Day: April 26, 2024

Understanding New York’s Tip Credit

Several states have already done away with tip credit for food service workers, and more are exploring the option, including New York. While the debate continues about whether this is a positive or a negative for restaurants and employees, New York has moved ahead with changes to wage theft laws, along with minimum wage increases starting this year and continuing in 2025 and 2026. This makes understanding how the tip credit works in New York even more important as mistakes can be costly and even result in criminal proceedings.

Here’s a quick review…

What is a tip?

Any amount of money a customer voluntarily leaves that’s above the ticket price plus tax is considered a tip.

What is a tip credit?

It allows employers to pay food service workers a rate that’s lower than minimum wage by including tips or a portion of them in wage calculations. Foodservice workers’ combined wage plus tips must equal at least the full minimum wage; otherwise, the employer must make up the difference.

Who owns a tip?

A tip belongs to an employee – not an employer. An employer is not entitled to take any part of a tip, except for a percentage of tips for a valid tip pool.

Who is considered a tipped worker?

While this isn’t defined under NY law, the FLSA applies and defines it as “a tipped employee is an employee engaged in an occupation in which they customarily and regularly receive more than $30 a month in tips.”

What about service charges?

Under the FLSA, mandatory service charges are the property of the restaurant as they’re not considered tips, but New York has a more generous policy so it takes precedence. It assumes service charges are gratuities and belong to employees. Employers must clearly let customers know when administrative charges like banquet or special event fees are not tips and, if the restaurant splits the charges with staff, they must let customers know the exact split rate.

What is New York’s minimum wage for tipped food service workers?

In NYC, Long Island, and Westchester, the cash wage is $10.65 and the tip credit is $5.35. For all other NY locations, the cash wage is $10 and the tip credit is $5.

What recourse do employees have if tip regulations are not followed?

They may report or file a complaint regarding hour or wage violations and are protected by law against retaliation. As of the end of last year, wage theft became eligible for criminal prosecution.

Are there tip recordkeeping and reporting requirements?

Yes! They help ensure compliance with state and federal wage and hour laws and serve as proof that you are upholding minimum wage requirements. Under NY Labor Law Section 196-d, employers are required to have daily records of the tips employees receive and those records are subject to DOL inspections. Also, employee wage statements must show how much of the pay is in tips and wages.

To help with recordkeeping and compliance, there are restaurant management systems to track and retain tip documentation. There are also applications allowing employees to self-report.

While the future of tip credits in New York is up in the air, right now they still exist. If you have any questions, we strongly encourage you to seek legal counsel.

Please remember RBT CPAs is available to meet all of your accounting, tax, audit, and advisory needs. We’ve been proudly serving municipalities, businesses, non-profits, and individuals in the Hudson Valley for over 50 years. Please don’t hesitate to give us a call and find out how we can be Remarkably Better Together.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

Note: RBT CPAs is not a law firm and the information provided herein should not be taken as legal counsel or advice. Any questions should be directed to your legal counsel.

Does My Small Business Need to File Beneficial Ownership Information?

Under the Corporate Transparency Act (CTA), certain businesses formed or operating in the U.S. must report information about their beneficial owners – the people who own or control them – to the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). This applies to most companies, including small businesses.

While it sounds like the stuff spy movies are made of, FinCEN Beneficial Ownership Information (BOI) reporting is real and is something businesses need to take seriously.

The U.S. adopted the law to protect against money laundering and related crimes while promoting national security. The willful failure to comply or the willful attempt to provide fraudulent information can result in fines of up to $591 each day a violation continues and criminal prosecution (imprisonment for up to 2 years and/or up to a $10,000 fine).

Earlier this year, the law was challenged in the Northern District of Alabama. The court ruled it exceeds Congress’ power and can’t be enforced against the plaintiffs (Isaac Winkles and companies for which he is the beneficial owner; the National Small Business Association, and its members. This is currently under appeal. For now, any covered entity other than those named in the suit are required to comply.

