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Archive for April, 2011

President Obama Signs 1099 Repeal

via President Obama Signs 1099 Repeal | PropertyCasualty360

President Obama late Thursday signed into law legislation repealing the 1099 reporting provision enacted as part of the healthcare reform bill.

Several insurance industry trade groups issued statements lauding the president’s decision.

The bill is H.R. 4, the “Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011.”

The repealed provision would have required all business entities to file a 1099 form with the Internal Revenue Service for each vendor for whom they have cumulative transactions of $600 or more. It would have gone into effect in January 2012.

The legislation also repeals an additional Form 1099 reporting requirement imposed on owners of rental real estate.

The 1099 provision was expected to contribute $19 billion toward paying for healthcare reform. The repeal legislation makes up the shortfall by making consumers repay all of their insurance subsidies under the healthcare law once their income rises beyond 400 percent of the federal poverty line.

House Democrats called that a tax increase on the middle class.

In signing the bill, President Obama said he looks forward to continuing to work with Congress to improve the tax credit policy in the legislation and is “eager to work with anyone with ideas about how we can make healthcare better or more affordable.”

Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies (NAMIC), says, “With the repeal of this provision, small businesses can now worry a little less about Washington red tape and continue to focus on creating jobs and rebuilding our economy.

He adds that NAMIC hopes Congress and the president “will continue to look for ways to improve government regulation by removing needless burdens on American businesses.”

Robert Rusbuldt, president and CEO of the Independent Insurance Agents  Brokers of America (IIABA), says, “In a strong show of bipartisan cooperation, the president and Congress have done the right thing by standing up for small businesses and repealing the 1099 reporting mandate.

“Our thousands of small business members and their clients will breathe easier knowing this ill-advised provision will not take effect.”

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Are Unpaid Internships Legal?

With the down economy, many companies are looking to “hire” unpaid interns as a way to save money. I recently came across this article which explains the “do’s and don’t’s” of unpaid internships, which includes a link to the new federal criteria so I thought I’d share:

http://www.nytimes.com/2010/04/03/business/03intern.html

From the Article:

“If you’re a for-profit employer or you want to pursue an internship with a for-profit employer, there aren’t going to be many circumstances where you can have an internship and not be paid and still be in compliance with the law,” said Nancy J. Leppink, the acting director of the department’s wage and hour division.

Ms. Leppink said many employers failed to pay even though their internships did not comply with the six federal legal criteria that must be satisfied for internships to be unpaid. Among those criteria are that the internship should be similar to the training given in a vocational school or academic institution, that the intern does not displace regular paid workers and that the employer “derives no immediate advantage” from the intern’s activities — in other words, it’s largely a benevolent contribution to the intern.”

The 6 Criteria:

• The training given in the internship must be similar to what would be given in an educational setting, or vocational school

• The training should be for the benefit of the trainee

• The trainee’s work not replace workers who are regularly paid

• The employer receives no immediate advantage from the trainees’ activities, and the employer’s operations may actually be impeded on occasion

• At the end of the training, the trainees are not necessarily entitled to a job

• Both the trainee and the employer understand that the trainee is not entitled to wages during the training period.

See Also: Compliance Assistance – Fair Labor Standards Act (FLSA)