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October 2003 — Vol. 81, No. 8
Your Questions Answered
Have a personnel-related or business tax question? Members can get
free information from CBIA’s experts. The phone number is 860–244–1900.
Q: We’re going to have a lot of overtime
hours available. One of our best employees says he’ll take as much
overtime as he can get and doesn’t mind working seven days a week.
Are there rules about how many consecutive days an employee can work?
A: Connecticut law (CGS 53-303e)
says no employer may require an employee to work more than six days in
any calendar week. The effect of this law is to prohibit more than 12
days of mandatory work in a row, since an employer who schedules workers
to have Sunday off in one week and Saturday off in the next week would
be getting 12 consecutive days of work. However, if it’s truly voluntary
on the employee’s part, an employee may work seven days a week.
It’s best if you get something from your employee in writing indicating
that he does not want a day off as long as overtime is available and instead
prefers to work that seventh day.
Q: We require employees to pay for a portion
of the group health insurance premium for their own coverage and for any
dependent coverage they need. Can we ask certain employees to pay a larger
portion of the premium than others, or must we have the same contribution
terms for all employees?
A: It is permissible to vary the
amount to be paid by different employees, as long as the distinction among
who pays what amount is not based on improper characteristics or factors
— that is, the traditional protected classes such as age, gender,
race, disability status, medical history, etc. In addition, many insurance
plans require the employer to pay at least a minimum portion of the premium.
CBIA Health Connections, for example, requires employers to pay at least
50% of the lowest-cost employee rate.
Other than those restrictions, it’s OK to have different arrangements
with different groups of employees. For example, senior managers may have
to pay only 20% of monthly premiums and hourly employees may be required
to pay 30%, or the other way around. In fact, rising insurance premiums
have led many companies to let hourly employees pay a smaller portion
of the premium than more senior-level workers, based on the assumption
that higher-paid employees can more easily afford the higher amount.
Q: We do business with the state of Connecticut
and don’t collect sales tax from them because the state government
is tax-exempt. If we outsource some of the work we perform for the state
to a third party, would sales tax be due on any part of the transaction?
A: There should be no tax consequences
for either the transaction between your business and the state, or between
your business and the third party, as long as the proper certificates
are filled out. For direct sales to the state government, you should obtain
a completed CERT-134 from the state agency you’re selling to. As
for the outsourced work, you should complete a “Resale Certificate”
and show it to the company you’re outsourcing work to. You will
not have to pay sales tax on the outsourced work because there is an exception
under state law for the circumstances you describe.
Note that sales to certain types of nonprofit organizations, such as
a 501(c)(3), are also tax-exempt, but a different form is required. The
organization should present you with a completed CERT-119.
All of these forms can be found on the Web site of the Department of
Revenue Services (DRS) at www.drs.state.ct.us, under “Forms.”
The DRS advises businesses to keep a copy of any completed certificates
for up to six years. If you have questions about any of the certificates,
call the DRS at 1-800-382-9463.
Q: I just heard that a business that wants
to settle a tax dispute with the Internal Revenue Service through the
Offer in Compromise (OIC) process now has to pay $150. Is that true?
A: Yes. Starting Nov. 1, the IRS
will charge a $150 application fee for processing OICs. The IRS says it
hopes this fee will help defray the costs of the OIC service and improve
the quality of the OIC submissions. Through the OIC process, the IRS can
accept less than full payment of a business’s tax liability, but
only in certain circumstances. For more information, see http://www.irs.gov/pub
/irs-pdf/f656a.pdf and type in “OIC.”
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