Vision Payroll

November 27, 2011

IRS Revamps Schedule A for 2011

IRS Revamps Schedule A for 2011
IRS Revamps Schedule A for 2011
The Internal Revenue Service (IRS) has issued a revamped Schedule A for Form 940 for 2011. The revised Schedule A includes a line for every state as well as the District of Columbia, Puerto Rico, and the US Virgin Islands.

Revamped Form Necessitated by Increase in Number of Credit Reduction States

A revision to Schedule A was required since the number of states and territories subject to a credit reduction increased from three in 2010 to twenty-one in 2011.

Each State Is Listed with the Relevant Rate

The individual lines for each state, DC, PR and VI are listed with the applicable credit reduction rate. Taxpayers should simply enter the wages paid in each state and multiply by that state’s rate. Wages should be entered even for states that have a zero credit reduction rate.

Not All Taxpayers Must File Schedule A

Not every taxpayer that is required to file Form 940 is required to file Schedule A. Taxpayers that pay wages in more than one state or taxpayers that pay wages in a credit reduction state must complete and file Schedule A. Taxpayers that pay wages only in a single state that is not a credit reduction state need not complete or file Schedule A.

Rely on Vision Payroll for Your Schedule A

Vision Payroll will complete and electronically file Schedule A for all tax pay and file clients. Employers will be able to download a copy of Schedule A for their records.

November 26, 2011

IRS Releases 2011 Form 940

US Virgin Islands and Twenty States Have a Credit Reduction in 2011
US Virgin Islands and Twenty States Have a Credit Reduction in 2011
The Internal Revenue Service (IRS) has released the 2011 Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return, and accompanying instructions. Employers use Form 940 to report their annual Federal Unemployment Tax Act (FUTA) tax.

Twenty Credit Reduction States for 2011

There are twenty credit reduction states for 2011: Michigan, Indiana, Arkansas, California, Connecticut, Florida, Georgia, Illinois, Kentucky, Minnesota, Missouri, North Carolina, New Jersey, Nevada, New York, Ohio, Pennsylvania, Rhode Island, Virginia, and Wisconsin as well as the US Virgin Islands. The credit reduction for most Michigan employers is 0.9% and for most Indiana employers it’s 0.6%. Most employers in the other credit reduction states and the US Virgin Islands have a credit reduction of 0.3%.

2011 FUTA Rate Decreased as of July 1, 2011

The FUTA tax rate decreased to 6.0% (before SUTA credits) on July 1, 2011. The rate for the first six months of 2011 was 6.2%. Under current law, the rate will remain at 6.0% throughout 2012. The 2011 Form 940 contains lines to report wages paid before July 1, 2011 and wages paid after June 30, 2011.

Vision Payroll to File Form 940 Electronically

Vision Payroll will file Form 940 for its clients electronically with the IRS and will not submit the paper version. Employers will be able to download a copy of Form 940 for their records.

November 25, 2011

Question of the Week: What Are the Credit Reduction States for 2011?

What Are the Credit Reduction States for 2011?
What Are the Credit Reduction States for 2011?
This week’s question comes from Victoria, a corporate controller.

Victoria asks:

I read that California is going to be a credit reduction state for 2011, but heard that they be more credit reduction states. What are the credit reduction states for 2011?

Answer: The Internal Revenue Service (IRS) has released a list of credit reduction states for 2011. There are a total of twenty states and one territory.

Standard Credit Rates Is 5.4% for 2011

Generally, employers who pay their state unemployment tax by the due date for filing Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return, receive a credit 5.4% against their Federal Unemployment Tax Act (FUTA) tax. This credit is claimed on Form 940. Federal law provides for a reduction in the FUTA tax credit when a state has outstanding federal loans for two years. The credit reduction is calculated on Schedule A of Form 940.

Michigan Is a 0.9% Credit Reduction States

Since this is Michigan’s third consecutive year as a credit reduction state, the credit reduction for Michigan is 0.9% for 2011.

Indiana Is a 0.6% Credit Reduction States

Since this is Indiana’s second consecutive year as a credit reduction state, the credit reduction for Indiana is 0.6% for 2011. South Carolina, which was a first-year state for 2010, has paid off its loans and is not a credit reduction state for 2011.

Eighteen New Credit Reduction States for 2011

There are eighteen new credit reduction states for 2011. These states will have a credit reduction of 0.3% for 2011. The states are Arkansas, California, Connecticut, Florida, Georgia, Illinois, Kentucky, Minnesota, Missouri, North Carolina, New Jersey, Nevada, New York, Ohio, Pennsylvania, Rhode Island, Virginia, and Wisconsin. Additionally, the US Virgin Islands also has a credit reduction of 0.3%.

