Please join your NAVREF colleagues for the third in our series of conference calls on “Insurance: A Primer on Policies.” NAVREF Insurance Program broker RCM&D has designed a series of conference calls to help NPCs better understand their insurance policies. Previous calls on directors and officers (D&O) liability insurance and crime policies were very informative and well-received.

The third conference call in the series will focus on workers’ compensation policies. RCM&D personnel with extensive experience working with NPCs will review the key features of workers’ comp policies and will offer tips for ensuring that employees are correctly classified and covered. They will also address how to respond when an employee is injured at work.

Date: Wednesday, July 13
Time: 1:00 p.m. – 2:00 p.m. East Coast Time

Online registration for the 2011 NAVREF Annual Conference is live at http://www.regonline.com/2011NAVREFAC.
Please join your colleagues in Seattle from September 11 to 14. The linked web site contains a day-by-day summary of the conference as well as complete program, hotel and registration information.

This year’s meeting will have a strong emphasis on financial management of NPCs on matters beyond internal controls. As a result, all NPCs with financial accounting staff members are encouraged to support their attendance. This is an opportunity for these critically important staff members to be exposed to the NPC issues that shape NPC financial management, to share their expertise with other attendees while learning from accounting and auditing experts, and to network with their peers.

Extend your stay in Seattle to attend our workshop on The Essentials of Federal Funds Management. The workshop will focus on preparing a winning grant proposal design and cost estimating; understanding management of federal funds; excellence in grant compliance and internal controls, and much more. For details, go to: http://www.regonline.com/2011NAVREFAC and click on the “Agenda” tab near the top of the screen.

Independent Contractors vs. Employees; Top IRS and State Audit Issue. Misclassification of employees as independent contractors remains on the IRS list of top audit items. Additionally, many states are aggressively investigating allegations of misclassification. The reasons for this are concern for the rights of misclassified employees as well as interest in increasing tax revenues. Failure to pay federal and state employee taxes and unemployment fees results in significant lost revenue for cash strapped agencies. Every case that results in payment of back taxes and fines means more revenue for the government.

A recent state level audit of an NPC’s independent contractors highlighted the importance of being aware of both federal and state rules on classification. Organizations that pay attention only to the federal rules may find themselves subject to state findings that result in owing significant back taxes and fines. Additionally, an organization may be prohibited from receiving state or federal grant funding until all amounts owed have been paid.

Massachusetts is one of the states that define an employee more broadly than federal laws. See http://www.navref.org/newsletter/pdf/MA_Independent_Contractor_Law.pdf for a discussion of the Massachusetts “presumption of employee status.” (Note: This was provided by Nancy Watterson-Diorio, CEO of the Boston VA Research Institute which was not the subject of the state audit mentioned above.) A number of states take a similar stance and others are moving in this direction so again, it is very important to know your state rules.

Also, the old tried and true IRS “20 factors” test has been largely replaced with assessment of behavioral and financial controls as well as the relationship between the parties. Also, review the questions posed on IRS Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. These questions provide insights on the factors used by the federal government to determine appropriate classification. For the form, go to: http://www.irs.gov/pub/irs-pdf/fss8.pdf.

NAVREF staff recently attended a training session on employee classification conducted by the law firm Venable LLP. The Venable speakers are graciously making their presentation available on line. If you don’t have time to listen to the entire 90-minute session (which gets a little bogged down in questions during the middle 30 minutes), consider reviewing the informative PowerPoint slides.

To listen to a recording of the May 18 Venable program, go to:
https://cc.readytalk.com/cc/playback/Playback.do?id=2mytrz
Be patient; this may take a few minutes to upload.

The PowerPoint presentation may be downloaded by going to: http://www.navref.org/newsletter/ppt/Venable_5_18_11_Presentation-Indep_Contractor.pdf