and all other date fields should include the ‘/’ separators for mm, dd, and yyyy to be consistent with the vertical position lines in the U.S. Social Security Number field and other fields for entering document numbers.

k.       There should be instructions added to the Alien #/USCIS # fields indicating the valid field lengths that can be entered. Employees and employers may become confused when the number on the employee’s document is less than nine digits. The letter ‘A’ should be shown on the form to eliminate the employee from entering it on the form and then not having enough spaces to enter their nine-digit number.

l.         There should be instructions added to the I-94 # field indicating that eleven characters must be entered.

m.    The instructions should include information to explain the meaning and use of the ‘3-D Barcode area at the bottom of Section 1.

n.      In Section 2, the following text changes should be made.

                                                               i.      Document title should be Document Title

                                                             ii.      Issuing authority should be Issuing Authority

                                                            iii.      The font for ‘(mm/dd/yyyy)’ used in the Date of Rehire field is not consistent with the rest of the form.

o.      In Section 2, removing the hire date from the certification statement is a good thind. However, the use of the phrase ‘The employee’s first day of work for pay (mm/dd/yyyy):’ can cause confusion.

                                                               i.      This line does not need to be a bold font.

                                                             ii.      What if the date entered turns out to not be the employee’s first day of work for pay? (e.g., the employee is called in early or is ill and cannot start on time)

                                                            iii.      Is there any requirement that the hire date in Section 2 or Section 3 match the employee’s hire date in the employer’s HR/Payroll system?

                                                           iv.      Should the employer change the hire date on Form I-9 if the employee starts before or after the hire date?

                                                             v.      Perhaps the phrase should be change to ‘The employee’s estimated first day of work for pay (mm/dd/yyyy):’ or ‘The employee’s anticipated first day of work for pay (mm/dd/yyyy):’ to lessen any potential confusion and eliminate the need for changing the hire date if the employee’s start date changes.

Here is the latest addition of our Unemployment Flash Report.  Please send an e-mail to taxalerts@talx.com with any comments or suggestions.

Employer Tax Services

States need complete separation information to make informed unemployment decisions.  Click here to find out more about current law and consequences for employer non-compliance.

As the House and Ways and Means Committee heard testimony on the subject of expired/expiring tax provisions Rep Aaron (R-Illinois) made a strong case for reinstating the core Work Opportunity Tax Credit (WOTC) among other tax extenders. Recall that Mr. Schock was the originator of House Bill H.R. 2082 “Work Opportunity Credit Improvements Act” (earlier coverage here, here and here). Referring to his history of support for the WOTC program, and its importance to his district and the nation as a whole, Mr. Shock said:

I have taken a leadership role in the Work Opportunity Tax Credit, which provides a reduction in tax liability for private sector employers who hire employees off of public assistance. Most recently, this Congress expanded this program to include unemployed veterans. However, without the core Work Opportunity program, employers will be less willing to participate in the new veterans hiring credit. It's hard for employers to justify maintaining that costly infra-structure of a Work Opportunity program which will now be one tenth the size of the core Work Opportunity program. For an average tax credit of $1,000, Work Opportunity saves the federal government $5,000 in public assistance payments a year and a nearly equal amount in state contributions to public assistance. In my home state of Illinois, which has one the worst budget shortfalls in the country, this is extremely significant

A video and transcript of Mr. Schock’s Testimony can be found below.

Chairman Tiberi, Ranking Member Neal, thank you for the time you have given me this morning. We all know this committee is undertaking the necessary task of reforming our current convoluted tax code. In this process we have held over 20 hearings looking at ways to reform and make less burdensome different parts of the code.

Turning 70,000 pages into a manageable, simplified tax code that is economically beneficial for both individuals and job creators does not happen overnight. While great strides have been made in the last 16 months - more work remains to be done.

In the meantime, as this committee continues working towards our shared goal of lowering the rates and broadening the base, it is important that we give employers and individuals the certainty that their taxes won’t increase by over $500 billion in the short term. That is the topic which brings us here today. Many of the low tax provisions which expired last year or will at the end of this year, serve a specific economic purpose and create jobs by keeping taxes low on both individuals and employers.

In reality many of these “extenders” are patches put in place to prevent tax increases from taking effect until this Committee can finish its work on comprehensive tax reform. Through tax reform, we hope to no longer remain the country with the highest employer tax rate and a worldwide system of additional taxation. US employers are forced to compete in a global economy and important tax extenders which give them that temporary ‘patch’ to compete like Deferral, Active Financing, and CFC Look-through are all slated to expire. Extension of these provisions and others gives this Committee the necessary time to rewrite the underlying rules of the game, a game which we are losing right now to our foreign competitors.

