There are more regulatory demands on businesses than ever before and they’re continually shifting, making it difficult for your clients to keep up. There’s no doubt you can help your clients prepare for and manage tax-related issues, but how up-to-date are you on the other regulatory challenges they’re facing? The current regulatory environment presents an opportunity for accountants looking to provide clients with more strategic guidance in every aspect of their business.
Five hot regulatory topics currently on the horizon are:
1. Payroll tax and tax reform – Business owners may still be unaware of all the implications of tax reform. For example, the new 20 percent pass-through deduction could prove advantageous for freelancers and gig workers in the form of healthcare and other benefits. Additionally, the updated W-4 anticipated for 2019 is expected to automatically assign a number of allowances based on marital status. Many states are also reacting to tax reform with their own regulations. For example, New York State will phase in an optional payroll tax in 2019 which employers must opt into by December 1, 2018 and California is opening two new charitable funds supporting health care and education donations which can be claimed as philanthropic gifts for both federal and state taxes.
2. Healthcare reform – Though tax reform brought the individual mandate tax penalty down to $0 as of 2019, Applicable Large Employers (ALEs) are still required to offer adequate and affordable coverage to full-time employees. Only non-ALEs who offer no group plan currently qualify for Qualified Small Employer Health Reimbursement Arrangements. Accuracy in filing is essential as employers may receive furnishing or filing penalties for late, incomplete, or inaccurate Forms 1094-C/1095 C and they must research and identify any errors in filing and make corrections in response to 226J letters sent by the IRS.
3. Employment law – New regulations are in discussion for paid family leave, paid sick leave, immigration, overtime, tipping, minimum wage, and other wage issues including pay equity. Especially important in the gig economy, the Wage and Hour Division has continued to work with the IRS and many states to combat employee misclassification and to ensure that workers get the wages, benefits, and protections to which they are entitled. The DOL has entered into partnerships with 37 states to work together on misclassification to more effectively and efficiently address this significant problem.
4. Retirement plan administration – HSAs and new and upcoming state and municipality retirement programs are creating different opportunities to save for retirement, but they also come with their own set of rules and regulations that business owners need to understand and comply with to make the most of these plans and to determine what retirement benefits will best attract and retain quality employees. Technology advancements are also impacting the retirement industry. As part of the important ongoing conversation, Paychex will take part in a session at AICPA ENGAGE 2018 discussing where “Robo” technology fits in the defined contribution world today, and how it will support the changing needs of sponsors, advisors, participants and CPAs, especially with the recent regulations and intensified scrutiny from the DOL and the marketplace. “The Role of ‘Robo’ in Defined Contribution Plans” will take place on Thursday, June 14th, 2018 at 11:15 a.m.
5. Cybersecurity/Privacy – All 50 states now have data breach laws and a federal standard may be upcoming. It’s in your clients’ best interest to protect themselves against cyberattacks and data breaches and it’s also important that they respect the privacy of their customers and prospects as they incorporate digital marketing tactics. Though GDPR is a European regulation, it impacts many U.S.-based businesses. California is also proposing a right to privacy law which regulates the collection and use of personal information.
Though at first glance you may wonder how these regulations directly play into your role as an accountant, each piece of regulation and your clients’ compliance with it impacts their business success and your ability to accurately assess their finances for planning and tax purposes. It can be difficult to find the time to refresh your knowledge on these topics in your hectic daily life, but I will be breaking these regulations down for you at AICPA ENGAGE. Don’t miss my presentation, “Top Regulatory Items on the Horizon. Are Your Clients Prepared?”, on Tuesday, June 12 at 7:00 a.m., where I’ll dive deeper into preparing your clients for these upcoming changes.
Mike Trabold is director of compliance risk for Paychex, Inc. Paychex is a leading provider of human capital management solutions for small- to medium-sized businesses.