So, what is beneficial ownership information (BOI)? BOI is information about individuals who directly or indirectly own or control a company.

What companies are required to report BOI? According to the U.S. Chamber of Commerce, a reporting company is any privately held company – domestic or foreign – registered to conduct business in the U.S.

There is a list of 23 entity types that are exempt from reporting, including nonprofits, government authorities, publicly traded companies, banks/credit unions, and such. If your business is not considered exempt and it is a domestic or foreign reporting company, filing requirements and deadlines apply.

A business created or registered before January 1, 2024, has until January 1, 2025, to file. Otherwise, the business must file within 90 calendar days of receipt of the company’s creation or registration if it’s before January 1, 2025. Thereafter, the filing must occur within 30 days of creation/registration.

Full details and resources are available on the FinCEN website. Go there to file BOI information, see Frequently Asked Questions, and access resources for small businesses including a Compliance Guide.

As you take care of the many aspects of running a business – including BOI filings (if required), please remember RBT CPAs is available to meet all of your accounting, tax, audit, and advisory needs. We’ve been proudly serving municipalities, businesses, non-profits, and individuals in the Hudson Valley for over 50 years. Please don’t hesitate to give us a call and find out how we can be Remarkably Better Together.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

Note: RBT CPAs is not a law firm and the information provided herein should not be taken as advice. Any questions should be directed to your legal counsel.

Funding Opportunity & Comments on Proposed Rule with June Deadlines

We are always on the lookout for funding and advocacy opportunities to benefit our HUD clients and prospects. Following is information about a funding opportunity for community revitalization efforts and a proposed rule to reduce barriers to HUD-Assisted Housing. Here are the highlights…

FY24 Choice Neighborhoods Planning Grant

On April 9, the FY24 Choice Neighborhoods Planning Grant opened for applications. This funding opportunity is designed to support the development and implementation of a neighborhood revitalization strategy (a.k.a. Transformation Plan) with a focus on housing, people, and neighborhoods. The strategy/plan can then be used to guide the revitalization of assisted and/or public housing and the surrounding neighborhood to have a positive impact on families.

What’s more, grant recipients earn additional points and are given priority for future Choice Neighborhood Implementation Grants, which provide up to $50 million to implement a Transformation Plan.

The application is open to communities of all sizes. $10 million in funding is available, with a maximum grant of $500,000. About 20 communities will be selected for funding. The deadline for applications is June 10 at 11:59 p.m. Eastern Time. For additional information, here is the notice of funding opportunity.

Proposed Rule to Reduce Barriers to HUD-Assisted Housing

On April 9, HUD posted a proposed rule – “Reducing Barriers to HUD-Assisted Housing” – and is seeking public comment by June 10.

The rule proposes that people with a criminal record cannot be automatically terminated from or denied access to HUD-assisted housing, including Housing Choice Vouchers, public housing, and multifamily housing. Instead, owners of HUD-assisted multifamily housing and public housing agencies (PHAs) would be required to use an individualized assessment that considers criminal records relevant to endangering the health and safety of residents and staff, while also giving full consideration to mitigating factors and circumstances.

As a result, PHAs and assisted housing owners would have more discretion and provide direction for fair, effective, and comprehensive admission and termination policies. Ultimately, the proposed rule would help minimize unnecessary exclusions while maintaining a healthy and safe environment.

HUD invites all members of the public and interested parties to submit views, comments, and suggestions by June 10. As per the notice of proposed rulemaking on the federal register, comments can be submitted electronically through the Federal eRulemaking Portal at http://www.regulations.gov or via mail to the Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 7th Street SW, Room 10276, Washington, DC 20410-0500.

While you consider grants and proposed rules, please remember RBT CPAs is here to help with all of your accounting, tax, audit, and advisory needs. Give us a call today.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

What’s the latest on AI regulations in New York?

