Onondaga County’s Shared Services Panel recently released a report outlining opportunities to create savings that directly address the fiscal challenges faced by our local governments. Their work is an important recognition that the status quo cannot continue, and I applaud their efforts to embrace cooperative solutions to eliminate duplication of services and tackle the tax pressures that burden our communities.

However, the current plan as outlined by the panel represents a mere 0.05 percent savings. This alone is not significant enough to be transformative. While a welcome first step, we have much more work to do. As a community, we must continue to advocate for solutions that touch every category of service and achieve a scale of service improvement and cost efficiency that will be meaningfully felt by the residents of our region.

Over the past several years the Consensus Commission on Government Modernization has put forth considerable time, thought, and effort to address how we can work together to drive savings and efficiencies. It is a missed opportunity for the panel to not have advanced more of the Consensus Commission’s recommendations. 

The final recommendations presented by that commission reflect more than 100 conversations that took place across the city and county over three years involving more than 6,000 people. It’s incumbent upon our community leaders and elected officials to understand those recommendations as an overwhelming call for action. However, in the absence of such action, it is up to each citizen to ensure that current models of service delivery, which are wholly inefficient and ineffective, are reformed.

This is a time for our elected leaders to take bold action. It is my hope that members of Onondaga County’s Shared Services Panel use this plan as a starting point to drive changes that are real and necessary for our community. I encourage all residents of Onondaga County to use their voice to make sure this happens.       

Robert M. (Rob) Simpson is president and CEO of CenterState CEO, the primary economic-development organization for Central New York. This viewpoint is drawn and edited from the “CEO Focus” email newsletter that the organization sent to members on Sept. 15.

Serving those who have faithfully served our country is a core value at the U.S. Small Business Administration (SBA). As a result of their military training and experiences, veterans have developed skills and leadership abilities that are naturally suited to operating a business. At SBA, we are committed to getting veteran entrepreneurs the resources and tools they need to succeed with access to capital, counseling services, veteran-focused training, and support pursuing government contracts. 

Access to capital — Starting Oct. 1, all new SBA loans up to $350,000 to qualified veteran–owned businesses approved using the SBA Express program will have zero one-time guaranty fees. This enhancement will save veteran entrepreneurs up to $5,250 in fees. Separately, new SBA-loan approvals exceeding $350,000 to qualified veteran-owned businesses may benefit from other upfront fee discounts. 

Free counseling services — If you are just starting out, the SBA can help with writing a business plan, developing financial projections, finding target markets, and much more. Veterans can find free, confidential business counseling from our family of resource partners. They include a local Small Business Development Center, SCORE Chapter, Women’s Business Center, and Veterans Business Outreach Center. Our offices in Albany, Elmira, and Syracuse also have veteran business development officers that provide one-on-one counseling for veteran entrepreneurs. 

Free veteran-focused training programs — Boots to Business is an entrepreneurial education and training program offered as part of the U.S. Department of Defense’s Transition Assistance Program (TAP). Boots to Business/Reboot is an entrepreneurial training program designed for veterans and their dependents who have already made the transition back to civilian life. Both programs include steps for evaluating business concepts and the foundational knowledge required to develop a business plan. To register online for a class near you, please visit https://sbavets.force.com/s/. 

Government contracting — Veteran-owned businesses have found success in selling to Uncle Sam this fiscal year, with nearly 2,000 awards valued at $59.7 million in our 34-county district of upstate New York. Of those awards, service-disabled veterans won 182 worth $13 million. With workshops, matchmaking events, and procurement-focused counseling from SBA, veteran entrepreneurs can continue to find more federal contracting opportunities.

So whether you are a veteran, active-duty service member, reservist, National Guard member, or spouse, I encourage you to learn more about how the SBA can help you achieve your dream of entrepreneurship. Visit our district website at www.sba.gov/ny/syracuse.                          

Bernard Paprocki is district director for the U.S. Small Business Administration’s Syracuse district office. He is responsible for the delivery of SBA’s financial programs and business development services for a 34-county region in upstate New York.

