Tackling Taxes
Resources for those who employ a nanny:

• ‘How to Hire a Nanny,’ by Guy Maddalone Guidebook covers tax issues
• irs.gov Search for Publication 926, Household Employer’s Tax Guide
• Breedlove-online.com/faqs Q&A on tax issues

Write to Sue Shellenbarger at sue.shellenbarger@wsj.com

Houston’s Morningside Nannies

(October 31, 2008) The Association of Premier Nanny Agencies (APNA) is proud to honor Houston’s Morningside Nannies with APNA’s 2008 Agency of the Year award.  Twenty five years ago, Pat Cascio founded the first agency in Houston to specialize in nanny placement, and she is still on the job. Like many in the industry, Pat started her business because, I needed in-home care for my children, and I wasn’t comfortable with the screening provided by what were then known as domestic agencies.

Now Pat and other staffing agencies have access to an arsenal of professional background checkers and computerized court files to assist them in screening household staff. However, she says she still scrutinizes all applicants with the time-tested question, “Would I hire this nanny to care for my own children?”

Seasoned household staffing agencies know how important it is to meet each job candidate in person. Nanny services that operate only online are becoming more popular, says Ginger Swift, the APNA board member who oversaw the selection of the 2008 Agency of the Year. But the people who run most online-only job services never meet the applicants, and they do not conduct the type of background check an agency like Morningside Nannies would require before sending someone to your home.

Says Pat of her award, I had considered vying for APNA’s Agency of the Year award in the past, but I wasn’t sure my agency would be special enough to gain this national honor.  But this year, I celebrated 25 years in the industry, and I retired from my eight-year post as the International Nanny Association President. When I reflected on the contribution I have made to our industry, I felt more confident.

Because household staffing laws vary from state to state, agency owners such as Pat help us set industry standards, so we can provide a nationwide network of reliable agencies, says APNA President Annie Davis. To be an APNA member, agencies must put their contracts, applications and business practices up for scrutiny by their peers. Parents who want to make sure they are dealing with a quality nanny service should look for the APNA seal. I am extremely proud of all our members, but Pat deserves to be recognized for the years she has dedicated to this industry. She has more than earned the respect of her colleagues and associates. Pat, as all members, has always put the welfare of children first.

Contacts:
* Pat Cascio, Morningside Nannies, Houston, Texas (713)526-3989 pcascio@morningsidenannies.com, www.morningsidenannies.com/index.html

* Annie Davis, APNA President, (206) 227-1690, annied@drizzle.com www.anihouseholdstaffing.com?�

* Go to www.theAPNA.org to find an APNA agency in your community and valuable information for families and people seeking household jobs

Once Joshua recovered, Lexy realized how grateful she was to Children’s Miracle Network of Las Vegas, and she began donating a portion of every placement made through her agency, Nannies & Housekeepers USA, to that chapter.

When Lexy told her colleagues on the APNA board of directors her son’s story, they saw the parallel between what Children’s Miracle Network does, and what they do. Says Lexy APNA Philanthropic Committee Co-chair Claudia Kahn of The Help Company, APNA agencies assist people all over the United States, and we are very proud to be helping Children’s Miracle Network because it shares our goal of making a difference in families lives

By Tom Breedlove  Breedlove & Associates

Many families ask for their agency’s “Tax ID” (they may refer to it as an “Employer Identification Number” or “EIN”). Until this year, the answer was always a simple “no” because families were not allowed to apply agency fees toward their childcare tax breaks.
Now the answer is not quite so simple. New tax laws allow families to count placement agency fees as a childcare expense. Despite this new law, the vast majority of families should use their own EIN on their taxes.
WHY IS AN EIN REQUIRED WHEN TAKING A TAX BREAK?

1.) Families are allowed to take the childcare tax credit on their federal tax returns, or to utilize dependent care accounts (also known as a “flexible spending account”) administered by their companies. The employer’s EIN must be provided for those breaks. In permanent and temporary placements, the caregiver does not work for the agency that placed her – she works for the family that employs her. Therefore, all wages should be applied to the family’s – not the agency’s – EIN.
2.) In late 2007 the IRS ruled that agency placement fees are a deductible childcare expense. However, in most cases, itemizing a placement fee is of no benefit because the nanny’s wages already exceed the childcare expense limit.

