Google offers new concessions to avoid fine in EU antitrust case

A Google logo is seen at the entrance to the company's offices in Toronto September 5, 2013.

Credit: Reuters/Chris Helgren

BRUSSELS | Mon Sep 9, 2013 6:19am EDT

BRUSSELS (Reuters) - Google has offered further concessions aimed at ending a three-year investigation into complaints it was blocking competitors and to avert a possible $5 billion fine, the European Commission said on Monday.

The new proposal comes two months after the Commission, which is the European Union's antitrust regulator, asked the world's most popular search engine for more measures to sooth concerns that it was blocking competitors, including Microsoft, in web search results.

"The Commission received a proposal from Google and is assessing it," EU Commission spokesman Jonathan Todd said. He did not provide details nor say if rivals would be given a chance to assess the concessions.

"Our proposal to the European Commission addresses their four areas of concern. We continue to work with the Commission to settle this case," Google spokesman Al Verney said.

Lobbying group FairSearch, whose members include Microsoft and other complainants such as online travel agency Expedia, British price comparison site Foundem and France's Twenga, urged the Commission to seek feedback from rivals.

"Given the failure of Google to make a serious offer last time around, we believe it is necessary that customers and competitors of Google be consulted in a full, second market test," FairSearch lawyer Thomas Vinje said in a statement.

Google, which has a market share of over 80 percent in Europe's Internet search market according to research firm comScore, told the Commission in April it would mark out its services from rival products in internet search results.

It also proposed to provide links to at least three competing search engines and make it easier for advertisers to transfer their search advertising campaigns to rival platforms.

But rivals said Google's offer was inadequate and would only reinforce its dominance.

The Commission has said Google may have favored its own search services over those of rivals and copied travel and restaurant reviews from competing sites without permission.

The EU executive is also concerned the company may have put restrictions on advertisers and advertising to prevent them from moving their online campaigns to competing search engines.

(Reporting by Foo Yun Chee; Editing by Mark Potter)

View the original article here

10 Tips to Avoid an Audit

What are the odds of being audited by the IRS? If you make less than $200,000 a year, just over 1 in 100, according to their annual report.

Those odds are up slightly over the past six years, where the average audit rate was 0.98 percent. That’s because the IRS stepped up its game a few years ago to work on closing the tax gap, or “the amount of tax liability faced by taxpayers that is not paid on time.” That amount was $345 billion in 2001, rising to $450 billion in 2006, the last year they computed it.

With today’s historic deficits, it’s not surprising Uncle Sam is looking harder for missing cash. There’s no guaranteed way to avoid an audit, because the government admits to randomly picking thousands of people every year. But there are ways to avoid red flags – things that make your return suspect and more likely to be chosen for an audit.

In the video below, Money Talks News founder and CPA Stacy Johnson offers three tips to avoid receiving a notice from the IRS.

As Stacy suggested, always take the deductions you’re entitled to. An audit doesn’t mean you’re guilty of anything – it just means the IRS might need a closer look. Good documentation is your best defense, so stay organized and don’t throw anything out until you know you won’t need it. The IRS typically has up to three years to audit a return, although they go back further in some cases. Here’s a recap of the tips you saw in the video, along with a few more…

Many people don’t need to hire a tax professional – there’s free professional preparation for those making $51,000 a year or less. But if you do decide to pay for help, choose wisely. Check references and credentials: If the IRS suspects a tax preparer is routinely fudging numbers, they can audit all their clients.

You can and should deduct expenses related to a business, including for home office use if it applies. But expenses related to hobbies aren’t deductible. The difference: A business makes money. From the IRS page called Is Your Hobby a For-Profit Endeavor?: “An activity is presumed for profit if it makes a profit in at least three of the last five tax years.”

As Stacy mentioned, according to The Wall Street Journal, self-employeds are 10 times more likely to get audited if they file a Schedule C rather than a corporate return. The reason is partially explained by a line in this government study: “70 percent of the sole proprietor tax returns reporting losses had losses that were either fully or partially noncompliant.” In other words, people operating a hobby rather than a business are more likely to file a Schedule C.

Taxes aren’t the only factor in the decision to incorporate. Read How Should You Set Up Your Business? for more options, with pros and cons on each.

Another red flag is taking charitable deductions that look big compared to your income. In general, the IRS says you can deduct up to half your adjusted gross income. But the rules get complicated, and the bigger the deduction, the higher the audit odds. That doesn’t mean you shouldn’t take all the deductions you’re entitled to – it just means you should be prepared to back them up.

