September 2nd, 2009 Nancy
USCIS (United States Citizenship and Immigration Service) has issued a revised I-9 form, effective August 7, 2009. (Look in the lower right-hand corner for the “Rev. Date” if you’re not sure which version of this federal form you’re using.) You can retrieve the new I-9 from www.uscis.gov/files/form/i-9.pdf. Don’t worry if you didn’t know about this until now – documenting new employees’ right to work on the old form is okay, too, for a while at least. But why wait? Start using the new one now. It has some revised language that I think is helpful.
For those of you unfamiliar with the I-9, it functions somewhat like the W-4: new employees complete the form and you retain it on file. USCIS provides the following instruction:
“Do not file Form I-9 with U.S. Immigrations and Customs Enforcement (ICE) or USCIS. Form I-9 must be kept by the employer either for three years after the date of hire or for one year after employment is terminated, whichever is later. The form must be available for inspection by authorized U.S. Government officials (e.g., Department of Homeland Security, Department of Labor, Office of Special Counsel).”
Unlike the W-4 where you don’t need to verify anything, you are required to examine the documents needed to verify an applicant’s right to work in the US. The five-page packet includes instructions on pages 1-3, the form itself on page 4, and a list of documents on page 5 that applicants can show you to establish that they have the right to work here.
No matter how convenient it may seem if an applicant doesn’t have the right combination of papers, you can’t shuffle these documents – taking two from column B instead of one from B and one from C, for example - so follow the instructions carefully. Note that you don’t need to photocopy the documents. I know many people do, but it seems to me that copying opens up opportunities for fraud that are better left closed. Any thoughts?
To read about changes affecting federal contracts and verification of employment eligibility, go to www.NFPAccountingHelp.org and click on Free Resources, then choose newsletter. It’ll be posted through September 10 or so.
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August 27th, 2009 Nancy
When an employee leaves, how can you be sure they’ve repaid all the money the organization has laid out on their behalf for various employee benefits? I ask this because I’ve seen several instances lately where, because of timing differences in invoicing for benefits and payroll, staff members terminated without reimbursing everything they should have through their withholding. How did this oversight come about? The responsible accountant did not adequately prepare payroll withholding and balance sheet account reconciliations.
I’ll explain. Several types of benefit programs that reduce taxable income involve the employer’s paying in advance on employees’ behalf and then recouping its money. Examples are transportation plans (employer buys bus passes at a reduced rate for a year and collects a portion of that each payroll) and flexible spending plans for dependent care and medical expenses not covered by insurance (employee elects an annual amount, the employer withholds a ratable portion of that each payroll and remits it to the plan administrator). Withholding too little can also arise when an employee is responsible for part of the health insurance premiums for himself or his dependents and reimburses the employer through payroll deductions.
To ensure that the organization is paid back completely, watch timing carefully. For example, you may pay the bill for September health insurance in August, though you won’t withhold the employees’ portion from their checks until September. If folks are paid twice a month, you may withhold half of the total each time, which complicates matters even more. The same is true for bus passes where an agreement for a year’s worth of monthly passes is purchased. In both cases, keep close track of which month’s benefits you are withholding for. If someone terminates in September, remember that they’ll receive a full month’s worth of benefits, even if they terminate on the 1st of the month, so be sure to withhold the rest of what they owe from their final check!
I recommend using balance sheet accounts to post amounts owed to the organization and reimbursed by employees. When you book each month’s health insurance bill, post to expense only the portion that the employer is responsible for and book to a receivable account (a liability account would work, too) the part that you will withhold from employees’ pay. After you’ve recorded payroll for the month, the balance in the receivable account should be $0 or, if you’ve posted the next month’s insurance bill, it should be equal to the employee portion of that bill. If the balance is neither of those amounts, you will see right away that there’s been a mistake and investigate it.
For flexible spending account activity, use a liability account. Wait to post a new invoice from your independent plan administrator until you’ve actually withheld money from employees. Then compare the invoice to your withholding and make corrections as needed before you remit anything.
You may also want to contract with your payroll service provider to be the plan administrator – I’ve had good experiences doing it this way. Then there’s no invoicing to confuse the timing, and what had been withheld from employees is available immediately for reimbursement of claims they may have filed.
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