In the absence of Federal legislation governing AI, states are taking it upon themselves to try to get ahead of, or at least keep up with, its development and use. New York is among the forerunners, with legislation already adopted for state agencies and more being explored in relation to labor laws, penal law, the regulation of specific industries, and more.

Overall, legislation seems to be trying to balance unlocking AI potential for the public good while protecting the public from its downsides. Municipalities and their employees should stay abreast of what’s here and what’s coming to ensure compliance and make informed decisions about local AI applications and use.

AI Policy for NYS Agencies

In January, New York State’s Information Technology AI Policy took effect. While encouraging state agencies to adopt AI tools, it also sets guidance for doing so responsibly. While the policy does not cover authorities, boards, and other NYS Government organizations (i.e., the MTA and NYSERDA), these groups are encouraged to follow the policy or use it as guidance.

The policy is broad and should be reviewed in full to understand its full scope. In general, agencies are allowed to adopt their own policies if they are not less restrictive than the state’s policy. State agencies must appoint supervisors to oversee AI systems, which are not allowed to make decisions impacting the public without final approval by a human. State agencies should also have policies for processing personally identifiable, confidential, or sensitive information. They are also advised to consult counsel to ensure intellectual property protections aren’t undermined when inputting data.

The policy also includes best practices for addressing unacceptable uses of generative tools to deceive people, creating content without confirming data, and using AI chatbots without identifying them as such.

Proposed Updates to NY Penal Code

On the criminal law front, Governor Hochul proposed legislation in February as part of the FY 2025 budget to set “important guardrails” to protect against untrustworthy and fraudulent uses of AI. This would classify using AI for the unauthorized use of a person’s voice as a misdemeanor; allow for private action to combat digitally manipulated, false images; disclosure on digitized political communications published within 60 days of an election; and clarify current law regarding unlawful distribution of intimate or sexually explicit images.

Proposed NY Labor Law

NY Bill S07623 was proposed on February 28. If enacted, it would be unlawful to use an automated employment decision tool (AEDT) to screen applicants for jobs in NY, unless the AEDT underwent a disparate impact analysis in the past year, and the employer published a summary of the analysis on its website and provided the NY DOL with an annual summary. If enacted, it will take effect immediately. (This aligns with NYC’s Local Law 144 which took effect last July, setting rules for employer use of AEDTs for screening, hiring, and assessing employees for advancement.)

Private Sector Impacts

As for legislation covering the private sector, while a proposed state task force focusing on this was vetoed in 2023, proposed legislation and guidelines for different industries have been issued and/or are in the pipeline.

For example, the NYS Department of Financial Services issued a proposed circular letter on January 17 regarding the use of external consumer data and information sources(ECDIS), as well as AI systems (AIS), for insurance underwriting and pricing. It includes rules and principles to address “risks of inaccurate, arbitrary, capricious, or unfairly discriminatory outcomes that may disproportionately affect vulnerable communities and individuals or otherwise undermine the insurance marketplace in New York.” Comments on the letter were accepted until mid-March, so there may be more to come.

The insurance industry isn’t alone. For example, bills SB 7922 and AB 8098 target book publishers, requiring disclosure when books are produced with AI. When it comes to newspapers, magazines, and other publications printed or electronically published, SB 7847 would require the identification of any parts made with AI.

For all businesses, there’s AB 8179, which would impose a “Robot Tax” on businesses that displace workers with AI. There’s also the Advanced Artificial Intelligence Licensing Act which would require the registration and licensing of advanced AI systems considered high-risk

No doubt, more is coming – a lot more. As you work with counsel to understand the impact of new laws and those in the pipeline, while making sure your employees are also up-to-speed, if your organization needs any accounting, audit, tax, or advisory services, you can continue to count on RBT CPAs to do the job professionally, ethically, on-time and within budget. Give us a call to learn more.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

Please note: RBT CPAs is not a law firm and the information herein should not be construed as legal advice. As always, to ensure your policies comply with global, national, state, and local laws, it is in your best interest to seek legal counsel.

