There were two recent articles that caught our attention. One of them was from Construction Executive magazine and the other from the law firm Fisher & Phillips LLP. While the Construction Executive article was written from the perspective regarding government contractors, it really applies to ANY employer.
Adam Bonsky wrote, “ARRA includes funds dedicated to compliance and enforcement in alignment with President Obama’s pledge for transparency and accountability for taxpayer dollars spent as part of the $787 billion economic stimulus package. The U.S. Department of Labor (DOL) is adding hundreds of auditors to its staff, and the Obama administration is cracking down on employers that fail to comply with laws that apply to federally funded projects.”
We have seen through the Employment Tax National Research Project (NRP) that it’s goal is to “collect data that will allow the IRS to understand the compliance characteristics of employment tax filers.” In February of 2010, the NRP began auditing the first 2,000 firms, focusing on five key issues: worker classifications, officer compensation, reimbursement expenses, fringe benefits and non-filers.
Bonsky went on to write, “In March, the DOL announced a joint DOL-IRS “Misclassification Initiative” designed to improve enforcement of workplace laws, with particular emphasis on employers that wrongly classify employees as independent contractors in an effort to avoid paying employment taxes, benefits and overtime. The DOL earmarked an additional $25 million in its 2011 budget for this effort. The DOL’s Wage and Hour Division received an additional $12 million and 90 new investigators to expand its enforcement efforts.”
That’s $25 million for enforcement of employers via joint efforts between the DOL and IRS.
John Thompson of Fisher & Phillips LLP, had a great article where they obtained a copy of the memorandum of agreement announcing the alliance between the U.S. Labor Department and the U.S. Internal Revenue Service. Thompson’s article’s references the memo specifically calling attention to the fact that the “DOL and IRS have agreed to implement their agreement “through enhanced information sharing and other collaboration” led by a “joint IRS-DOL team””.
Typically, when a company is being investigated, the DOL may require employers to provide:
- plan documents, adoption agreement(s), summary plan descriptions and summary annual reports;
- Schedule As; and
- Form 5500s
Bonsky statement asserting “assembling this information is extremely time-consuming, even for the most organized employers” is just the reason why ComplianceBug was created for employers.