Vision Payroll

April 26, 2014

IRS Releases Revised Form 941-X

 

IRS Releases Revised Form 941-X

IRS Releases Revised Form 941-X

The Internal Revenue Service (IRS) recently released a revised version of Form 941-X, Adjusted Employer’s QUARTERLY Federal Tax Return or Claim for Refund.

COBRA Premium Assistance Credit May Only Be Claimed on Form 941-X

For tax periods beginning after 2013, the COBRA premium assistance credit may only be claimed on Form 941-X. Employers are longer able to claim the credit on either Form 941 or Form 941-SS. Employers are instructed to first file the Form 941 or Form 941-SS and then file the Form 941-X. Employers should not file the Form 941-X in advance of their regular filing.

Social Security Tax Rates May Differ

Depending on the period being amended, different social security tax rates may be in effect. For years other than 2011 and 2012, the employee and employer social security tax rates are 6.2% each or a total of 12.4%. For 2011 and 2012, the employee tax rate is 4.2% and the employer tax rate is 6.2% for a total of 10.4%. The correct rate should be used for the period being amended.

Contact Vision Payroll for Questions on Form 941-X

Contact Vision Payroll if you have further questions on Form 941-X.

September 30, 2013

Model Notices Need Not Be Provided To Former Employees Who Have Elected COBRA Coverage

Model Notices Need Not Be Provided To Former Employees Who Have Elected COBRA Coverage
Under the Patient Protection and Affordable Care Act, also known as the Affordable Care Act Under the Patient Protection and Affordable Care Act, also known as the Affordable Care Act or Obamacare, most employers are required to provide one of two notices to all employees. Guidance was provided to employers by the US Department of Labor (DOL) in Technical Release No. 2013-02, Guidance on the Notice to Employees of Coverage Options under Fair Labor Standards Act §18B and Updated Model Election Notice under the Consolidated Omnibus Budget Reconciliation Act of 1985.

Notice Not Required for Former Employees Who Have Elected COBRA Coverage

Although all employees, regardless of plan enrollment status or availability, must receive a notice, the DOL in Technical Release No. 2013-02 clarifies that “[e]mployers are not required to provide a separate notice to dependents or other individuals who are or may become eligible for coverage under the plan but who are not employees.” Therefore, former employees eligible for coverage need not be notified.

Contact Vision Payroll for Further Information

Contact Vision Payroll if you have further questions on the notice to employees of coverage options required under the ACA.

October 30, 2011

IRS Releases 2011 Form 944

IRS Commissioner Douglas H. Shulman
IRS Commissioner Douglas H. Shulman
The Internal Revenue Service (IRS) has released the 2011 Form 944, Employer’s ANNUAL Federal Tax Return, and related instructions. Form 944 is designed so the smallest employers (those whose annual liability for social security, Medicare, and withheld federal income taxes is $1,000 or less) will only file once a year instead of every quarter.

Several Changes Have Been Made To the 2011 Form 944

The 2011 Form 944 has several new items. The new items include the following:

Employee Tax for Social Security Cut To 4.2%

The employee tax rate for social security has been cut to 4.2%, although the employer rate remains at 6.2%. The Medicare tax rate remains at 1.45% for both employees and employers.

COBRA Premium Assistance Credit Continues

The credit for COBRA premium assistance payments applies to premiums paid for employees involuntarily terminated between September 1, 2008, and May 31, 2010, and to premiums paid for up to 15 months. The credit is claimed on line 9a.

Social Security Wage Base for 2011

Do not withhold or pay social security tax after an employee reaches $106,800 in social security wages for the year. There is no limit on the amount of wages subject to Medicare tax.

Advance Payment of Earned Income Credit (EIC)

The option of receiving advance payroll payments of EIC expired on December 31, 2010. Individuals eligible for EIC in 2011 can still claim the credit when they file their federal income tax return.

