Vision Payroll

May 16, 2016

IRS Sent Out Erroneous Failure to Deposit Notices

Filed under: News — Tags: , , , — Vision @ 10:54 am

The Internal Revenue Service (IRS) has sent out an e-mail to the payroll industry indicating that it sent out erroneous Failure to Deposit Notices. Following is the text of that e-mail:

Here is important information regarding notices for Failure to Deposit penalties which may have been sent in error. Please share with your clients as appropriate.

Some monthly and daily deposits of payroll taxes are being treated as late in error.

Due to the observed holiday on April 15, 2016, (Washington DC Emancipation Day), deposits were not due until April 18, 2016. IRS recently identified a programming error causing deposits made after April 15, 2016, to be considered late, even though they were made timely by April 18, 2016. In some instances, taxpayers were assessed failure to deposit penalties as a result.

IRS is working to resolve the issue and correct the erroneous penalty assessments in the near future. No taxpayer action is required at this time. Those affected will receive correspondence when the issue is resolved. We apologize for any inconvenience this may cause.

The notice in question, is generally titled, Your Federal Tax Deposit wasn’t submitted correctly. In the bottom section, it will list the Date due as 04/15/2016 and the Date received as 04/18/2016. At this time, you may ignore any such notice and the IRS will issue correspondence to correct the erroneous notices. Please contact Vision Payroll if you have any further questions.

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.

November 20, 2013

Tip of the Week: IRS Says Restaurants Must Change Tip Reporting in 2014

Filed under: News — Tags: , , , , , , — Vision @ 4:30 pm

 

IRS Says Restaurants Must Change Tip Reporting in 2014

IRS Says Restaurants Must Change Tip Reporting in 2014

Effective January 1, 2014, restaurants and other employers with tipped employees must change the way certain tips are reported. Although Rev. Rul. 2012-18 took effect in 2012, examiners in some circumstances could apply it to amounts paid after December 31, 2013. Therefore, all employers must comply with Rev. Rul. 2012-18 starting in 2014.

Payments Traditionally Treated as Tips Must Now Be Treated as Service Charges

Certain payments that tipped employees receive and employers called tips must now be treated as wages. Since these wages are subject to withholding, they should be paid in the employee’s paycheck. Although there is a line on Form 941, Employer’s QUARTERLY Federal Tax Return, to report the uncollected employee share of social security and Medicare taxes on tips, there is no line to report such uncollected taxes on wages or service charges treated as wages. In order to collect and pay these taxes, therefore, the service charges should be paid on the employee’s paycheck.

Employer’s Characterization of Amounts as Tips Is Not Relevant

The Internal Revenue Service (IRS) states that it is irrelevant whether or not the payment is called a tip. According to the IRS, “the absence of any of the following factors creates a doubt as to whether a payment is a tip and indicates that the payment may be a service charge.” The four factors listed are the following:

  1. The payment must be made free from compulsion;
  2. The customer must have the unrestricted right to determine the amount;
  3. The payment should not be the subject of negotiation or dictated by employer policy; and
  4. Generally, the customer has the right to determine who receives the payment.

Mandated Tips and Suggested Tips

Examples provided by the IRS distinguish between mandated tips and “suggested” tips. In the former case, the menu dictates that an 18% gratuity will be added for parties of six or more. Since the amount is added to the charged amount by the employer and the customer did not have the unrestricted right to determine the amount, this payment is considered wages, not tips. Alternatively, if the check simply shows sample tips amounts of 15%, 18%, and 20% and the customer chooses one of the suggested tip amounts, the amount is still considered a tip for payroll tax purposes.

Service Charges Should Not Be Reported as Tips

Employees are generally required to report cash tips (including amounts paid on credit cards and received in a tip-sharing arrangement) to their employers, and those cash tips are included in gross income of the employees. Amounts determined to be wages and not tips under these provisions should not be included in the amounts reported to employers.

Contact Vision Payroll if You Have Questions on the New Rules on Tips

Be sure to contact Vision Payroll if you have further questions on Rev. Rul. 2012-18 and the new rules on tip reporting.

