The Paychex Top 10 in 2014: Regulatory Changes Every Small Business Needs to
Know About in the New Year
ROCHESTER, N.Y. -- December 19, 2013
The New Year is already shaping up to be an active one, full of sweeping
changes that are sure to have an impact on the country’s small businesses.
Paychex, Inc., a leading provider of payroll, human resource, insurance, and
benefits outsourcing solutions for small- to medium-sized businesses, has
identified the top 10 regulatory issues business owners need to be aware of in
“Navigating all of the legislative and regulatory changes that occur
throughout the course of the year can be challenging – taking business owners
away from other important aspects of running their businesses,” said Martin
Mucci, Paychex president and CEO. “By identifying these regulatory issues
early on and explaining how they can impact businesses, Paychex is helping
small business owners prepare for changes that could come in the new year.”
The top 10 regulatory issues for 2014 as identified by Paychex are:
1. Affordable Care Act: Numerous provisions related to health care reform
continue to affect small business owners and their employees. Beginning in
2014, most individuals will be required to carry insurance for themselves and
their dependents or potentially pay a tax. While small business owners aren’t
required to offer insurance to their employees, those that chose to will need
to comply with reforms that take effect in 2014. Although the reporting and
enforcement of the Employer Shared Responsibility provision was delayed until
2015, employers should determine their applicable large employer status and
ensure that appropriate tracking of employee hours begins in 2014. A
significant clarification regarding Flexible Spending Accounts (FSAs) for 2014
is that employers offering a health FSA must also offer group health insurance
coverage. Also changing in 2014 is the small business tax credit for employers
that offer health insurance coverage. To qualify for the tax credit, coverage
must be purchased through the Small Business Health Options Program (SHOP)
marketplace or be certified for SHOP-eligible coverage in states that have
federally facilitated SHOP marketplaces. For more health care reform
resources, visit paychex.com/health-reform.
2. Federal Government Watch: All business owners should be paying attention to
the likely debate around the next increase in the federal debt limit in
February to see if there are implications for their businesses. With pressure
growing in Washington to address the Federal deficit via tax reform, it
promises to be a topic of significant attention in the coming year and one
that businesses should follow closely. One specific area of potential activity
is the possible change in the current S-Corp structure to reduce an owner’s
ability to scale back their payroll tax obligations.
3. Defense of Marriage Act (DOMA): The Supreme Court’s ruling earlier this
year, which expands the federal definition of marriage to include same-gender
spouses, has a significant effect on federal laws including payroll taxes and
health insurance, and employment laws such as the Family Medical Leave Act
(FMLA). Affected employees are now eligible to pay for same-gender spousal
benefits such as health insurance premiums and FSA/Section 125 participation
on a pretax basis for federal taxes. Individuals whose legal spousal status
was changed by the ruling also have the option to claim refunds and/or request
adjustments due to overpayment of FICA taxes, and employers may be entitled to
a refund of federal unemployment tax on wages paid to legally married
same-gender spouses. Regarding state taxes and withholding on the state level,
this will vary depending on whether a state recognizes same-sex marriages and
chooses to follow federal rules.
4. Immigration and E-verify: Although the government shutdown and issues with
implementation of the Affordable Care Act seem to have slowed its momentum,
comprehensive immigration reform remains on the radar of many in Washington.
Highlights of proposed legislation that are of interest to businesses include
mandatory E-verify requirements for all employers and the potential release in
2014 of a new version of Form I-9. The new Form I-9 is expected to contain
enhancements designed to help employers maintain compliance.
5. IRS Priorities: The United States Supreme Court will begin hearing
arguments in January to determine if severance pay should be taxable or exempt
from FICA tax. If the Court rules against the IRS, the agency will need to
process retroactive refund claims submitted by employers and employees. These
claims could reach a total in the billions, and cause the IRS to lose a major
source of future revenue. The IRS has also announced its intent to more
closely examine the taxation of tips and service charges in 2014. This will be
important to industries where tipping is customary such as the hospitality and
6. Retirement: There are several items being considered by policymakers that
could lead to changes in 2014 for businesses that offer retirement plans to
their employees. Business owners should keep an eye on the possible attempt to
amend retirement statements to provide lifetime income illustrations to 401(k)
plan participants. These illustrations could include a projected monthly
income stream based on predetermined variables such as account balance,
current contributions, and assumed interest rates. Another retirement-related
item to watch out for in 2014 is the long-awaited release of fiduciary
regulation by the Department of Labor (DOL). If this is released, it could be
more difficult for small investors to access investment advice as some firms
look to avoid an increase in fiduciary responsibility.
7. Employment Regulations: The Department of Labor is expected to remain
aggressive in its enforcement efforts under new Secretary Thomas E. Perez.
Businesses should be paying attention to the following potential items on the
2014 agenda: a worker’s right to organize; continued enforcement for the
misclassification of employees as independent contractors; vigorous
enforcement of minimum wage and overtime provisions under the Fair Labor
Standards Act; and strong support for an increase to the federal minimum wage.
8. Privacy and Data Security: A current trend that is expected to continue in
2014 is the implementation of additional measures on the state level to
strengthen security and privacy regulations. It has never been more important
for businesses of all sizes to protect the personal, financial, and health
information of both customers and employees, and to ensure they are adequately
protected against the growing threat of cyber fraud.
9. Mobile Technology: As the use of wireless devices and mobile apps continues
to grow, more businesses are adopting Bring Your Own Device (BYOD) or Bring
Your Own Technology (BYOx) policies that allow employees to use their own
mobile phones and tablets to conduct company business. Businesses could see
new regulations and guidance in the new year on how to balance employer
software, productivity, and data security demands with the privacy, ownership,
and compensation rights of the employee.
10. Banking: In response to the well-publicized regulatory challenges many
banks have recently experienced, some are adopting stricter policies around
customer relationships. This increased due diligence may result in changes to
the requirements imposed on small businesses, or even the availability of
credit and other banking services. Expect payroll card programs to be a
specific area of focus. Businesses offering this option to employees should
ensure their card provider is well versed in the relevant federal and state
Paychex, Inc. (NASDAQ:PAYX) is a leading provider of payroll, human resource,
and benefits outsourcing solutions for small- to medium-sized businesses. The
company offers comprehensive payroll services, including payroll processing,
payroll tax administration, and employee pay services, including direct
deposit, check signing, and Readychex®. Human resource services include 401(k)
plan recordkeeping, section 125 plans, a professional employer organization,
time and attendance solutions, and other administrative services for business.
A variety of business insurance products, including group health and workers'
compensation, are made available through Paychex Insurance Agency, Inc.
Paychex was founded in 1971. With headquarters in Rochester, New York, the
company has more than 100 offices serving approximately 570,000 payroll
clients as of May 31, 2013. For more information about Paychex and our
products, visit www.paychex.com.
Note: The foregoing is provided for informational purposes only, and is not
intended to be tax or legal advice. Consult your licensed attorney,
accountant, or other tax professional to discuss your particular facts,
circumstances, and how these opportunities might apply to your business.
Stay Connected with Paychex
Lisa Fleming, 585-387-6402
Public Relations Program Manager
Eric Mower + Associates
Tom Brede, 585-389-1870
Counselor, Public Relations & Public Affairs
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