Some will say that the only economic effect of extending expiring tax provisions is a reduction in revenue to the government. This argument sorely understates the benefit and economic growth which is derived from these low tax mechanisms.

I have taken a leadership role in the Work Opportunity Tax Credit, which provides a reduction in tax liability for private sector employers who hire employees off of public assistance. Most recently, this Congress expanded this program to include unemployed veterans. However, without the core Work Opportunity program, employers will be less willing to participate in the new veterans hiring credit. It's hard for employers to justify maintaining that costly infra-structure of a Work Opportunity program which will now be one tenth the size of the core Work Opportunity program. For an average tax credit of $1,000, Work Opportunity saves the federal government $5,000 in public assistance payments a year and a nearly equal amount in state contributions to public assistance. In my home state of Illinois, which has one the worst budget shortfalls in the country, this is extremely significant.

Also of vital importance is the current biodiesel tax incentive, which has been on the books since 2004. Until we can reduce farmers’ tax burdens below current levels, I favor extending this policy which supports 39,000 jobs and returns more than $600 million per year in tax revenue to federal, state and local governments. As I have told our Chairman, I will be the first in line to help reduce the 70,000 pages of our tax code to a slim volume which could fit in our pockets. The bulk of these pages will become unnecessary with a lower and fairer tax rate for individuals and employers. A code that helps taxpayers keep more of their hard earned money and employers more of theirs to invest, expand, grow and hire here in the U.S. But until we are at the point where we have truly a willing President, and an engaged Senate, it is of vital importance that we prevent looming tax increases on businesses and individuals, and we do so now…our President said not too long ago, “…you don’t raise taxes in a recession, which is why we haven’t and why we’ve instead cut taxes… you don’t raise taxes in a recession.” For once, I couldn’t agree more with our President’s sentiments. Thank you, I yield back

Ezrie Yellin

In the case of Dicon Fiberoptics, Inc. v. Franchise Tax Board,  the California Supreme Court (No. S173860) sides with the Franchise Tax Board (FTB).

The California Supreme Court has concluded that the California Franchise Tax Board (FTB) may conduct an audit to determine whether a taxpayer is entitled to an enterprise zone hiring credit for corporation franchise and income tax purposes, and during such audit may require the taxpayer to establish that the employee is a "qualified employee." The FTB is not required to accept a certification or voucher from a local agency as conclusive or prima facie proof that an employee is a "qualified employee," nor is the FTB required to establish that the employee is not a "qualified employee."

While this decision may be troubling to some, TALX clients need not worry.  TALX maintains the highest ethical standards regarding certification and vouchering and we welcome the additional scrutiny of the program.

Maureen Schneider

Do you know how to write an effective written warning?  Click here for tips that could save you money.

The House Ways and Means Subcommittee on Select Revenue Measures is planning to hold a hearing to discuss various expiring tax provisions “that either expired in 2011 or will expire in 2012” (i.e. “tax extenders”). The hearing will take place on Thursday, April 26, 2012, in Room 1100 of the Longworth House Office Building at 10:00 A.M. As per the hearing advisory, testimony will only be open to “members of the House of Representatives who, as of April 25, 2012, have either introduced or co-sponsored legislation related to tax extenders during the 112th Congress.” However, written statements will be accepted by any entity and will be considered for inclusion in the printed record.

The notice details the purpose of this hearing as follows:

The hearing provides Members of Congress the opportunity to speak on behalf of specific tax proposals they have introduced or cosponsored in the 112th Congress related to the extension, modification, or termination of one or more tax extenders. The hearing will evaluate how these proposals would measure against key metrics such as cost, effectiveness, and job creation.

More information can be found on the Ways and Means website here and here.

Ezrie Yellin

Here is the latest addition of our Unemployment Flash Report.  Please send an e-mail to taxalerts@talx.com with any comments or suggestions.

Employer Tax Services

As the nation settles into “campaign mode” heading into the November elections, increasingly frustrated business leaders are lamenting the lack of attention to the various expired/expiring tax measures that Congress has yet to adequately address. Indeed, currently, there are no definite plans on the extension of the 60 tax provisions that expired at the end of 2011, of which the Work Opportunity Tax Credit (WOTC ) is one.

John Engler of the Business Roundtable, an association of the CEO’s from large corporations nationwide, summed it up when he said, “It’s driving everyone crazy that 60 provisions of the tax code expired last December 31 and 41 more are slated to expire this year.”

Unlike, perhaps, individual tax filers, corporations are necessitated by their nature to plan their tax, business, and hiring strategies well in advance of their execution. However, the uncertainty surrounding these provisions makes that task near impossible to undertake with any accuracy.

“Businesses want to know what their taxes will be next year. They don’t know,” says Amanda Austin of the National Federation of Independent Businesses.

Ezrie Yellin