Contact Vision Payroll Today

For more information on the credit reduction states in 2011, be sure to contact Vision Payroll today.

November 21, 2011

California Is a Credit Reduction State for 2011

Filed under: News — Tags: , , , , , — Vision @ 6:00 pm
Pam Harris, Chief Deputy Director, California EDD
Pam Harris, Chief Deputy Director, California EDD
According to the California Employment Development Department, California will be a FUTA tax credit reduction state in 2011.

Standard Credit Rates Is 5.4% for 2011

Generally, employers who pay their state unemployment tax by the due date for filing Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return, receive a credit 5.4% against their Federal Unemployment Tax Act (FUTA) tax. This credit is claimed on Form 940.

FUTA Wage Base Is $7,000 for 2011

The FUTA wage base is $7,000 for 2011.

Employers in Certain States Are Subject To Credit Reduction

Federal law provides for a reduction in the FUTA tax credit when a state has outstanding federal loans for two years. The credit reduction is calculated on Schedule A of Form 940.

California Is Subject To Credit Reduction for First Time

Since California was not a credit reduction state in 2010, the credit reduction rate will be 0.3% for 2011. California employers will receive a reduced credit of 5.1% for 2011. For the first six months of 2011, the FUTA tax rate was 6.2% and for the last six months of 2011, the FUTA tax rate has been 6.0%. Therefore, California employers will pay an effective rate of 1.1% for the first six months of 2011 and 0.9% for the last six months of 2011. The credit reduction will continue to increase by 0.3 percentage points each year until the loan is paid, e.g., 0.6% in 2012, 0.9% in 2013, etc.

Vision Payroll Will Calculate the Credit Reduction for All California Clients

Contact Vision Payroll if you have any further questions on the California credit reduction.

October 21, 2011

Question of the Week: What Are the 2012 Highly Compensated Employee Limits?

What Are the 2012 Highly Compensated Employee Limits?
What Are the 2012 Highly Compensated Employee Limits?
This week’s question comes from Carla, a company president.

Carla asks:

We’re doing some compensation planning for next year. What are the 2012 Highly Compensated Employee Limits?

Answer: The IRS has just released updated information for 2012.

IRS Releases 2012 Highly Compensated Employee Limits in IR-2011-103

In IR-2011-103, the Internal Revenue Service (IRS) announced that for 2012 the Highly Compensated Employee Limitation under §414(q)(1)(B) of the Internal Revenue Code of 1986 will increase to $115,000. Non-discrimination testing in some types of retirement plans limits the deferral rate of “highly compensated employees” (HCEs) based upon the deferral rate (ADP) of the “non-highly compensated employees”.

Highly Compensated Employee Compensation Limit Had Been $110,000

For 2012 plan year testing, an HCE is anyone who was a “5-percent owner” at any time during 2011 or 2012 or anyone who received in excess of $110,000 in compensation during 2011 and, if elected by the employer, is in the top twenty percent of employees based upon compensation. The HCE limit was also $110,000 for 2010 and 2011 plan year testing. The new $115,000 limit for 2012 is to be used for 2013 plan year testing.

Look-back Provision Impacts HCE Testing Period

Since the law includes a look-back provision, employees who earned more than $110,000 in 2010 are generally considered HCEs for 2011 plan year testing, employees who will earn more than $110,000 in 2011 are generally considered HCEs for 2012 plan year testing, and employees who will earn more than $115,000 in 2012 are generally considered HCEs for 2013 plan year testing.

Contact Vision Payroll for More Information on HCEs

Contact Vision Payroll if you have questions on changes to the HCE definition for 2012 to be used in 2012 plan year testing or get further information at Important Facts and Figures.

September 9, 2011

Question of the Week: What Are the Updated Standard Industry Fare Level Rates?

DOT Releases SIFL Rates for Second Half of 2011
DOT Releases SIFL Rates for Second Half of 2011
What Are the Updated Standard Industry Fare Level Rates?

This week’s question comes from Russell, a company president.

Russell asks…

Some of our employees use our company aircraft for personal purposes. We need to value this and include it as income for those employees. What are the updated Standard Industry Fare Level Rates?

Answer: The United States Department of Transportation (DOT) recently released updated Standard Industry Fare Level (SIFL) rates, which are used to value employee personal use of company aircraft.