Electronic Deposit Requirement

Beginning January 1, 2011, you must deposit all depository taxes (such as employment tax, excise tax, and corporate income tax) electronically using the Electronic Federal Tax Payment System (EFTPS). Forms 8109 and 8109-B, Federal Tax Deposit Coupon, cannot be used after December 31, 2010.

Vision Payroll Will File Form 944 for Eligible Taxpayers

Contact Vision Payroll if you have further questions on Form 944.

August 31, 2011

Tip of the Week: COBRA Subsidy Not Ending Today According to the US Department of Labor

COBRA Subsidy Not Ending Today According to the US Department of Labor
COBRA Subsidy Not Ending Today According to the US Department of Labor
According to the US Department of Labor, some individuals will still be eligible to receive the COBRA premium reduction (subsidy) beyond August 31, 2011. It had been reported that the subsidy ended today.

ARRA Provided a COBRA Premium Reduction

The American Recovery and Reinvestment Act (ARRA) provided a COBRA premium reduction for eligible individuals who were involuntarily terminated from employment through the end of May 2010. Due to the statutory sunset, the COBRA premium reduction under ARRA is not available for individuals who experience involuntary terminations after May 31, 2010. Since August 31, 2011 is fifteen months after May 31, 2010, it had been incorrectly reported that the subsidy was ending

Severance Agreement Among Reasons for Extended Subsidy

However, individuals who qualified on or before May 31, 2010 may continue to pay reduced premiums for up to 15 months, as long as they are not eligible for another group health plan or Medicare even if their COBRA coverage did not start until a later date due to the terms of a severance arrangement, or the use of banked hours or other similar provision that delayed the start of their COBRA coverage. For example if an individual was involuntarily terminated on May 31, 2010 and due to the terms of a severance agreement their COBRA coverage did not start until December 1, 2010, they would still be eligible for the full 15 months of subsidy through February 29, 2012 as long as they are not eligible for another group health plan or Medicare.

Contact Vision Payroll Today

Contact Vision Payroll if you have further questions on the COBRA subsidy.

January 14, 2011

Question of the Week: What Are 10 Hot Items for Payroll in 2011?

What Are 10 Hot Items for Payroll in 2011?
What Are 10 Hot Items for Payroll in 2011?
This week’s question comes from Seth, a company controller. It seems as if there are many changes in payroll recently. What are 10 hot items for payroll in 2011? Answer: The payroll industry and payroll departments have seen many changes as Congress uses the payroll and payroll tax system as a means to implement desired changes in social policy. Many items are new or revamped for 2011.

10 Hot Payroll Items in 2011

  1. 2011 Withholding Table Changes: Because of the recently passed Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (2010 Tax Act), employers should implement the 2011 withholding tables as soon as possible, but not later than January 31, 2011.
  2. Reduced Social Security Tax Rate for Employees: For 2011, the employee tax rate for Social Security is 4.2%, down from 6.2% in 2010. The employer rate remains at 6.2%.
  3. Expiration of Making Work Pay Credit: The Making Work Pay credit expired on December 31, 2010, resulting in higher federal withholding from many employees in 2011.
  4. Extension of COBRA Premium Assistance Credit: The credit for COBRA premium assistance payments has been extended to include premiums paid for employees involuntarily terminated between September 1, 2008, and May 31, 2010, and to premiums paid for up to 15 months.
  5. Advance Payment of Earned Income Credit (EIC) Discontinued: The option to receive advance payroll payments of EIC expired on December 31, 2010.
  6. Federal Tax Payments Must Be Made by Electronic Funds Transfer: With the discontinuation of Forms 8109 and 8109-B, most federal tax payments must now be made by electronic funds transfer.
  7. FUTA Tax Rate Scheduled to Decrease: Under current law, the FUTA tax rate will decrease from 6.2% to 6.0%, effective July 1, 2011.
  8. Withholding Allowance Amount Set at $3,700: For 2011, the amount for one withholding allowance on an annual basis is $3,700, up from $3,650 for 2009 and 2010.
  9. Aggregate Form 940 and Form 941 Filers Must File Schedule R: Agents must complete the appropriate Schedule R when filling an aggregate Form 940 or Form 941.
  10. Choose to File Form 941 Instead of Form 944: Employers notified that they should file Form 944, but who want to file Form 941 instead, may notify the IRS and request to file Form 941.

