New Member Benefit -- 30 Minutes of Free Legal Consultation on Employment Issues
As part of our continuing commitment to help you navigate through the minefields you face in your business, America Outdoors Association is delighted to announce that is has reached an agreement with the outstanding law firm, Bradley Arant Boult Cummings LLC, to provide limited free employment consultation advice to AO members. If you have questions about issues related to employment, background checks, hiring and firing, drug free workplace issues, new employment legislation or other employment related issues, 30 minutes of free legal consultation is available to the owners and senior management of our member companies. Contact David Brown at 865-558-3595 to gain access to the attorney providing this service.
As if the business environment wasn’t complicated enough these days, the legal environment in which you operate is now rapidly changing. Recently, for example, several Supreme Court cases that had decided issues in favor of employers have been overturned by congressional legislation. Other legislation has extended employer obligations to pay for health insurance premiums to laid off workers. Below is a summary of recently passed legislation that you need to be aware of.
- The Lilly Ledbetter Fair Pay Act amended Title VII to strike down the U.S. Supreme Court's decision in Ledbetter v. Goodyear Tire & Rubber Co. The Act significantly extends the time limit for filing a lawsuit for discrimination-based pay claims.
- The ADA amendments passed in the last session of Congress and signed into law during the Bush Administration are more pervasive. Effective January 1, 2009, the amendment specifically overturned several Supreme Court decisions that had recognized what many employers believed to be common-sense limitations to the scope of the ADA. Many people not considered “disabled” before the amendments are probably considered disabled and protected under the ADA today.
- The NDAA (National Defense Authorization Act) permits an employee to take up to 12 weeks of FMLA leave a year to tend to “any qualifying exigency” arising from an immediate family member’s actual or impending active military service. The regulations are cumbersome and seemingly difficult to apply.
- COBRA Premium Assistance. For individuals who are or were involuntarily terminated from employment during the period from September 1, 2008 through December 31, 2009 (the “Qualifying Period”), the Act provides a premium assistance benefit of 65% of the cost of COBRA coverage under the group health plan paid by the individual’s employer. For purposes of the Act, a group health plan does not include plans that only provide dental, vision, counseling, or referral services; health care flexible spending accounts; or onsite clinics.
Provisions to Help Small Business in The American Recovery and Reinvestment Act of 2009
The following is a summary of the benefits to small business contained in the recent economic stimulus bill, which we had reviewed by one our members who is an accountant. We strongly urge that you consult with your accountant regarding the applicability to your specific corporation and operation before making financial decisions based on this summary. Some of the benefits are only available to certain types of corporate entities and others are only of benefit if you are profitable.
Bonus depreciation: IRC section 168(k) is amended to extend the 50% first-year bonus depreciation through 2009 (through 2010 for certain transportation property and aircraft).
The election to accelerate the Alternative Minimum Tax (AMT) and research credits in lieu of taking the bonus depreciation is also extended to qualifying property placed in service through 2009. Special rules apply to taxpayers who had already made this election for property placed in service in 2008. This provision will allow businesses to accelerate income protection in 2008 and 2009 if the economic decline hasn’t hit you yet and you project that it will. You can move expenses that would have been spread out in the future into the current operating year.
Section 179 expensing: The increase in the section 179 expensing amount to $250,000 and the increase in the phase-out threshold to $800,000 are both extended through 2009. This keeps the writing off of large equipment and livestock purchases as an expense in the year purchased alive for at least a couple more years. Again this is an effective acceleration technique in anticipation of poor income performance in the future.
Carryback of small business NOLs: Eligible small businesses are allowed to carry their 2008 net operating losses (NOLs) back for five years (section 172(b)(1)(H)). An eligible small business is one that has average gross receipts of $15 million or less (using the gross receipts test from section 448(c)). The act gives Treasury authority to publish anti-abuse rules relating to this provision. This provision could be huge boon to some small businesses. Essentially, a net operating loss carryback simply allows you to take a loss generated in one year and move it back to offset income earned in another year. So, if you had a few really good years 5 or less years ago, and you have already felt the pinch of the slowdown in 2008 numbers, you will be now able to carry the loss back five years instead of just three. These are new found tax refund dollars not previously available for those filing carry back amendments to their returns.