Revised Rates Are Effective For the Second Half Of 2011

The Standard Industry Fare Level (SIFL) rates for the second half of 2011 were published by the Transportation Department. The rates, which are used to determine the taxable value of an employee’s personal flight in a company aircraft, are 23.95 cents for flights of up to 500 miles, 18.26 cents for flights of 501 to 1,500 miles, and 17.56 cents for flights greater than 1,500 miles. The terminal charge is $43.79.

Contact Vision Payroll for Updated SIFL Rates

Contact Vision Payroll if you have any questions on SIFL changes.

August 8, 2011

New Hampshire Unemployment Wage Base to Increase for 2012

Filed under: News — Tags: , , , , , , — Vision @ 7:34 pm
New Hampshire Unemployment Wage Base to Increase for 2012
New Hampshire Unemployment Wage Base to Increase for 2012
The New Hampshire Department of Employment Security has announced an increase in the taxable wage base for 2012. The wage base will increase from $12,000 for 2011 to $14,000 for 2012.

Third Consecutive Year the Wage Base Has Increased

This is the third consecutive year the wage base will increase. In 2010, it increased from $8,000 to $10,000 and in 2011 it increased from $10,000 to $12,000.

Find Out the Wage Base for All States by Visiting the Vision Payroll Unemployment Taxable Wage Base Page

Contact Vision Payroll if you have any questions on the New Hampshire unemployment taxable wage base or visit our Unemployment Taxable Wage Base page.

August 7, 2011

Michigan Offers Rebate for Expected Credit Reduction

Steven Hilfinger, Director, Michigan Department of Licensing and Regulatory Affairs
Steven Hilfinger, Director, Michigan Department of Licensing and Regulatory Affairs
According to the Unemployment Insurance Agency (UIA) of the State of Michigan Department of Licensing and Regulatory Affairs in Fact Sheet 139, the FUTA tax credit reduction rate will increase from 0.6% in 2010 to 0.9% in 2011. Since the determination will not be made until November 1, 2011, this is only a projection at this time.

Standard Credit Rate is 5.4% for 2011

Generally, employers who pay their state unemployment tax by the due date for filing Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return receive a credit 5.4% against their Federal Unemployment Tax Act (FUTA) tax. This credit is claimed on Form 940.

Employers in Certain States Are Subject To Credit Reduction

Federal law provides for a reduction in the FUTA tax credit when a state has outstanding federal loans for two years. The credit reduction is calculated on Schedule A of Form 940.

Michigan Is Subject To Credit Reduction for Third Consecutive Year

Since Michigan was already subject to a credit reduction in 2009 and 2010, the credit reduction will increase to 0.9% for 2011. The credit reduction will continue to increase by 0.3 percentage points each year until the loan is paid, e.g., 1.2% in 2012, 1.5% in 2013, etc.

Rebate Offered To Fully Experienced Employers with a Positive Balance

Fully experienced employers with a positive balance may claim a credit using Form UIA 1110. The credit is the lower of 50% of the additional tax paid due to the credit reduction or the taxable wages for the year of the credit reduction multiplied by the employer’s Nonchargeable Benefits Component (NBC). Based on the eligibility conditions for prior years, the expected eligibility conditions for a 2012 tax credit should be as follows:

  1. Your “actual reserve” balance as of June 30, 2010 as shown on your 2011 annual tax rate determination must be positive. If the “actual reserve” is a negative figure, refer to Voluntary Payment information at www.michigan.gov/uia.
  2. In 2011, you are in your fifth or subsequent year of coverage with the UIA (you are a fully experienced employer).
  3. You pay the 2011 FUTA credit reduction to the Internal Revenue Service prior to January 1, 2013.
  4. You certify on Form UIA 1110 the amount of additional FUTA tax you paid for 2011 as a result of the credit reduction.
  5. You have taxable wages with UIA in the 2011 calendar year.

Vision Payroll Will Calculate the Credit Reduction for All Michigan Clients

Contact Vision Payroll if you have any further questions on the Michigan credit reduction.

August 1, 2011

Vermont Wage Base to Increase for 2012

Filed under: News — Tags: , , , , , — Vision @ 7:16 pm
VT Govenor Peter Shumlin
VT Govenor Peter Shumlin
Pursuant to legislation passed in 2010, the taxable wage base in Vermont will increase for 2012. The wage base will increase from $13,000 for 2011 to $16,000 for 2012.