How to Protect Your Assets from Future Long-term Care Needs

In truth, none of us know what type of medical care we’re going to need in the future. Some may need none and some may need care for years. We just don’t know. What we do know is that future healthcare costs can wipe out lifetime savings, assets, and financial legacies, unless you plan in advance.

According to the NYS Partnership for Long-Term Care, the average cost of a nursing home in the Northern Metropolitan area (covering Dutchess, Orange, Putnam, Rockland, Sullivan, Ulster and Westchester counties) is $466 daily, $14,165 monthly, or $169,980 annually! People with significant assets (over $6 million) may be in a position to cover those costs, even for a long period of time. People with low to no assets will likely be eligible for Medicaid. What about those in between?

For those 65 and up, Medicare does not cover long-term care (LTC); it does cover short-term nursing home expenses for rehab for eligible individuals. Medicaid does cover LTC, if you’re eligible. Eligibility is based on income and total assets, with limits varying by state. For example, in New York, for Medicaid LTC coverage to kick in, the following limits apply:

Single: a maximum of $1,732/monthly income and $31,175/total assets.
Married with both spouses requiring LTC: a maximum of $2,351/monthly income and $42,312/total assets.

(The American Council on Aging provides a free test to determine Medicaid eligibility for the elderly. To learn more, click here.)

There is a way to protect your assets and still benefit from Medicaid – a Medicaid Asset Protect Trust or MAPT. A MAPT is an irrevocable trust. You’ll basically shift assets to a trustee. This allows you to protect a portion of your assets for loved ones while still allowing you to qualify for Medicaid. There are a couple of caveats that are important to know.

First, states have a lookback period for Medicaid eligibility. In most states, including New York, the current lookback period is 5 years If money or assets are transferred to a trust inside of the lookback period or simply given away, gifted, or sold for below market value, it will delay Medicaid benefits. The delay or penalty period equals the value of the funds transferred/gifted/given away/sold by Medicaid’s regional rate for nursing home care. (The regional rate varies by county and is updated annually. Click here to see the 2024 New York regional rates.)

In basic terms, if you transfer $100,000 to an irrevocable trust two years before needing a nursing home and assume the regional rate is $10,000/month (just for simplicity’s sake), you would not be eligible for Medicaid assistance for 10 months ($100,000/$10,000) and you’d end up spending the full $100,000 you put in the trust.

On the other hand, if you establish the trust early enough and the lookback period has passed by the time you need LTC, the assets in your MAPT will not count toward your Medicaid eligibility. So, you can get LTC and protect your assets.

Second, there is a trade-off. When you establish an irrevocable trust, you designate someone else as trustee, giving them full control of your assets. You cannot change or cancel the trust in any manner. While the trustee can distribute income to you if authorized by the trust agreement, he/she will not distribute principal to you. That means you are putting 100% trust in that person.

Those are the biggest considerations. There are others. For example, when you die, Medicaid can recover funds paid on your behalf by going after assets like a house. On the other hand, assets placed in an irrevocable trust will not be included in your estate for the calculation of estate taxes or probate.

Interested in learning more about how to protect your assets and ensure you can get the medical care you may need in the future? RBT CPAs professionals in our Estate, Trust, and Gift Practice can help.

While RBT is not a law firm, RBT CPA professionals in our Estate, Trust and Gift Practice can help you plan for future healthcare needs as part of an overall estate plan. We can help you understand your options and define a course of action; refer you to an attorney who can create related legal documents (or work with your attorney if you already have one); review legal documents to ensure they accurately reflect your wishes; and review and update your plan annually so they continue to reflect your wishes and are adapted due to any tax law changes.

Please don’t hesitate to give us a call and find out how we can be Remarkably Better Together.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.