Don’t rush through your taxes – the more mistakes you make, the more your return sticks out. We’ll soon cover the most common tax mistakes, but if you can’t wait to file, don’t miss simple stuff like signing your return and double-checking your Social Security number.

Prolific U.S. bank robber Willie Sutton was credited with saying he robbed banks “because that’s where the money is.” The IRS has a similar philosophy. Last year the odds of an audit went up sharply for higher earners. Audit odds for those making more than $200,000 were about 4 percent, and for those making more than $1 million, more than 12 percent.

We’re not seriously suggesting taking a pay cut to lower your audit risk. But the more you make, the better prepared you should be.

The IRS doesn’t focus only on the rich. Folks claiming the Earned Income Tax Credit – available to “low to moderate income working individuals and families” – can also invite scrutiny. More than 27 million people claimed the EITC last year, leading to $62 billion in refunds. Because the credit is refundable – meaning the government will send you a check even if you paid no taxes – it’s ripe for abuse. Definitely take it if you’re eligible, but make sure you are. Check out the EITC page of IRS.gov for more.

Many people don’t realize income from almost any source is taxable. You may not get caught on stuff like yard sale profits, but you might on gambling winnings. And for stuff that’s been reported to the IRS by someone else – like investment and self-employment income – you almost certainly will.

Don’t assume because you didn’t get a copy of an income-reporting form, one wasn’t filed with the IRS. If your W-2, 1099, or other tax form hasn’t shown up by now, call the company that’s supposed to be sending it. Still no luck? Call the IRS at (800) 829-1040.

It’s true that the IRS uses computers to analyze returns for potential audits. But it’s not true that e-filing increases your risk. In fact, the IRS says the opposite: When you e-file, “Your chance of getting an error notice from the IRS is significantly reduced.”

It’s easier, cheaper, safer, and gets faster refunds – there’s no good reason not to file electronically.

Federal and state governments communicate, so if you get audited by one, expect to hear from the other. That’s a good reason to take just as much care in preparing a state return as the federal one.

Keep calm and carry on. An audit isn’t the end of the world. The IRS has a video series explaining the whole audit process in detail. Usually it’s a polite notice or phone call asking for some details about a few numbers on your return. It rarely requires an in-person interview or an agent showing up at your door.

If you do get selected for an audit, don’t forget about Form 911: the form to request help from the Taxpayer Advocate Service. The number might be the IRS’s idea of a joke, but the service isn’t. The taxpayer advocate service is an independent department of the IRS that helps people who can’t afford professional representation.

Have you ever been audited? Tell us about your experience below or on our Facebook page.

View the original article here

Avoid the Most Common Tax Mistakes to Get a Faster Refund

As the United States tax code clocks in at 18,500, pages, it's easy to see how taxpayers can make a mistake or two when filing federal income tax forms. And with over 97,000 full-time employees, you can bet it's not going to go unnoticed.

Here are some of the guiltiest repeat offenders -- steer clear of them and you'll get your refund faster and can avoid having your IRS agent over for a cup of tea.

1. Sign on the dotted line.

Probably the easiest part of preparing your taxes is signing your John Hancock, but it's still one of the most common mistakes year after year. The IRS will not accept your return if you fail to sign and date your income tax form. It delays the process and your refund. Remember also that when filing jointly, both spouses must sign.

2. Check the right box.

Another common mistake is checking the wrong filing status. You have five choices: Single, married filing jointly, married filing separately, head of household and qualifying widower. Taxpayers often incorrectly claim head of household filing status without meeting the requirements. You can qualify for head of household status (and a larger deduction) if you are unmarried at the end of the year, have cared for a closely-related dependent for over half the year and paid more than half the cost of maintaining a home for yourself and your dependent.

3. Be a diligent scribe.

This is another mistake that you can sidestep if you're just a little more careful. The names and Social Security numbers for the taxpayer, the taxpayer's spouse, dependents and children who qualify for the Earned Income Credit or Child Tax Credit must be included on the return exactly as they appear on their Social Security cards.

4. Show them the money.

According to the IRS, taxpayers often make the mistake of failing to report income that's not included on a W-2 or 1099 form, including rental income and self-employment income. If you neglect to report that type of income, it may cost you in the long run: The IRS can assess interest and penalties, not to mention criminal prosecution. Don't risk it.

5. Get the numbers right.

One of the top reasons the IRS adjusts returns is math mistakes, so get out that calculator and start number crunching. It also doesn't hurt to have a second set of eyes check your work. This is another advantage to filing online -- the electronic filing software double-checks your math.

