Pub. 2 2020 Issue 6

NEW HAMPSHIRE MINIMUM WAGE Effective 08/21/2011, no employee shall be paid at an hourly rate lower than that set forth in the federal minimum wage law, which is currently $7.25 per hour. IMPORTANT PAYROLL LIMITS FOR 2020 & 2021 FICA Limit: For 2020, the maximum wages subject to FICA tax is $137,700 ($142,800 for 2021). Medicare wages have no limitation. 401(k) Contribution Limits: The maximum deferral under a 401(k) plan is $19,500 for 2020. Additionally, any par- ticipant who will be age 50 or older as of December 31, 2020, may contribute an additional $6,500 for 2020 as a “catch-up contribution.” Mileage Reimbursement Rate: The standard business mile- age reimbursement rate for the year beginning January 1, 2021, has not yet been released by the IRS. The rate will likely be close to 2020s 57.50 cents per mile. PUT LIFO ESTIMATE ON 12TH MONTH (DECEMBER) FACTORY STATEMENT A reasonable estimate of the change in the LIFO reserve must be booked and appear on the 12th-month factory financial statement. For calendar year taxpayers, this would be the December statement. Failure to record a LIFO adjustment on the 12th-month statement could result in termination of the LIFO election and recapture of the LIFO reserve into income. COMPLIANCE WITH THE ADDRESS DISCREPANCY, “RED FLAGS,” AND SAFEGUARDS RULES The Federal Trade Commission (FTC) has enacted three rules in recent years relating to protecting con- sumers against the threat of identity theft: the Address Discrepancy Rule, the “Red Flags” Rule, and the Safe- guards Rule. Auto dealers are required to comply with each of these rules due to their involvement in finance and lease transactions. While these rules have been in effect for several years, it is important to note that compliance is an ongoing process as the FTC reserves the right to audit any organization within its jurisdiction at any time. As a result, any dealer that is not in full com- pliance with these laws should take the necessary steps to do so as soon as possible. Address Discrepancy Rule: The deadline for implement- ing the Address Discrepancy Rule was November 1, 2008. This rule requires consumer reporting agencies to issue a notice of address discrepancy to any user of a credit report when the address provided to the consumer reporting agency substantially differs from the address on the credit report. The dealership must implement and document in writing, policies, and procedures to reasonably conclude that the consumer report relates to the consumer for whom the dealership requested the report. Red Flags Rule: The Red Flags Rule went into effect on November 1, 2008; however, the FTC delayed enforce- ment of the Rule until January 1, 2011. This rule is a requirement for any organization that opens an account with a customer in which the payments are deferred. Dealers are required to develop, implement, and maintain policies and procedures to prevent, detect, and respond to identity theft. Penalties range from $2,500 to $11,000 per violation, and that does not factor in the extensive legal fees that could result from the threat of a lawsuit. As with the Safeguards Rule, the Red Flags Rule requires that the dealer document the entire compliance effort, which can be summarized by the following steps: 1. Appoint a Compliance Officer 2. Perform a risk assessment in which you identify the “covered accounts” and the “red flags” that could indi- cate the potential of identity theft within those accounts 3. Develop policies and procedures that detect and respond to the red flag 4. Document the policies and procedures in a written Identity Theft Prevention Program 5. Employee training 6. Agreements with service providers 7. Senior management’s approval 8. Annual compliance reports Safeguards Rule: The Safeguards Rule has been in effect since May 23, 2003. This rule’s main objective is to outline the policies and procedures in place to safeguard non-public customer information. These policies and procedures must be outlined in an Information Security Program. If you are not in compliance, you should still do so even though you are past the May 2003 deadline. The Information Security Program must be in writing and must include the following five specific components: • Designate a compliance officer(s) • Identify and assess foreseeable risks to customer info • Design and implement internal controls • Detail agreements with service providers • Monitor and evaluate compliance Monitor Compliance: The requirement to monitor and evaluate compliance is an ongoing process. It is import- ant to regularly evaluate the policies and procedures in place to ensure that your dealership is in full compli- ance with the Safeguards Rule. The Written Information Security Program should be revised when necessary. Compliance does not end with the Written Information Security Program. NOTE: O’Connor & Drew has developed a Safeguards Rule Compliance program for auto dealers. Materi- als are available as a self-install kit including CD and materials written by the Association of F&I Profession- als (AFIP), or as a full-service program, which includes installation and compliance review by accountants from O’Connor & Drew. For additional information on the comprehensive plan, call Frank O’Brien at O’Connor & Drew, (617) 471-1120. ADDITIONAL RESOURCES AVAILABLE For more information on any of the above topics, NHADA members may be referred to NHADA Gold Partner O’Connor & Drew’s Lauren Carnes at lcarnes@ocd.com or 617-471-1120 as a member service. Past NHADA bulle- tins and much more are posted at nhada.com. Continued from Page 19 D R I V E 20