Paychex Inc., a leading provider of payroll, human resource, and benefits outsourcing solutions for small- to medium-sized businesses, today released its monthly update on compliance issues it is monitoring – issues that impact America’s businesses.
“When a major legislative or regulatory issue is debated in Congress or its constitutionality is argued at the Supreme Court, it often generates more questions than answers for small business owners. The Paychex compliance and insurance teams have dedicated a lot of time and resources to helping businesses understand the new health care law and how it impacts them. Regardless of how the Supreme Court rules, the health care and insurance industries are sure to continue changing, and we at Paychex will keep doing all we can to help businesses understand those changes so they can adapt and succeed.”
- Martin Mucci, Paychex President and CEO
SCOTUS Health Care Law Arguments
The Supreme Court of the United States heard oral arguments beginning on Monday, March 26, 2012, regarding the Patient Protection and Affordable Care Act (PPACA), more commonly known as Heath Care Reform. The Court heard six hours of oral arguments over the course of three days. Each session focused on the constitutionality of specific issues related to PPACA, particularly the individual mandate - the requirement that, subject to certain exemptions, all individuals purchase health insurance.
The first day of arguments focused on whether or not the Court is able to rule on the constitutionality of the individual mandate now or if it would have to wait until after January 1, 2014, when the mandate goes into effect, because of the Anti-Injunction Act which prevents an individual from contesting a tax until after it has been imposed. Day two focused on the individual mandate and whether Congress has the authority to require individuals to purchase insurance. Day three focused on two issues, severability and the expansion of Medicaid. Severability refers to whether a portion of a law that is found unconstitutional can be separated, or severed, from the rest of the law while leaving the parts that are not unconstitutional intact. Under the Medicaid expansion provision of PPACA, all U.S. residents earning less than 133 percent of the federal poverty level would now be eligible for Medicaid. The question being considered by the Court is whether this expansion is valid under Congress’s spending power, or if it improperly forces states to enact the expansion in order to continue receiving federal Medicaid funding.
The Court’s opinion, which is expected to be issued in June 2012, will heavily impact all American businesses, as well as the accountants who advise them. Paychex will continue to monitor developments regarding the Court’s opinion and provide additional information as it becomes available. For more information and resources on the Affordable Care Act please visit http://www.paychexinsurance.com/healthcarereform/index.aspx.
The JOBS (Jumpstart Our Business Startups) Act
On Thursday, April 5, President Obama signed the JOBS (Jumpstart Our Business Startups) Act, a bipartisan bill that enacts many proposals to encourage startups and support our nation’s small businesses.
The JOBS Act is intended to spur entrepreneurship and small business creation and assist startups by removing current obstacles to raising capital. The provision of the bill garnering the most attention is the creation of a framework for “crowdfunding.” This is the practice of allowing small businesses to solicit small equity capital investments from numerous small, “non-accredited” investors. The legislation also creates an “emerging growth” designation that would allow qualifying companies to conduct initial public offerings with fewer regulatory requirements. It would also permit smaller-scale IPOs (raising $50 million or less) to circumvent some of the financial disclosure requirements that most publicly held companies are currently subject to.
Worker Misclassification
The topic of worker misclassification remains top-of-mind in Washington, as federal legislation has been introduced in both the House and Senate which would bar certain workers from being classified as independent contractors.
Provisions of the Fair Playing Field Act of 2012 would require the IRS and Treasury to issue guidance addressing employment and classification status for employment tax purposes, increase federal penalties on employers who improperly fail to deduct/withhold income taxes and the employer's share of FICA, and require that employers provide information to independent contractors on the tax and employment law ramifications of that designation.
While the prospects for such legislation pre-election are unclear, there is growing bi-partisan support for such measures at the federal level.
Retirement Savings
Retirement savings issues continued to generate interest in Congress as the U.S. Senate Banking, Housing, and Urban Affairs Committee’s Economic Policy Subcommittee held a hearing on March 28 on the subject. Experts provided testimony on the lack of sufficient employer-sponsored retirement plan coverage; the need for continued promotion of automatic enrollment, escalation, and annuitization systems in qualified plans; the adequacy of default investments into which participants are automatically enrolled; the extent that retirement plan balances have been harmed by recent economic conditions; and how the Federal Reserve's “zero-interest rate” policy may negatively impact retirement savings.
For Media Interviews
As the nation’s leading provider of payroll and HR services for small businesses, Paychex works closely with the IRS and other government agencies on issues of importance. Paychex is constantly monitoring compliance-related issues that impact our 564,000 clients across the country, and we are available to answer your questions. Please contact Tom Brede at (585) 389-1870 or tbrede@mower.com at Eric Mower + Associates on behalf of Paychex, to schedule an interview on any of these important new regulatory measures.