• DOL revises the overtime pay rules for white-collar workers. The rulemaking is the most ambitious DOL regulatory initiative on the issue since 1940 ... (read more)
• GSA has announced that it will change the per diem rates for the following locations ... (read more)
• Maryland adjusts due date for quarterly form ... (read more)
• West Virginia renames revenue department ... (read more)

IR-2004-60, April 30, 2004

WASHINGTON-The U.S. Department of the Treasury and the Internal Revenue Service today warned taxpayers of an e-mail-based scheme that attempts to trick taxpayers into revealing personal information such as social security numbers, driver's license information and bank and credit card numbers.

In this ploy, unsuspecting consumers receive an e-mail, claiming they are under investigation for tax fraud and are subject to prosecution. The e-mail informs recipients they can "help" the investigation by providing "real" information and directs them to an official-looking Web site, http://deptreas.org/irs/7634/, where detailed personal information must be provided to dispute the charge.

Identity thieves can use an individual's personal data to take over their financial accounts, run up charges on their credit cards, apply for loans, credit cards or other services in the victim's name and file fraudulent tax returns.

At the request of the IRS and the Treasury Inspector General for Tax Administration (TIGTA), the Internet service provider that was hosting the Web site has shut the site down. The scheme is being investigated by TIGTA, which addresses threats to federal tax administration.

The bogus IRS web page and the e-mail in this instance contained several grammatical errors, rendering them immediately suspect. However, new versions of the scam could surface in the future, including more effectively-written text and a different destination Web site.

The IRS does not use e-mail to contact taxpayers about issues related to their accounts. Official taxpayer contact usually includes a letter on IRS stationery in an IRS envelope. IRS letters also contain a contact phone number.

Taxpayers who believe they have received suspect communication are encouraged to call TIGTA's toll-free fraud referral hotline at 1-800-366-4484. Taxpayers can also contact the IRS at 1-800-829-1040. An IRS representative will be able to verify the taxpayer's account status and determine whether a communication is legitimate.

The Department of Labor (DOL) has significantly altered its original proposal to revise the overtime pay rules for white-collar workers. The department's final rules include revisions to its proposed duties tests and an increase in the salary threshold under which workers would qualify for overtime pay.

The rulemaking is the most ambitious DOL regulatory initiative on the issue since 1940. The revisions clarify the definitions for professional exemptions, providing examples of jobs and job duties that better reflect the contemporary workplace. They also "codify" to some extent the case law that has developed over past decades.

The Fair Labor Standards Act (FLSA) requires covered employers to pay their employees at least the federal minimum wage and overtime pay of time-and-one-half the regular rate of pay for all hours worked over 40 in a workweek. There are a number of exemptions from the minimum wage and overtime requirements. Section 13(a)(1) of the FLSA exempts from both minimum wage and overtime pay provisions "any employee employed in a bona fide executive, administrative, or professional capacity or in a capacity of outside salesman."

Revised salary minimum
The new rule raises the "salary level test," the threshold under which white-collar workers automatically qualify for overtime pay. The final rules state that workers earning less than $23,660 annually ($455 per week) will automatically qualify for overtime pay. That is up from the department's original March 2003 proposal, which would have set the threshold at $22,100 annually ($425 per week). Currently, workers earning $8,060 annually ($155 per week) automatically qualify. The wage levels were last raised in 1975, and the previous minimum salary had amounted to $3.88 per hour-sharply lower than the current minimum wage rate.

No more 'short' and 'long' tests
The previous rules included a "short test" and a "long test" for determining exempt status. To qualify for exemption under the old regulations, an employee must have earned a minimum salary of $155 per week for the executive and administrative exemptions, and $170 per week for the professional exemption. Employees paid above these minimum salary levels would also have to meet a "long" duties test to qualify for the exemption. Those paid above a higher salary rate of $250 per week were exempt if they met only a "short" duties test. The short test contained fewer requirements and was less burdensome to meet.

The new regulations do away with the "short" and "long" tests. The minimum salary level is referred to as the "standard test," and the "short test" and "long test" terminology has been eliminated. (The higher salary-level test for professional employees also has been removed.)

Because of its outdated salary level, the long test has, as a practical matter, been inoperative for many years. Here, the agency is conforming its regulations to economic reality, while simplifying unduly complex dual exemption tests.