Third Consecutive Annual Increase

This is the third consecutive year that the wage base will increase. In 2010, it increased from $8,000 to $10,000 and in 2011 it increased from $10,000 to $13,000.

Find Out the Wage Base for All States by Visiting the Vision Payroll Unemployment Taxable Wage Base Page

Contact Vision Payroll if you have any questions on the Vermont unemployment taxable wage base or visit our Unemployment Taxable Wage Base page.

July 20, 2011

Tip of the Week: Twelve FAQs About the New York Interest Assessment Surcharge

Filed under: News — Tags: , , , , — Vision @ 9:12 am
Twelve FAQs About the New York Interest Assessment Surcharge
Twelve FAQs About the New York Interest Assessment Surcharge
As previously announced, New York has assessed most employers an Interest Assessment Surcharge (IAS). The New York Department of Labor has posted the following twelve FAQs about the IAS.

1. Why is the IAS being assessed?
Due to the high rate of unemployment, New York, as well as many other states, had to borrow money from the federal government in order to meet unemployment insurance (UI) benefits obligations. Normally, there should be sufficient revenues generated from quarterly UI employer tax collections to repay the federal loan in time to avoid interest charges. As a result of the recession there have been insufficient revenues from unemployment insurance (UI) taxes to satisfy the loans and to avoid the interest assessment. In 2009 and 2010, the federal government provided interest-free loans to states with insolvent Trust funds. Thus far, Congress has not extended the interest-free loan provisions for 2011. Therefore, New York owes approximately $95 million in interest for this year, which must be paid by September 30, 2011. In order to pay the interest due for 2011 on these federal loans, New York State is required by state law to assess a temporary charge on employers called the Interest Assessment Surcharge, or IAS.

2. What happens if the interest is not paid to the federal government?
Failure to pay the interest due can have severe consequences. New York’s Unemployment Insurance Program could lose its federal certification, which would result in employers in the state losing eligibility for a credit of up to 5.4% against the Federal Unemployment Tax Act (FUTA) tax. This would cause a very large and sudden spike in employer payroll taxes. In addition, the federal government can withhold administrative funds needed to operate New York’s Unemployment Insurance Program.

3. Isn’t the federal government waiving the interest?
The American Recovery and Reinvestment Act (also known as the Recovery Act) provided interest-free loans to New York and other states with insolvent Trust Funds during calendar years 2009 and 2010. Thus far, Congress has not extended the interest-free loan provisions into 2011. Should Congress extend the interest-free loan provision, we will either credit the employer’s account or refund the money paid.

4. What is the section of the law which imposes the IAS?
The section of the State Labor Law is Article 18, Title 6, Section 581-d. This can be found by visiting our website at www.labor.ny.gov. Employers were previously charged an IAS under this law in 2003, 2004, and 2005.

5. Are all employers required to pay the IAS?
All employers who pay unemployment insurance (UI) tax to the State are liable for the IAS. State and local government and not-for-profit employers who self-insure for UI purposes are not liable for the IAS.

6. How was my IAS calculated?
Your IAS was calculated using the taxable wages for the current payroll year (the fourth quarter of 2009 through the third quarter of 2010) and multiplying those wages by the IAS rate of 0.25%. The maximum amount that most employers will be assessed is $21.25 per employee.

7. Will my tax rate increase as a result of IAS?
No. IAS does not affect an employer’s experience rating account.

8. When is my payment of the IAS due? Can I get an extension?
Payment is due August 15, 2011. As the federal government has not granted an extension of the interest payment, extensions on the due date cannot be granted.

9. Why didn’t I receive the notice of the IAS earlier?
Because multiple bills were being considered by Congress to extend the interest waiver position into the current year, it was prudent to wait for Congressional resolution. Unfortunately, to date, Congress has not enacted an extension of this provision.

10. Whom should I make my check payable to and where do I send the payment?
Checks should be made payable to: NYS Unemployment Insurance and sent to: NYS Unemployment Insurance, PO Box 4301, Binghamton, NY 13902-4301.

11. Is this a one-time billing and what happens if I do not pay my IAS?
IAS will be billed annually until the loans to the federal government have been paid. IAS is subject to the same collection processes as contributions due. This would include legal actions to enforce the debt.

12. What if I did not receive an IAS bill or have questions regarding the IAS bill?
If you have any questions, please call the Employer Accounts Adjustment Section of the Unemployment Insurance Division at (888) 899-8810 or go to the agency website at www.labor.ny.gov.

Contact Vision Payroll Today

New York clients who have further questions on the IAS should contact Vision Payroll.

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