By Ellen Rodriguez-Swing
Article 1 – US Compliance and Tax Laws
New Third Party Tax Reporting Rule to Impact US Small Business Owners
A new tax rule will impact small businesses who use digital payment services. Starting January 1, 2022, the IRS will look into the digital payment service accounts of small businesses, freelancers, and independent contractors.
Payments of $600 or more with no minimum number of transaction requirements processed from PayPal, Venmo, Zelle, Cash App or any third-party settlement provider accepting credit cards on one’s behalf will need to be reported.
A Form 1099-K will be filed with the IRS by the Third-Party Settlement Organization (TPSO) and one can expect to receive it starting January 2023. In the coming months, it is expected that an extra form will be added during the payment process for the payer to identify the nature of the transaction. Additionally, tax information, like a social security number or tax ID, will be collected, if not yet provided, in order to continue using their TPSO account.
Article 2 – US Compliance and Tax Laws
State-Mandated Retirement Plans Kick in
More than 30 states have considered enacting state-mandated retirement plan legislation. Of them, 13 have already signed such programs into law and have introduced legislation mandating that employers offer their employees a qualified retirement plan, like 401(k), or a state-run retirement plan to save in. These states have stepped in as a way to address the retirement savings gap and give workers access to a workplace retirement savings program.
Businesses generally have two ways to comply with this state-mandated retirement – enroll their employees into a state-sponsored retirement program or sponsor a plan of their own through the private market. They would have to offer the plans, and employees would be able to opt out. Employers in these jurisdictions who don’t comply with the requirements or miss enrollment deadlines may be penalized. The exact monetary amount of the penalty varies by state. It is advised that businesses check with their state to get these deadlines.
Below are the state-sponsored retirement which are a generally a low-cost solution with few fiduciary responsibilities for employers.
|Active state-sponsored retirement plans
|Illinois Secure Choice
|Massachusetts Defined Contribution CORE Plan
|Washington Small Business Retirement Marketplace
|Legislation passed, implementation scheduled
|Colorado Secure Savings Program
|End of 2021-2022
|Maine Retirement Savings Program
|Maryland Small Business Retirement Savings Program
|New Jersey Secure Choice Savings Plan
|New Mexico Work and Save Act
|Green Mountain Secure Retirement Plan
Legislation passed, implementation not scheduled
|New York Secure Choice Savings Plan
|New York City
|Retirement Security for All Act