An error-free return means faster processing and a faster refund check for you, so cross your T's and dot your I's and before you put it in the mail, make a copy.

View the original article here

Lesser-Known (But Common) Tax Mistakes to Avoid

The April 15th deadline is quickly approaching. For those who have yet to file, this can be an overwhelming time. When rushing to get taxes prepared, sometimes things go wrong. Before you sit down to prepare your taxes, relax, and take a few minutes to review these eight common yet lesser-known tax mistakes.

Entering incorrect Social Security number. Make sure you've entered the correct Social Security numbers for yourself, your spouse and any dependents. Your Earned Income Tax Credit (EITC) and other dependent-related tax benefits could be at risk if you enter an incorrect Social Security number for your dependent child.

Not claiming all dependents. Are you caring for a parent or supporting a friend? If so, he or she may be claimed as a dependent. The same is true for your kids in college. On your 2012 tax return, you can claim a $3,800 dependent exemption deduction per dependent. The exemption reduces the portion of your income subject to federal tax--just be sure no one else is claiming the same dependents as you. For example, you and your sibling can't both claim your parent as a dependent.

Not comparing this year's return to last year's. Take a look at your completed return and paperwork from last year. It might remind you of a deduction you took in 2011 and you are eligible for in 2012.

Overlooking irregular deductions. There are a number of unusual expenses that can be deducted. For instance, you may be able to deduct job-related expenses. Some credit card companies and banks itemize a year's worth of expenditures for you and enable you to sort them by category online. If you use personal finance software, spend some time going through all the categories to ensure you're not missing out on a deduction.

Not filing electronically. Doing your taxes with software and e-filing reduces common mistakes, as many common errors are corrected by computer software. When you e-file with direct deposit, you also get your tax refund faster than paper filing.

Not disclosing all your income. In the last-minute rush, taxpayers often forget important tax documents. Make sure you have important tax forms like W-2s and 1099s in front of you when you sit down to prepare your taxes. If you have multiple employers, or if a W2 or 1099 goes missing, you may end up accidentally forgetting to disclose all your income.

Forgetting to sign. It sounds basic, but not everyone remembers to sign their tax return and their check to Uncle Sam (if they owe money). Check to make sure you've signed in the appropriate places; otherwise, you may face delays receiving your refund.

Wasting your refund. If you're due a tax refund, plan ahead for what you'll do with it before it arrives. Use your windfall to pay down debt. Invest it in tax-deferred retirement accounts. Put it in a savings account for the inevitable rainy day. Use it to take a class to help advance your career or take a nice vacation. The worst thing you can do is spend your refund on something you'll forget about a month or two later.

Lisa Greene-Lewis, Lead CPA, American Tax & Financial Center at TurboTax, has more than 15 years of experience in tax preparation, including positions as a public auditor, controller, and operations manager. For up-to-date tax tips and tax news, go to the TurboTax Blog.

More From US News & World Report

View the original article here

Structuring Unpaid Internships to Avoid FLSA Violations

Recent court decisions may curtail the use of unpaid internships at for-profit businesses, as companies now face substantial liability for improperly classifying interns under the "trainee exception" of the Fair Labor Standards Act (FLSA). Traditionally, unpaid internships have proven to be a crucial resource for inexperienced students and recent graduates. According to the National Association of Colleges and Employers, 55 percent of the class of 2012 had an internship during college, almost half of which were unpaid. Although companies are generally receptive to such arrangements, recent legal exposure will likely upend the traditional unpaid internship model.

The term "intern" is neither defined nor provided as an exception in the FLSA. Courts faced with the issue of whether unpaid internships are violative of the FLSA look to the U.S. Supreme Court's decision in Walling v. Portland Terminal, 330 U.S. 148 (1947), which established the trainee exception. In Walling, the court found that trainees who worked for seven or eight days for the defendant railroad without pay during "a course of practical training" were not "employees" under the FLSA based on "the unchallenged findings that the railroads receive no 'immediate advantage' from any work done by the trainees." Specifically, the court reasoned that the trainees did not displace any of the regular employees and the trainees' work did not provide any immediate advantage to the company business; rather, at times, it actually impeded it. The court held that the FLSA was not intended to penalize employers for providing the same kind of instruction akin to a vocational school at a place and in a manner that would most greatly benefit the trainee.

