Here’s what you need to know about the $1.7 trillion spending bill passed by Congress and signed by the President, known as the Consolidated Appropriations Act of 2023 (CAA).
This is the largest spending bill in history, and other than authorizing the government to spend more money than most of us can even imagine for questionable special projects and government operations with zero accountability, it also contains changes to the IRS code and other laws that will have a broad effect on businesses and individuals.
CAA expands funding of the IRS and the Department of Labor (DOL). This funding is intended to increase enforcement and assist with the catch-up of backlogs created by Covid down time. The DOL receives additional funds for the Wage and Hour Division (WHD). One of the WHD’s functions is to conduct investigations into Fair Labor Standards Act (FLSA) violations by employers.
The bill also appears to place a degree of importance on the IRS’s SS-8 (Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding) worker classification program. This is the process the IRS uses to address complaints by those treated as independent contractors that feel they should have been treated as employees, making the employer responsible for employment taxes such as employer Social Security and Medicare, along with any other benefits provided to employees.
Another section of the bill calls for the DOL to take all necessary steps to ensure prompt processing of H-2B, for temporary nonagricultural workers.
The SECURE Act 2.0 retirement plan provisions were also incorporated into the CAA. These retirement plan provisions include; expanding automatic enrollment in retirement plans, modifying the credit for small employer pension plan startup costs, higher retirement plan catch-up limit, the treatment of student loan payments as elective deferrals for the purpose of matching contributions, starter Code Sec 401(k) plans for employers with no retirement plan, and improving coverage for part-time workers. Employers should be sure to understand how these changes affect their existing retirement plans.