Answering common employer questions

The New York Workers’ Compensation Board (WCB) on July 19 published its final regulations implementing the New York Paid Family Leave Law (PFL).

With the regulations final, employers should be modifying existing leave policies and processes to incorporate PFL requirements, and to develop new PFL policies that offer employees information about their rights and obligations under the law. 

We held a webinar on New York’s PFL on July 25, in which we received hundreds of questions. While we didn’t have the opportunity during the webinar to address all the inquiries that we received, we noted afterwards that many employers raised the same questions. So, this article is dedicated to answering some of the most frequently asked questions we received. We hope this follow-up will be helpful to employers in preparation for the launch of PFL in 2018.

This batch of questions and answers focuses on the application of PFL to higher-education institutions.

Q: Are private colleges and universities covered by PFL?

A: Yes. Private colleges and universities are deemed to be covered employers under PFL. However, if these colleges and universities are not-for-profit organizations, they may be deemed to be covered employers, but may also have some employees who are not covered by PFL. Specifically, employees engaged in a “professional” or teaching capacity for not-for-profit educational institutions are excluded from the definition of employee under the law. Certainly, higher-education institutions can extend coverage to these exempt classes of individuals if they choose to do so.

Q: Are state colleges and universities covered by PFL?

A: No, to the extent that such institutions fall within the definition of a “public employer.” PFL does not apply to public employers, which includes the following entities: the state, a political subdivision of the state, a public authority, or any other governmental agency or instrumentality.

Q: Can state colleges and universities voluntarily choose to provide benefits under the PFL law?

A: Yes. Public employers are permitted to opt in to PFL. The process for opting in is slightly different for unionized and non-unionized employers. If a public employer chooses to cover its non-unionized workers, it must provide 90 days’ notice of its decision to opt in to not only the WCB, but also to all employees who will be required to make PFL contributions. For a public employer to cover/opt in its unionized employees, the public employer must engage in collective bargaining and reach consensus/agreement with the applicable union. Once an agreement is reached, the employer must notify the WCB that an agreement has been attained and provide certain information to the WCB.

Q: Are higher-education institutions who currently provide voluntary state disability insurance coverage (DBL) to their employees also required to provide PFL?

A: No. However, if these colleges and universities currently provide voluntary DBL coverage to their employees, they must notify both the employees and the WCB whether they will also provide voluntarily PFL coverage. Notification must be made by no later than Dec. 1, 2017.

Q: Are student employees entitled to PFL?

A: Yes, provided they satisfy the requisite eligibility criteria. Student employees are treated in the same manner as any other employee. If the student employee is regularly scheduled to work at least 20 hours a week, he/she is eligible to take PFL after he/she has been employed for 26 weeks. If the student employee is regularly scheduled to work less than 20 hours per week, he/she is eligible to take PFL after working 175 days.         

Kerry Langan and Caroline Westover are labor and employment law attorneys at Bond, Schoeneck & King, PLLC in Syracuse. This viewpoint article is drawn from the firm’s New York Labor & Employment Law Report blog. Contact Langan at klangan@bsk.com and Westover at cwestover@bsk.com

Taxes are neither sexy nor exciting, except perhaps to us CPAs who seem to thrive on the nuances of the tax code. But taxes are a critical factor in your business, affecting your bottom line and your daily operations. When a business does not plan for the proper collection and payment of taxes — whether payroll, sales, income, or excise taxes — the money and time spent to resolve the situation can far exceed the tax burden itself. Ask anyone who has had to straighten out a tax situation with the IRS.

You don’t need to be operating overseas to face international tax issues. We all live and work in a global economy. Your business might ship products overseas or employ someone who is not a U.S. citizen. With the increased emphasis by the U.S. government on the proper treatment and reporting of international assets and transactions, along with the high penalties associated with noncompliance in this area, it is critical that you identify any potential international tax issues associated with your business.

Here are four types of international activities that might subject your business to special disclosure, withholding, or other requirements.