The exception: temporary placements (and permanent placements made late in the year, i.e. November or December), where wages fall below the expense limit. In those cases, the agency’s placement fee MAY create a tax benefit for the family.
ALLOWABLE CHILDCARE EXPENSES:
* A nanny’s gross salary (not net)
* All employer taxes (over and above the gross salary)
* Fees paid to a daycare, preschool or day camp (overnight camps do not qualify)
* Fees paid to a placement agency
SHOULD PLACEMENT AGENCIES PROVIDE THEIR EIN?
Our advice is NOT to give out your EIN unless you are absolutely sure it is only being used to itemize your placement fee. If your EIN is erroneously applied to a nanny’s wages, your agency will be viewed as the employer and you will have a paperwork mess and considerable liability.
We advise a three-step approach:
1.) Ask the employer if they filed state and federal employment tax returns on the nanny. If they did, they should have their own Household Employer EIN. If they did not file state and federal employment tax returns, they are not in compliance with employment law and cannot itemize employment-related expenses.
2.) For those who have paid legally and still want your EIN, we advise you to try to analyze their employment situation. If they’ve exceeded the expense limit in wages ($3,000 for one child; $6,000 for two or more children) itemizing your placement fee will have no tax benefit. If they had a temp(s) or hired late in the year, they may be below the expense limit and able to deduct your placement fee.
3.) For those who have paid legally AND fall below the expense limit, it’s probably safe to provide your tax ID. However, to avoid misapplication of your EIN, we recommend requesting a copy of your client’s completed Form 2441 (the form upon which your Tax ID will be applied). Make sure only agency fees are tied to your Tax ID. Do not under any circumstances let them tie your EIN to the nanny’s wages!

It takes a little effort to fend off clients – and even CPAs – who are prone to misapply your Tax ID. But it’s worth your trouble. Protecting your EIN will save you lots of time and money down the road. The old adage “an ounce of prevention is worth a pound of cure” definitely applies here.

Reputable staffing agencies routinely conduct criminal checks, Social Security Number verifications, and driving record checks as standard components of their candidate screening process. There is another type of background check that is not typically included in a standard background check – civil litigation.

CRIMINAL vs. CIVIL
Criminal cases are felonies and misdemeanors filed by the government. The penalties include jail, prison, probation and fines. Most civil litigation consists of torts or contracts cases.
Contract cases normally involve breach of contract or contract enforcement. Torts can encompass intentional actions – such as infliction of emotional distress – or unintentional actions which often arise from situations involving negligence. Tort cases can involve injury to property (trespassing or theft), to a person (assault or wrongful death), or to reputation (slander or liable).
Civil cases are brought by individuals or companies, usually through attorneys. Judgments in civil cases frequently involve money.

WHY CLIENTS REQUEST CIVIL CHECKS
Typically, a client who requests a civil litigation check is concerned about 3 things:
* A large number of lawsuits in which the job candidate was the plaintiff, which would indicate the candidate is litigious
* Lawsuits involving former employers. For example, sexual harassment or wrongful termination suits can be a sign the candidate might sue her next employer
* Restraining orders filed by, or against, the job candidate
RESTRAINING ORDERS ARE OF PARTICULAR CONCERN
A criminal background check will not usually find a restraining order.
EXAMPLE: A nanny agency client of ours placed a caregiver with no irregularities in her standard background check. The family was ecstatically happy with the nanny during the first few months. However, the nanny was increasingly taking on an almost parental role. The situation deteriorated to the point where she was fired.
Once terminated, the parents felt the nanny was stalking their children. The family contacted the agency and asked it to conduct a deeper background check.
My company repeated our original checks, but added a civil litigation check. With that, we found a restraining order against the nanny. A judge ruled she had stalked the children of another family that had fired her; a family not listed in her job history.

For everyone’s safety, it is also important to know about restraining orders filed by a job candidate. If she has filed an order against a boyfriend or abusive spouse, it is possible he might discover where she is working and show up at the home.

PROBLEMS WITH CIVIL LITIGATION CHECKS
To find out what really happened in a civil litigation case you must obtain copied, case file documents from the courthouse which can involve a great deal of time and expense.
Civil litigation files often do not include identifying information about the parties involved. Frequently there are no addresses, Social Security numbers, dates of birth, or driver’s license numbers.
If your job candidate has a common name, a large number of cases may be found that actually have nothing to do with that person. It will probably be impossible to determine if the cases involve your job candidate, and pulling each case file to search for identifying information can take weeks. Therefore, avoid civil litigation checks when a person’s name is common.

The Fair Credit Reporting Act (FCRA) limits the time in which civil records can be reported to 7 years, unless the candidate will be earning $75,000 or more. Several states limit the period of time, regardless of the employee’s salary.