Further, in determining whether interns at for-profit businesses fall within the trainee exception, courts are guided by the framework provided in the Department of Labor's "Fact Sheet 71: Internship Programs Under the Fair Labor Standards Act," published in April 2010. In its fact sheet, the Department of Labor enumerates six criteria for determining whether an internship may be unpaid: "The internship, even though it includes actual operation of the facilities of the employer, is similar to training that would be given in an educational environment.The internship experience is for the benefit of the intern.The intern does not displace regular employees but works under close supervision of existing staff.The employer that provides the training derives no immediate advantage from the activities of the intern and, on occasion, its operations may actually be impeded.The intern is not necessarily entitled to a job at the conclusion of the internship.The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship."

While the Department of Labor test is not necessarily conclusive of the inquiry, courts have generally afforded it some deference in determining whether an unpaid internship would overcome the employment label.

A few general principles may be gleaned from recent court decisions in which courts have addressed whether an unpaid internship violated the FLSA. To ensure compliance with the law and reduce potential liability, employers should consider the following with respect to structuring unpaid internships:

•Teach fungible skills.

Courts have acknowledged that classroom training is not a prerequisite for an unpaid internship; however, internships must provide something beyond on-the-job training that employees receive. Internships that only provide exposure to menial tasks, such as photocopying or making coffee, are not likely to meet this standard. To the contrary, if the internship is engineered to be more educational than a paid position, it will likely be considered comparable to vocational school. For example, provide training similar to that which would be given in school and is related to an intern's course of study. Interestingly, one court has held that whether an intern actually learned anything is not dispositive of whether training or useful knowledge was offered by the company, reasoning that even a classic educational environment sometimes results in surprisingly little learning.

•Ensure the experience benefits the intern.

Undoubtedly, interns receive benefits from their internships, such as resume listings, job references and an understanding of how a particular office works. The latter benefits, however, are incidental to working in an office like any other employee and are not the result of internships intentionally structured to benefit the intern. Courts have held that resume listings and job references result from any work relationship, paid or unpaid, and are not the academic or vocational training benefits envisioned by the law. Unpaid internships that benefit the intern often involve the receipt of academic credit for his or her work and/or satisfy a precondition of graduation.

•Do not have interns perform routine tasks.

A browser or device that allows javascript is required to view this content.

Subscribe to The Legal Intelligencer

You must be signed in to comment on an article

Sign In or Subscribe
">

View the original article here

Five Costly Mistakes to Avoid With Obamacare

Organizations large and small are quickly running out of time to ensure that they are compliant with the Patient Protection and Affordable Care Act (PPACA), signed into law in 2010. Also known as the Affordable Care Act (ACA), major portions of the law begin to take effect next year. However, an employer's actions this year will have a significant impact on its ability to comply with the reforms in 2014 and the company's financial liability for noncompliance.

To date, discussion has focused on the topic of employers "playing" (buying health insurance coverage) or "paying" (being assessed the penalty) under the ACA. The majority of employers, which are likely to play, now need to be wary of costly errors that will result in companies playing and paying — buying health insurance for their employees and paying the ACA fines.

To understand the common errors, employers must have a basic understanding of the ACA penalties. Those penalties only apply to employers that employ 50 or more full-time employees, which are defined as employees who work 30 or more hours a week or the equivalent when all of the part-time employees' hours are aggregated.

There are two primary penalties, known generally as the "a" and "b" penalties. The "a" penalty applies when the employer fails to offer an appropriate health plan to substantially all of its common-law FT employees and their dependents. The term "substantially all" is generally defined as 95 percent of FT employees. The "a" penalty is calculated as $2,000 times the number of FT employees (minus the first 30 FT employees).

The "b" penalty occurs when the employer offers an appropriate health plan to substantially all of its FT employees and their dependents but the plan is either not affordable or does not meet the minimum value test and an employee goes to a government exchange and receives a subsidy to purchase health insurance. The "b" penalty is the lesser of the "a" penalty or the number of employees who receive a subsidy times $3,000.

1. Failing to Offer Coverage

At first blush, it would seem simplistic to ensure that an employer offers health care coverage to 95 percent of its FT employees. If, however, the employer misses the 95 percent mark — even by a fraction of a percentage point — the employer will pay the full "a" fine and the cost of the health insurance. Accordingly, employers should not be complacent with respect to the "substantially all" threshold and must be proactive to ensure that they have correctly accounted for all FT common-law employees. Easy employees to miss are those who are misclassified as independent contractors. There is no such creature as the "1099 employee," which is a fiction that places the employer at substantial risk under the ACA, as well as a plethora of employment and tax laws. Other easy-to-miss employees include temporary and certain leased individuals who might qualify as common-law employees. The employer must be precise in its classifications to ensure that it has accounted for all common-law employees and is, in fact, offering health insurance benefits to substantially all of those common-law FT employees. Otherwise, the employer will play and pay.