Hiring foreign employees 

Most of us are all familiar with the documentation requirements that must be met each time a new employee is hired. Eligibility to work in the U.S. must be verified for every new hire, which includes completing Form I-9. The potential employee must be a citizen, noncitizen national, lawful permanent resident (i.e., green card holder), or an alien with specific authorization to work in the U.S. 

If you are hiring an alien authorized to work in this country, that employee may or may not be subject to Federal Insurance Contributions Act (FICA) tax withholdings depending on his or her visa status. If the employee is a nonresident and work is being done partly outside the U.S., some of the wages may not be taxable wages for U.S. purposes. There may also be tax treaty benefits to consider if the U.S. has an income tax or totalization treaty with the employee’s country of origin. Prior to issuing the employee’s first paycheck, you will need to address all of these issues. Note that there are similar requirements and issues to consider when hiring independent contractors.

Having foreign investors 

If you have an investor who is a nonresident alien (NRA) or a foreign entity, your business may face income-tax withholding requirements associated with that owner. Partnerships and LLCs operating as partnerships must withhold and remit income taxes on income allocated to those foreign owners — whether or not any cash was distributed to them. Failure to properly withhold when required can result in significant penalties, in addition to being liable for the under-withheld tax.

If your business is operating as a C corporation (a corporate entity that has not elected special “S” status), then withholding must be done on dividend payments to any nonresident alien or foreign-entity shareholders. If you have ever owned stock of a foreign company, you may have noticed an amount for withheld foreign taxes reported on your broker statement. This is the same concept, just in reverse.

Is your business an S corporation? Then you should not have any nonresident alien shareholders since NRAs are not eligible S corporation shareholders. Owners of S corporation stock do not have to be U.S. citizens, but they must be U.S. residents as defined by the tax code. 

A situation can arise if a foreign owner who was previously a U.S. resident (and thus an eligible shareholder) moves back overseas and is no longer considered a U.S. resident. Unless that owner relinquishes his or her ownership prior to the loss of U.S. residency status, there will be an inadvertent termination of the corporation’s S status. This can have undesired tax consequences.

Selling to foreign customers 

If your business sells product to or buys product from a foreign affiliated entity, the price of that product will be subject to a body of law called the transfer-pricing rules. These rules are set up so that companies cannot shift profits to more tax-favorable countries through the pricing of the product.

Sales to a foreign customer may be subject to foreign income-tax withholding, foreign sales taxes, and/or foreign value-added taxes (VAT) in that foreign country. It is important to understand any foreign taxes that will be borne by your business before you price a product to a foreign customer.

You will need to determine whether the foreign tax is actually due to that foreign government. The tax might be refundable if certain forms are remitted to the foreign government or reduced because of a treaty between the foreign country and the United States. 

Although a credit is allowed against a business’s U.S. tax liability for foreign taxes paid, the foreign tax-credit rules are deceptively complex. A credit is only allowed for income taxes (not sales tax or VAT), the taxes must be owed to that foreign country (not refundable), and U.S. tax law must consider the income on which the foreign taxes were paid to be “foreign sourced income.” Thus, it’s important to look at the foreign-tax situation from both the foreign and U.S. perspective to minimize the overall tax burden.

Owning foreign accounts 

Some businesses set up accounts in other countries to simplify payment by their foreign customers. There are disclosure requirements associated with having a financial interest in, or having signature authority over, foreign accounts. Some of the highest penalties are associated with failure to properly disclose foreign accounts.

Not only might your business have a disclosure requirement if it owns a foreign account, but the business owners — and even certain employees — may also face disclosure requirements due to having the ability to sign checks or initiate account transactions. 

This is just a brief discussion of some of the more common ways that Central New York businesses might cross paths with U.S. international tax and disclosure requirements. As with most tax law, the rules are complex. If your business has foreign-entity owners, has an ownership interest in a foreign entity, or is operating in a foreign country, those complexities can increase exponentially.

The global economy offers exciting opportunities for business of all sizes. Navigating the tax implications as your business grows and evolves is one part of ensuring a smooth journey.                        

Linda Bruckner, CPA is a partner at Sciarabba Walker & Co., LLP. Contact her at lbruckner@swcllp.com