More Changes Expected Throughout 2011

Check VisionPayroll.com regularly as the only certain thing about payroll and payroll taxes for 2011 is that many more changes can be expected.

December 1, 2010

Tip of the Week: IRS Releases 2010 Form 944

IRS Commissioner Douglas H. Shulman
IRS Commissioner Douglas H. Shulman
The Internal Revenue Service (IRS) has released the 2010 Form 944, Employer’s ANNUAL Federal Tax Return, and related instructions. Form 944 is designed so the smallest employers (those whose annual liability for social security, Medicare, and withheld federal income taxes is $1,000 or less) will only file once a year instead of every quarter.

Several Changes Have Been Made To the 2010 Form 944

The 2010 Form 944 has several new items. The new items include the following:

Qualified Employer’s Social Security Tax Exemption

Qualified employers are allowed an exemption for their share (6.2%) of social security tax on wages/tips paid to qualified employees after March 31, 2010, and before January 1, 2011.

Qualified Employer’s Social Security Tax Credit

Qualified employers are allowed a credit for their share (6.2%) of social security tax on wages/tips paid to qualified employees after March 18, 2010, and before April 1, 2010.

COBRA Premium Assistance Credit Extended

The credit for COBRA premium assistance payments applies to premiums paid for employees involuntarily terminated between September 1, 2008, and May 31, 2010, and to premiums paid for up to 15 months.

Social Security Wage Base for 2010 and 2011

Do not withhold or pay social security tax after an employee reaches $106,800 in social security wages for the year. There is no limit on the amount of wages subject to Medicare tax.

Advance Payment of Earned Income Credit (EIC)

The option of receiving advance payroll payments of EIC expires on December 31, 2010. Individuals eligible for EIC in 2011 can still claim the credit when they file their federal income tax return. Individuals who receive advance payments of EIC in 2010 must file a 2010 federal income tax return.

Electronic Deposit Requirement

The IRS has issued proposed regulations under §6302 of the Internal Revenue Code of 1986 which provide that beginning January 1, 2011, you must deposit all depository taxes (such as employment tax, excise tax, and corporate income tax) electronically using the Electronic Federal Tax Payment System (EFTPS). Under these proposed regulations, which are expected to be finalized by December 31, 2010, Forms 8109 and 8109-B, Federal Tax Deposit Coupon, cannot be used after December 31, 2010.

Vision Payroll Will File Form 944 for Eligible Taxpayers

Contact Vision Payroll if you have further questions on Form 944.

October 13, 2010

Tip of the Week: IRS Delays Health Care Reporting Requirement on Form W-2

IRS Delays Health Care Reporting Requirement on Form W-2
IRS Delays Health Care Reporting Requirement on Form W-2
In Notice 2010-69, the Internal Revenue Service (IRS) announced that the reporting of the cost of coverage under an employer-sponsored group health plan on Form W-2, Wage and Tax Statement, would not be mandatory for 2011 Forms W-2.

Additional Time Is Needed to Make Changes to Payroll Systems

According to Notice 2010-69, “[t]he Treasury Department and the IRS have determined that this relief is appropriate to provide employers with additional time to make any necessary changes to their payroll systems or procedures in preparation for compliance with the reporting requirement.”

Aggregate Cost Determined Using COBRA Rules

When reporting begins, “the aggregate cost is to be determined under rules similar to the rules of §4980B(f)(4), referring to the definition of the “applicable premium” under the rules providing for COBRA continuation coverage.”