Duties tests updated
The DOL's final rules change the "duties tests" that are used to classify employees as exempt from the overtime pay rules. These provisions are the source of considerable frustration and litigation, and many critics said the department's March 2003 proposal did little to make the rules more clear.

Executive duties test. The basic executive duties test in the final rules is unchanged from the proposal. But the department did delete the proposed special exemption for "sole charge" executives. It offered guidance on the phrase "given particular weight," as contained in the test.

Administrative duties test. The final rules eliminate the proposed "position of responsibility" test and the "high level of skill or training" standard for the administrative duties test. The final rules contain the requirement that exempt administrative employees must exercise discretion and independent judgment. The department deleted that existing requirement from its proposed regulations but reinserted it in the final rules.

Professional duties test. The DOL's final rules change the professional duties test by eliminating references to training in the armed forces, attending a technical school or a community college. The DOL made the change in response to critics of the proposal who contended veterans could be denied overtime protections based on their armed forces experience. Licensed practical nurses will not qualify as exempt professionals, although the final rules retain existing regulations regarding registered nurses.

The salary test regarding "highly compensated" employees in the final rule will apply only to employees who earn a total at least $100,000 a year, an increase of $35,000 from the proposed rules. The final regulations add a new requirement that exempt highly compensated employees must "customarily and regularly" perform exempt duties.

The General Services Administration (GSA) has announced that it will change the per diem rates for the following locations: (1) State of Montana, cities of Butte, including Silver Bow County, Missoula, including Missoula County, Polson/Kalispell, including Lake and Flathead Counties; (2) State of New York, city of Schenectady, including Schenectady County; (3) State of Ohio, city of Fairborn; and (4) State of Texas, city of Killeen, including Bell County, Colorado, City of Colorado Springs, including El Paso County. The changes will be posted at GSA's Internet site: http://www.gsa.gov/per diem.

The new rates will be: Montana: Butte, Silver Bow County lodging-$63, meals and incidental expenses-$31, maximum per diem rate-$94; Missoula, Missoula County, for (Nov 01-Apr 30) lodging-$60, meals and incidental expenses-$31, maximum per diem rate-$91, for (May 01-Oct 31) lodging-$77, meals and incidental expenses-$31, maximum per diem rate-$108; Polson/Kalispell Lake and Flathead, for (June 01-Sep 15), lodging-$83, meals and incidental expenses-$35, maximum per diem rates-$118, for (Oct 01-May 31), lodging-$59, meals and incidental expenses-$35, maximum per diem rate-$94; New York: Schenectady, Schenectady County, lodging-$74, meals and incidental expenses-$31, maximum per diem rates-$105; Fairborn (delete entry), Dayton/Fairborn Montgomery, Greene and Darke Counties, Wright-Patterson AFB, lodging-$72, meals and incidental expenses-$35, maximum per diem rates-$107; Texas, Killeen Bell, lodging-$62, meals and incidental expenses-$35, maximum per diem rates-$97. (Per Diem Bulletin 04-3, effective April 20, 2004, and applies to travel performed on or after May 5, 2004; 69 FR 21115, April 20, 2005.)

Maryland adjusts due date for quarterly form
Effective January 1, 2005, the Maryland quarterly withholding form (MW 506) will be due by the 15th day of the month following the due date. Currently the form is due by the last day of the month following the due date. (S.B. 69, Laws 2004, approved April 4, 2004, and effective as noted above.)

West Virginia renames revenue department
The West Virginia Department of Tax and Revenue has been renamed the Department of Revenue. (Ch. 239 (S.B. 149), Laws 2004, approved April 6, 2004, and effective June 11, 2004.)

Six in 10 workers surveyed expect their savings in employer-sponsored retirement plans to be their single largest source of future retirement income, according to a study of plan participants by Prudential Financial Inc.
On average, participants expect retirement plans to account for 54% of their total retirement income, more than twice as much as they would expect from Social Security (26%), according to Prudential Financial's retirement perception study. According to the survey, 48% characterized Social Security as a "minor component" or not important to their future retirement income. The majority of respondents (56%) use 4 or fewer investment options, while 19% don't know how many options they put their money in within their plan. 16% use 5 or 6 options, while 10% use 7 or more.
Prudential polled 1,000 full-time employed men and women ages 21 to 64 who currently participate in 401(K), 403(b), 457 or other plans offered by their employers.

34% of households with income over $75,000 that live paycheck to paycheck.

57% of households with children under age 18 that live paycheck to paycheck.

20 minutes per day people lose looking for items in an office.