January 2016 Volume X No. 1 Taking Care of Business
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BEWARE: Tax Exempt Filing Deadline 6 Weeks Earlier

Gerold Stout

The Indiana Legislature has established new procedures for non-profit tax-exempt entities to file for property (both real and personal) tax exempt status. The exemption generally sought is permitted under IC 6-1.1-10-16. This statute relates to non-profit corporations whose stated purpose involves education, literary, scientific, religious or charitable purpose, also commonly known as a 501(c)(3) entity.

Under the previous version of IC 6-1.1-11-3, a tax exempt entity was required to file a certified application for exemption, commonly referred to as Form 136, with the County Assessor on or before May 15. Failure to file the application by the May 15 deadline resulted in a waiver of the tax exemption for that particular year.

Effective January 1, 2016, the filing deadline has been moved up significantly. The statute now requires that a non-profit corporation seeking an exemption of property taxes must file its application with the County Assessor on or before April 1 of each year. This is a full six (6) weeks earlier than previously required filing deadline. As before, failure to timely file the application will result in a waiver of the property tax exemption for that particular year.

It is extremely important for non-profit tax exempt organizations seeking a property tax exemption to be aware of this change in the filing deadline. Non-profit tax exempt organizations are accustomed to filing their Form 136 on or before May 15 of the year. Failure to file the application for tax exemption on or before April 1 will result in the removal of the tax exemption.

If you have questions regarding the contents of this article, or other similar issues, please contact your HWE relationship attorney or visit us at http://www.hwelaw.com.

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New Overtime Rules

Jim Jorgensen

In part the Fair Labor Standards Act (“FLSA”) provides that employees must be paid overtime, at 1½ times the regular rate of pay, for hours worked over 40 in a workweek.

The FLSA creates an exception to the general rule. Currently, “Exempt Employees” are not entitled to overtime if they are paid a salary of at least $455 a week, regardless of the number of hours they work. In other words, if an exempt employee works 30 hours or 50 hours, she is paid the same fixed salary.

There are five (5) principal “white collar” exemptions, each with a list of required duties. The most common are executive and administrative.

For an employee to fulfill the executive exemption, the employee’s primary duty must be managing the enterprise, including the customary and regular direction of work of at least two other full-time employees or the equivalent.

The administrative exemption is by far the most difficult of the white-collar exemptions to apply. In a word, this exemption relates to employees who have a proactive role in running the business. To qualify for the exemption, employee’s primary duty must include the exercise of discretion and independent judgment with respect to matters of significance.

As you may have seen in the media, the Department of Labor, at the direction of President Obama, is poised to make a major revision to the white collar exemptions.

For political and ideological reasons, the DOL believes that exempt employees are underpaid. The new regulations will significantly revise the “salary test” part of the exemption definition.

The increase will be significant: the $455 per week salary minimum would be raised to $970. The intent of the increase is to transfer current exempt employees to a non-exempt status. When this occurs, presumably, employees will earn more when they are paid overtime for hours worked in excess of 40.

What should employers do?

First, they must identify currently exempt jobs with salaries that fall below the proposed new salary threshold for exempt employees, using the $970 per week, or $50,440 per year, figure. Next, employers should determine whether to have a zone within which employees close to the new threshold will get bumped up to maintain exempt status, or whether the approach will be to reclassify as nonexempt all employees whose current salary is below the new minimum. In other words, if an exempt employee currently makes $900/week, it may be best to increase the salary to $970, and retain the exemption.

Finally, employers must determine what approach to take in setting nonexempt pay rates. Will the hourly rate simply be the current weekly salary divided by 40, or will there be an effort to replicate current pay and hours, such as by lowering the hourly rate to account for the possibility of overtime compensation? It is very possible that despite the effort to force employers to pay their employees more, many employees will not see a change in their compensation.

If you have questions regarding overtime rules, or other similar issues, please contact your HWE relationship attorney or visit us at http://www.hwelaw.com.

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