NOT CONVICTED BUT HELD ACCOUNTABLE
Sometimes a defendant may not be convicted in a criminal case, but may still lose in civil court. Both the O.J. Simpson and Michael Jackson trials provide good examples of defendants who were not criminally convicted, but lost or settled the civil cases filed against them.

SHOULD CIVIL LITIGATION CHECKS BE PART OF A STANDARD BACKGROUND CHECK?
Because of the significant problems mentioned above, we do not recommend civil checks as a standard part of the background check. However, civil litigation checks can serve as a valuable tool, particularly when the search is focused on employment-related issues and restraining orders.

THE BOTTOM LINE IS: if your client wants a civil litigation check conducted you should be prepared to do so. However, you should also make the client aware of the problems inherent in these checks.

PFC Information Services, Inc., in Oakland, CA provides public records research and pre-employment background checks. PFC offers discount rates to APNA members.

The View
320 West 66th St.
New York, NY 10023

March 10, 2008

Re: The Dangers of Online Only Job Listings to Hire Nannies

To The View,

Job listing services such as Sittercity should not be confused with nanny agencies.

We feel it is important to raise a red flag about your segment last week on Sittercity, a service that lists families and nannies online.  Your guest stated that Sittercity allows users to  go through all the same steps that really expensive placement agencies do.  In our opinion that is not true. Some of the biggest problems with online job listing services are that they do not provide the personal investigation, matching and tools that a nanny agency uses to assure the confidentiality and security of its clients and its applicants seeking work.

Additionally, online job listing services can give the client a false sense of security by advertising a background check that offers minimum screening compared to what top notch nanny agencies would consider adequate. Many online job services, including Sittercity, allow parents to conduct an online LexisNexis background check for $9.99. Sittercity has a disclaimer that the LexisNexis check covers just 38 states (http://www.sittercity.com/help_detail.html?tag=bgcin). But some online job listing services call the LexisNexis check nationwide which can be misleading.

Top notch household staffing agencies require a computer background check, and much more, on each job candidate. Most quality agencies hire a seasoned professional to conduct background checks. You can read in detail about what a thorough background check entails on our web site at: http://theapna.org/blog.

Quality nanny agencies also meet each nanny candidate in person and check the candidate references and resume. Online job listing services often do not check qualifications or references. They simply advise parents to perform those tasks.

Careful, experienced household staffing agencies are the best way to protect children, but they also help ensure a job seeker’s safety. Katherine Olson of Minnesota was found dead last October, one day after she responded to an online ad for a nanny job.  The 19-year-old man police suspect placed the ad, where he posed as a parent seeking a nanny, is charged with her murder and awaiting trial.

A responsible staffing agency knows when one of its job candidates is being interviewed, and the candidate is expected to report in afterward.  The personal contact that a qualified agency provides is an added security measure for both candidates and the hiring families. That service also increases the chances a family will find a nanny that is right for them and decreases the chances of high turnover of nannies in their employment.

Additionally, many online job listing services post the nanny candidate’s picture with his or her job profile. Household employment attorneys do not advise posting candidates’ photos for both safety and legal reasons. Pictures can be a way for predators to choose victims or for potential employers to discriminate based on legally protected characteristics such as race or age.

The points listed above are the primary reasons that our organization does not grant membership to job services that operate only online.  Below is a list of some APNA members who would be willing to speak with you if you are interested in more information about the safest ways to find and become household staff.

Sincerely,

Guy Maddalone
on behalf of the APNA Board of Directors

By Lynn Peterson, President of PFC Information Services, Inc.

The quality of criminal background checks conducted by nanny agencies varies greatly. Agency A’s standard background check is a “National Criminal File” search. Agency B’s standard check includes county level criminal checks in the location or locations where the applicant has lived. It sounds as if Agency A’s check is more extensive. Wrong!
In reality, Agency B’s criminal checks are far superior. This isn’t readily apparent because the background screening industry uses confusing terminology to describe its products, and many Internet-based companies deliberately make misleading claims about their criminal checks’ contents.
The Non-Existent Nationwide Criminal Check

The National Criminal File (NCF) search sounds extremely good. However, the truth is that there is no such thing as a nationwide criminal records check. Even the FBI database is not truly nationwide. The FBI database (NCIC) does not include most misdemeanors. Many crime records never reach the FBI because they must be sent from the city and county, to the state. Then, from the state to the FBI, leaving numerous opportunities for a breakdown in the process. Nevertheless, the NCIC is the closest thing we have to a national criminal database, and it is far more comprehensive than the NCF.
The vast majority of data included in the NCF is made up of corrections records from state prisons. Only the most serious criminals are sent to state prison. Our company has been conducting background checks since 1987. We have found criminal records on approximately 7% of the applicants we have checked. Their offenses range from murder to jaywalking. One point to note, most of their convictions are for misdemeanors rather than felonies. Most of these individuals did not even go to jail, let alone serve time in a state prison. Since the NCF includes few misdemeanors, most of their records would never be found through an NCF search.