2. Failing to Offer Coverage

No, this is not a typographical error. The first two mistakes are the same but for very different reasons. Employers need to recognize that the determination of who is or is not a FT employee — working 30 hours or more per week — is measured right now in 2013 to determine and lock in the individual's FT status in 2014. Employers must have databases and payroll systems that allow them to accurately track, quantify and average hours, particularly if they have a variable-hour workforce. Failure to appropriately implement and conduct a 2013 measurement period and 2014 stability period under the ACA regulations is a potentially catastrophic error, particularly for employers with a significant number of part-time or variable-hour employees.

If the employer inadvertently misclassifies employees as part-time individuals and deems them to be ineligible for employer-sponsored health care insurance when they are actually working 30 or more hours a week, these employees will count as FT employees who weren't covered for purposes of the "substantially all" requirement. If enough of these employees are accidentally excluded from the plan, it could reduce the number of FT employees who are covered below 95 percent and expose the employer to the full "a" penalty. An employer's counting methodologies are critical and those methodologies must be in place now, or the employer risks making mistakes in classifying employees that will cause it to play and pay.

3. Misunderstanding the Term 'Dependents'

Historically, employers have had great latitude in choosing to offer employee-only, employee-plus-spouse and/or f?amily coverage. That flexibility has just evaporated. So have creative tactics such as the "birthday rules." These rules seek to keep children from enrolling in one parent's group health plan and purport to force the child onto the other parent's group health plan depending on which parent has the first birthday during the calendar year or based on some similarly arbitrary date determination. The ACA requires that plans offer (although they do not have to pay for) coverage to dependents. Interestingly, the ACA generally defines dependents as biological, step- and foster children up to age 26, but the reforms do not include spouses. A failure by a plan to offer dependent coverage will result in the employer playing and paying the full "a" penalty. The only exception is some brief transition relief, which will allow the employer to avoid the "a" penalty in 2014 if the health plan historically did not offer any dependent coverage and is diligently moving toward offering dependent coverage.

4. 'B' Penalty Can Apply Despite Offering Coverage

If an employer offers health care insurance that is either not affordable (generally, the employee contribution for employee-only coverage must be less than 9.5 percent of household income or the employee's W-2 wages) or does not meet the minimum value test (generally, the coverage must pay for 60 percent of the costs) and an employee obtains a subsidy from an exchange, the employer will be assessed the "b" penalty. The "b" penalty is equal to $3,000 per year for every employee who obtains a subsidy up to the amount of the "a" penalty that would apply in the absence of any coverage whatsoever. If a sufficient number of employees obtains subsidies, the "b" penalty will eventually equal the "a" penalty and, once again, the employer will play and pay.

5. 'A' and 'B' Penalties are Not the Only Consequences

Employers that are subject to the Employee Retirement Income Security Act and choose to play must document the material terms of the plan that they choose to offer. It is a regular occurrence to find employers that do not have the required plan document or summary plan description (SPD) or that mistakenly think the insurer's booklet on services is sufficient documentation. The U.S. Department of Labor is actively auditing health plans for compliance with the ACA, ERISA and a host of related laws. These audits can be complaint-driven or random. They are a painful and often lengthy process for the unprepared employer that does not have a legally compliant SPD, up-to-date plan documents, good records of participant communications and other important written information about the plan.

Similarly, employers need to be aware that employees can complain to the Occupational Safety and Health Administration and other government agencies if they feel the employer has failed to comply with the ACA. This will trigger an OSHA investigation. This is not an exhaustive list of other penalties and financial pitfalls, but it highlights that the "a" and "b" penalties are not the only ones to be concerned about. The unprepared employer who is playing and who is on the receiving end of an investigation may find itself with fines, attorney fees and related external/internal costs and will surely play and pay.

Complying with the ACA is a complicated process that requires careful planning and assessment. For employers of all sizes, the key is to understand the law and avoid the costliest mistakes so the company either pays or plays, but not both.

Anne Lavelle is a director and attorney in the labor and employment practice group with Cohen & Grigsby in Pittsburgh. Contact her at alavelle@cohenlaw.com.

This article originally appeared in The Legal Intelligencer.

A browser or device that allows javascript is required to view this content.

You must be signed in to comment on an article

Sign In or Subscribe
">

View the original article here