November 5, 2011

Question of the Week: Why Did I Receive a Notice Titled “Your 2012 Federal Tax Deposit Requirements for Form 941”?

Filed under: News — Tags: , , — Vision @ 2:09 pm
Why Did I Receive a Notice Titled "Your 2012 Federal Tax Deposit Requirements for Form 941"?
Why Did I Receive a Notice Titled "Your 2012 Federal Tax Deposit Requirements for Form 941"?
This week’s question comes from Brad, a company owner.

Brad asks:

I recently received a notice from the IRS. Why did I receive a notice titled “Your 2012 Federal Tax Deposit Requirements for Form 941”?

Answer: The Internal Revenue Service (IRS) sends this notice to employers who have a change in deposit frequency.

Employers May Have One of Two Deposit Frequencies

Employers may have one of two deposit frequencies assigned. The first frequency is a semi-weekly frequency assigned to employers who had a tax liability of more than $50,000 during the lookback period. The second frequency is a monthly frequency assigned to employers who had a tax liability of $50,000 or less during the lookback period. For 2012, the lookback period is the period from July 1, 2010 to June 30, 2011.

Semi-Weekly Depositors Have Two Due Dates per Week

Employers assigned a semi-weekly deposit frequency generally must deposit taxes on one a two days each week. Any taxes accumulated for wages paid Saturday, Sunday, Monday, or Tuesday are due on Friday of that week and taxes accumulated for wages paid Wednesday, Thursday, or Friday are due Wednesday of the following week. Holidays or special rules may change those due dates.

Monthly Depositors Have One Due Date per Month

Employers assigned a monthly deposit frequency must deposit taxes accumulated for wages paid during a calendar month by the fifteenth of the following month. Weekends, holidays or special rules may change those due dates.

Weekends and Holidays Extend Due Date

If a due date falls on a weekend or a legal holiday in the District of Columbia, it extends the due date until the next day that is not a weekend or a legal holiday in the District of Columbia.

$100,000 Next-Day Deposit Rule May Apply

For taxpayers with a semi-weekly deposit frequency, if the total accumulated liability reaches $100,000 during any semi-weekly period, that deposit is due the next business day. For taxpayers with a monthly deposit frequency, if the total accumulated liability reaches $100,000 during any monthly period, that deposit is due the next business day. In addition, taxpayers with a monthly deposit frequency who accumulate a liability of $100,000 during a calendar month must deposit using the semi-weekly deposit rules for the remainder of that calendar year, unless the $2,500 rule applies.

$2,500 Rule May Reduce Deposit Frequency

Employers may pay their tax liability when filing Form 941 if their total Form 941 tax liability for either the current quarter or the preceding quarter is less than $2,500 and they did not incur a $100,000 next day obligation during the current quarter.

Vision Payroll Will Make Tax Deposits Following These Rules

Subscribers to Vision Payroll’s Tax Pay and File Service will have their taxes deposited by Vision Payroll in accordance with the above rules.

March 20, 2011

IRS Discontinues Mailing of Form 941 Tax Package

Filed under: News — Tags: , , — Vision @ 3:52 pm
IRS Discontinues Mailing of Form 941 Tax Package
IRS Discontinues Mailing of Form 941 Tax Package
The Internal Revenue Service (IRS) has announced that it will no longer mail the Form 941 tax package to business taxpayers. Taxpayers who need paper copies of the forms can download them at IRS.gov or VisionPayroll.com.

Growth in Electronic Filing Spurred Move

The IRS says that it took these steps due to the continued growth in electronic filing as well as to help reduce costs. Additionally, most business forms are available through tax professionals and tax software.