Vision Payroll Will Assist Employers in Transition to New Rules

Contact Vision Payroll today for assistance in planning your transition to the new reporting rules for Form W-2.

September 24, 2010

Question of the Week: How Do We Determine the Cost of Health Insurance to Report on Form W-2?

How Do We Determine the Cost of Health Insurance to Report on Form W-2?
How Do We Determine the Cost of Health Insurance to Report on Form W-2?
This week’s question comes from Katy, an HR administrator. We know we need to capture the cost of health coverage and report it on Form W-2, starting in 2011. How do we determine the cost of health insurance to report on Form W-2? Answer: Employers are required to use rules “similar to the rules of §4980I(d)(1)”, which are the rules used to calculate the cost to qualified beneficiaries who elect COBRA coverage.

Further Guidance for Reporting the Cost Health Insurance on Form W-2 Is Expected

As further guidance from the Internal Revenue Service (IRS) becomes available in this area, Vision Payroll will provided updated guidelines for calculating the amount to be included on Form W-2.

June 28, 2010

Department of Labor Rules That Mooning of Co-Worker Is Not Gross Misconduct

The US Department of Labor (DOL) Employee Benefits Security Adminstration (EBSA) has ruled in a determination letter that the mooning of a co-worker is not gross misconduct that would disqualify an individual from receiving COBRA premium assistance under the American Recovery and Reinvestment Act of 2009 (ARRA). The ruling came to light when the employer in the case, Stormont-Vail Health Care, Inc. (Stormont-Vail), requested a temporary restraining order (TRO) staying the final determination letter. In Stormont-Vail Health Care, Inc. v. US Department of Labor EBSA, DCKS, 10cv4052-RDR, 5/27/2010, the court denied the motion for the TRO.

According to the court, Jennifer Reavis (Reavis) was employed by Stormont-Vail as a nurse. Stormont-Vail received a report that “Reavis told [a male nurse] to answer some patient call lights, that he assertively told her ‘no, I’m busy,’ and that in response Reavis bent over with her scrub pants pulled down, exposing her rear end.” In response, “Reavis has claimed that she was responding to a provocative finger gesture and that she only partially exposed her backside to the male nurse.” Stormont-Vail fired Reavis and disallowed her claim for COBRA premium assistance under ARRA. Reavis filed an appeal with the Department of Labor, which ruled that Reavis did qualify for the premium assistance.

Due to the clear lack of standards to determine gross misconduct for COBRA and ARRA purposes, Vision Payroll strongly recommends that employers consult with a competent labor law attorney for assistance in deciding if ARRA premium assistance should be denied because of gross misconduct.

June 22, 2010

Former Williams College Professor Denied COBRA Coverage Due to Gross Misconduct

An Assistant Professor in the Williams College (Williams) Political Science Department was denied continuing health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) after Williams terminated his three-year teaching contract “for cause because of his guilty plea [to student aid fraud, bank fraud, and social security fraud], his failure to notify [Williams] of the crimes and subsequent plea, fraudulent credentials he had supplied to Williams…in seeking employment, and his misuse of a Williams…credit card.”

In Moore v. Williams, DCMA, 09cv30208, 4/7/2010, the court granted the defendant’s motion to dismiss, thereby closing the case. Under COBRA, terminated employees may elect to continue their health care coverage, generally at their own expense. An exception disallows COBRA coverage when an employee is terminated for gross misconduct. Although the court stated that there are no regulations defining gross misconduct for this purpose, “The conduct in this case is sufficiently outrageous to constitute gross misconduct, and while it did not arise from an ‘evil design’ to harm [Williams], it indicated a reckless disregard for [Williams’s] interests.”

Due to the clear lack of standards to determine gross misconduct for COBRA purposes, Vision Payroll strongly recommends that employers consult with a competent labor law attorney for assistance in deciding if COBRA coverage should be denied because of gross misconduct.

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