Bookkeeping Matters

Temps Getting Full Benefits

Firms using temp agency employees may be liable for past benefits equal in value to what the temps would have accrued had they been employees from the start. To avoid this, some employers are drafting "inoculation" language and submitting it to the IRS for determination letters. One large corporation now limits temps paid through agencies to one year at a time with a 100-day break between terms with the company. The IRS may soon issue a technical advice memorandum on inoculations, i.e., on how to avoid entitling temps to full benefits.

Social Security Earnings Limits for Workers Ages 65-69 Repealed

Social Security earnings limits for workers aged 65-69 are repealed retroactive to January 1, 2000, by the Senior Citizens Freedom to Work Act. These workers no longer lose $1 in benefits for every $3 earned over $17,000 in 2000. As a result, older workers may want to submit a new W-4 or revise employment agreements. Eligible workers will see the repeal in current Social Security checks and should have received refund checks in May for benefits withheld since January 1. Disabled employees and early retirees (62-64) are not affected. Yes, wages are subject to FICA regardless of retirees' age or whether they receive retirement benefits.