Case in Point:

One of our clients requested a background check on an applicant who was a CNA at the University of California San Francisco Medical Center. Since she was licensed, she had been cleared through California’s criminal repository. Even so, our client requested a San Francisco county check.
We discovered she had been convicted of killing her boyfriend with a kitchen knife. She was sentenced to one year in jail, then probation. An NCF search would not have found her manslaughter conviction, as she was sent to jail rather than prison. The state repository did not have a record of her conviction, neither did the FBI.

The Claims:

While many of the companies offering NCF searches claim that data from state criminal repositories, corrections records, county criminal-court records, traffic records, and sex offender records are included, the truth is that these databases contain very little in the way of records from state repositories or county criminal courts. For example, the NCF does not include any data from Arizona’s most populous counties: Maricopa, Mohave, and Pima. Phoenix and Tucson are located in those counties. Arizona is considered a “premium state” by some background screeners because some rural counties are included. You really have to study the fine print to find out what is missing.
The largest of the NCF databases includes criminal repository records from only 10 states. Most of the state repositories include only some misdemeanors or none at all. In our experience, the vast majority of nanny candidates with criminal records have committed misdemeanors, not felonies. Many statewide repositories do not contain records from all counties, as the counties often fail to send records to the state repository.
There is another serious problem with the NCF– much of the data is stale. For example, some versions of the NCF include a “Florida courts database from all 67 counties”. The problem is that the database is only updated every six months, or even less frequently.
An additional problem exists. Most records in the NCF databases do not include identifiers, like Social Security numbers or dates of birth. Run an NCF search on someone with a common name, and you will receive many records that have absolutely nothing to do with your applicant. You will have to request county criminal checks where records are reported to determine whether the NCF records are relevant.

The Most Thorough Background Check:

Many companies offering National Criminal File (NCF) searches claim that information from state criminal repositories, corrections records, county criminal- court records, traffic records, and sex offender records are included. The truth is that the NCF and similar databases contain very little in the way of records from state repositories or county criminal courts. The most thorough background searches encompass separate state and county checks everywhere the subject has lived.
STATEWIDE CRIMINAL CHECKS:
When the criminal records process works as it should, law enforcement and courts send information about arrests, court filings, and incarcerations to their respective state records repositories. In some states, the records are public. In others, access is limited to law enforcement and the courts.
Unfortunately, the quality of the state repository information varies a great deal. As of 2003, a handful of states still did not use computer editing and verification programs to ensure data quality. Moreover, county courts often fail to send disposition or other information to their state repository, which has a significant impact on the quality of statewide searches.
Our company provides statewide searches for Alabama, Alaska, Arizona, Arkansas, Colorado, Connecticut, Florida, Georgia, Hawaii, Iowa, Kansas, Maine, Maryland, Michigan, Minnesota, Nebraska, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Virginia, Washington, and Wisconsin. Some of these are state repository records searches, and some are criminal court data searches. While there are additional states that allow access to their criminal repositories, data from the other states may be grossly incomplete. From a quality perspective, a county records check may be a better option in the states not listed above.
A word of warning about statewide criminal records: the NCF and some other vendors claiming they provide state criminal checks are actually providing state corrections searches, and calling them “criminal searches.” If a subject has been placed on probation, released from prison, or is sentenced to county jail rather than state prison, it is likely a criminal record will not be found with one of these searches.

COUNTY CRIMINAL CHECKS:

In a location where a statewide check is not a viable option, a county check is the only way to search for criminal records. Despite the inherent geographic limitations of a county criminal search, it is still the prevailing method by which criminal records are checked in the U.S.
It is surprising in this day and age that less than 30% of county criminal records are available online. As a result, in the majority of jurisdictions, a human being must be injected into the research process.
Normally called “court runners”, they are dispatched to a courthouse to check records manually. If there is a match with the subject’s name, the physical case file needs to be pulled and examined to determine whether the defendant’s birth date matches the candidate’s, what the offense was, and whether the defendant was convicted. Because county criminal checks still involve “gum shoe” methods, they take longer than online state checks.

BUYER BEWARE!