Small business estimated taxes: Qualified individuals are allowed (for 2009 only) to make estimated tax payments that equal only 90% of their preceding tax year liability instead of 100% (under section 6654(d)(1)). To be a qualified individual, the taxpayer must have adjusted gross income (AGI) of less than $500,000 and more than 50% of the individual’s gross income must come from a small business (a business with an average of fewer than 500 employees). Essentially this provision allows more accurate payment of taxes in anticipation of having less taxable income at the end of the year. However, it should be noted that this is not a tax break, it is a cash flow break. Your rates remain the same you just don’t have to pay 100% of the liability equal to last year throughout the year.
Work opportunity tax credit: The act creates two new targeted groups for the work opportunity tax credit, “disconnected youth” and unemployed veterans (section 51(d)(14)). Employers who hire members of these groups during 2009 or 2010 may be eligible to take the credit. Remember on all tax credits, you have to have generated taxable income to take advantage of credits.
Discharge of business indebtedness: The act allows certain businesses to recognize cancellation of indebtedness income over five years, starting in 2014, if the business repurchases specific types of debt in 2009 or 2010 (section 108(i)). Essentially this takes the “bite” out of phantom income hitting you at the time of debt forgiveness by spreading it out.
Qualified small business stock: The section 1202 exclusion of gain from the sale of qualified small business stock is increased from 50% to 75%, for stock acquired after the enactment date and before Jan. 1, 2011. This is an attempt to reduce the tax burden of small business that are for sale and are sold on a stock sale basis. The problem is few do stock purchases of small businesses because of the liability associated with it.
S corporations: The recognition period for assets subject to the built-in gains tax is reduced from 10 years to seven years for S corporation tax years beginning in 2009 and 2010 (Section 1374(d)(7)). Again this is a measure to relieve some of the penalty of selling businesses that are held in a Sub Chapter S format.
Energy credits: The act also includes a number of energy incentives aimed at both individuals and businesses, including increases in the section 25C residential energy property credit, the section 25D residential energy efficiency property credit, and the energy investment credit under section 48.
We will be investigating the potential for earning energy credits, which may be of increasing importance especially for those businesses that are operating in national parks.
You May Need to Adjust Your Browser Settings to View the Results of Outfitting Business Outlook Industry Survey
There is some dramatic information coming out of the online business outlook survey for outfitters for 2009. About 150 companies have participated in the survey. Take two minutes to register your response and see the overall results immediately. If your browser balks, check your privacy settings. The survey may use a cookie to prevent duplicate responses, but no personal data is collected by AOA. Click on the Survey link to participate and get instant results. Survey.
If you have already participated to see the results, go to http://www.surveymonkey.com/sr.aspx?sm=284EVzOTCnyGI5vg98vscOl4qKc_2bDrs675I0gthylTI_3d
We will do another survey later in the year. The current survey documents outfitters’ reservations to date and their outlook for the 2009 season.
Why States May Turn Down Money to Expand Unemployment Insurance Compensation
Several states, including some with Democratic governors, may reject millions in unemployment compensation funding contained in the The American Recovery and Reinvestment Act of 2009. While supporting many of its provisions, Tennessee’s Democratic Governor Phil Bredesen expressed concern about the future impact on the state’s small businesses once the federal funding runs out. Bredesen has expressed concern that his state would be obligated to continue paying out extended benefits from its own resources. Governor Bredesen has since backtracked somewhat but is still looking at the provision. Opposition has built in other states because they will be obligated to continue the benefits after the federal money is spend. Several governors fear they may have to increase unemployment compensation premiums on stressed employers to cover the expanded benefits.
The Missouri State Unemployment Council, which advises the state’s Division of Unemployment Security determined that accepting federal funds would obligate the state to spending millions in the long run. The council concluded:
- Extending coverage to part-time workers would cost $17.8 million a year.
- Compensating workers who left their jobs for family reasons would cost as much as $56.2 million a year.
- Compensating workers enrolled in state-approved training programs would cost $6 million a year.
- Increasing payments to the dependents of the unemployed would cost $47 million a year.
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