The bottom line is that there is no 100% foolproof way to check for criminal records. Record keeping is still so fragmented, it is quite possible you won’t find someone’s criminal past. While some searches are geographically broader that does not mean they are better.
Staffing agencies need to adopt a buyer beware attitude when evaluating background screening firms. While many offer inexpensive checks which are available online instantly, what those companies are really providing is a false sense of security. There is simply no viable substitute for a tightly focused, county court search, and/or a statewide check in the locations where the individual has lived.
PFC Information Services, Inc., in Oakland, CA provides public records research for employers, law firms, corporations, lenders, venture capitalists, the media, and others. Pre-employment background checks are among the public records research conducted by PFC.
PFC is an APNA Sponsor Member & offers discounted rates to APNA members
Tips from PFC Information Services:
?�
Parents frequently ask about Sex Offender searches. These searches are free, easy, and available to the public at the U.S. Department of Justice web site: http://www.nsopr.gov This site includes sex offender information from all 50 states. However, some states only provide information on their most serious sex offenders. If you are not routinely conducting this search on all candidates, you may want to consider doing so.

Social Security Numbers
Contrary to what many assume, it is not possible to “plug ” a Social Security number into a criminal records database and find all of a person’s criminal convictions. Criminal records are indexed by a defendant’s name. Therefore, the correct spelling of a name is critical to obtaining accurate results. If a person has used other names, they should also be checked. If a name match is found, a date of birth is required to determine whether the records are relevant.

Want to know if a candidate’s Social Security number is valid? Click this box to connect to the free, web site, www.ssnvalidator.com. It will tell you if a SSN has been validly issued, as well as when and where it was issued.

Don’t Get Tripped Up
Numerous crime mapping studies have shown that criminals generally commit crimes within 1 or 2 miles of their homes. If you check the locations where individuals have lived and worked, the chances of finding their records are maximized. Therefore, it is critical for an agency to request a Social Security Number verification from its background screening vendor, as the SSN verification includes an address history. This address history should be checked against the candidate’s application for inconsistencies.

Many in the background screening business refer to the National Criminal File as the NCF. However, it is called other things, too. For example, the “National Super Search”; the “National Comprehensive Criminal Check”; and the “Multi-State Criminal Check”.

 (January 2, 2008)  The Georgia parents who hired the nanny under investigation for abusing their 13-month old boy had paid for a background check on her What they didn’t know is that the $10 computer background search the online nanny service conducted on their behalf could easily miss past problems, says Judi Merlin, owner of the Athens, Georgia nanny placement agency A Friend of the Family.  Merlin has more than 20-years experience in the field and is an active board member with the Association of Premier Nanny Agencies  A Household Staffing Alliance (APNA).
She continues,  The online agency the family used even has a disclaimer on its web site that the computer background check they run does not cover every state  red flag right there! Top notch nanny agencies will require that applicants social security numbers are traced to identify every state in which they have lived. That information is used to check records in those states a process that costs more than $10.
APNA Sponsor Member PFC Information Systems specializes in background checks.?� Owner Lynn Peterson explains what it really takes to dig in to a nanny’s past I’ve found that most nanny candidates with criminal records have committed misdemeanors which rarely show up on the various nationwide computer searches that are offered. Felonies are more likely to be listed. So, the nationwide computer check sounds good, but it probably won?��t find a person’s minor run-ins with the law which can tell you a good deal about their past and their character.
Seasoned household staffing agencies know of this pitfall in criminal record tracking. They are also aware of the sad fact that many misdemeanor records that are supposed to be forwarded to state or national databases don’t get sent, get lost or end up misfiled. That is why they hire experts to help them. There is simply no substitute for a county, criminal-court search and a statewide check in every location where an individual has lived, says Peterson. It takes time and knowledge to do it right. And most importantly, it should be a human being conducting that search, not a computer.
It is very important to work with a staffing agency that knows how to screen and takes the time to interview each job candidate in person, says APNA Member Stuart Dupuy of Mom’s Best Friend in Austin, Texas. Online web sites do not meet nanny applicants. It’s one of the primary reasons APNA does not accept online agencies as members.
Merlin adds, The number of families with household staff is growing, and we are working hard to let people know that APNA member agencies provide services that parents should leave to the experts. Most parents simply don’t know how to analyze a nanny’s resume, run a background check, catch a phony reference or ask the tough questions. But it’s what agencies do all day everyday. Parents who want to make sure they are dealing with a quality nanny service should look for the APNA seal.

“Many nannies post ads on Craig’s List. You can do that, but you never know who’s going to show up at your door. They haven’t been vetted, they haven’t been matched and it’s perilous for both parties,” says attorney Bob King.

Read the entire article here: http://abclocal.go.com/kabc/story?section=local&id=5772084