Mailing of Many Other Forms Also Discontinued

The IRS also announced that mailing of the following forms and publication has also been discontinued:

ProductTitle
Form 940Employer’s Annual Federal Unemployment (FUTA) Tax Return
Form 943Employer’s Annual Federal Return for Agricultural Employees
Form 944Employer’s Annual Federal Tax Return
Form 945Annual Return of Withheld Federal Income Tax
Form 720Quarterly Federal Excise Tax Return
Form 730Monthly Tax Return for Wagers
Form 2290Heavy Highway Vehicle Use Tax Return
Form 5500Annual Return/Report of Employee Benefit Plan
Form 8027Employer’s Annual Information Return of Tip Income and Allocated Tips
Form 8160-TTax Product Availability for Exempt Organization Filers
Form 11-COccupational Tax and Registration Return for Wagering
Form CT-1Employer’s Annual Railroad Retirement Tax Return
Publication 51(Circular A) Agricultural Employer’s Tax Guide
Publication 80(Circular SS) Federal Tax Guide for Employers in the U.S. Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands
Publication 179(Circular PR) Guía Contributiva Federal para Patronos Puertorriqueños
Package 1120-HU.S. Income Tax Return for Homeowners Associations

Vision Payroll Submits These Forms Electronically

Vision Payroll submits Form 941, Form 944, and Form 940 electronically to the IRS for its clients and does not need paper copies of the forms.

February 28, 2011

IRS Confirms It Sent Incorrect Penalty Notices

IRS Confirms It Sent Incorrect Penalty Notices
IRS Confirms It Sent Incorrect Penalty Notices
In IMRS10-0001357, the Internal Revenue Service (IRS) confirmed that erroneous CP 276B and CP 207 notices were sent to several taxpayers.

IMRS Addresses Significant Issues Regarding IRS Policies, Practices and Issues

The Issue Management Resolution System (IMRS) was designed to capture, develop, and respond to stakeholder issues and to identify nationwide trends in the reporting, filing, and paying requirements that may indicate a need to change IRS processes or procedures.

HIRE Credit Misapplication Led To Erroneous Notices

A problem was identified in the way the 2010 first quarter HIRE credit (line 12e) was applied when computing the Failure to Deposit (FTD) penalty on 2010 second quarter Forms 941. As a result, erroneous CP276B notices were issued.

IRS Response To Incorrect Penalty Notices

The IRS response to this issue is:

Incorrect CP276B and CP207 notices were generated for Form 941 for the tax period ending [June] 30, 2010. There was a programming problem and the HIRE credit arising from the first quarter and claimed on second quarter Forms 941 was not used in the systemic FTD penalty calculation. As a result, the computer charged incorrect penalties in some cases and generated incorrect CP 276B systemic waiver notices in others. A recovery was run to reverse the incorrectly assessed FTD penalties. No corrective action is necessary for the incorrect CP 276B notices since no penalty was charged. This situation will not be considered for future determinations of whether First Time Abatement relief will be granted.

Contact Vision Payroll for Further Information

Contact Vision Payroll for further information regarding the incorrectly issued penalty notices.

February 26, 2011

IRS Releases Draft Form 941

IRS Releases Draft Form 941
IRS Releases Draft Form 941
The Internal Revenue Service (IRS) recently released a draft Form 941, Employer’s QUARTERLY Federal Tax Return. The revised Form 941 will be used for reporting information for the first quarter of 2011 and later quarters. It cannot be used to report information for 2010.

Social Security Rate Is Changed on Draft Form

Since the employee social security tax rate for 2011 is 4.2%, the rate used to calculate tax on both taxable social security wages and taxable social security tips has been changed from 12.4% to 10.4%.

New Line 5e Has Been Added

The draft form includes a new line 5e to report §3121(q) notice and demand—tax due on unreported tips. Under §3121(q), when notice and demand is made for such taxes, the remuneration is deemed to be paid on the date of the notice.

Lines 6a-6d Made Inactive

Lines 6a, 6b, 6c, and 6d have been made inactive on the draft Form 941. These lines were used to report on qualified employees and exempt wages under the HIRE Act.

Contact Vision Payroll for Further Information

Contact Vision Payroll for further information on the changes in the draft Form 941.

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 26, 2010

2010 Form W-2 Tips, Part 1, General Information

2010 Form W-2 Tips, Part 1, General Information
2010 Form W-2 Tips, Part 1, General Information
This is one in a continuing series on the 2010 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than January 31, 2011. Forms mailed on the due date are considered furnished if properly addressed. Employers unable to meet that deadline may file a request for extension of time to furnish the forms. Today we review general information regarding Form W-2.

Form W-2 Should Be Typed or Machine-Printed

Forms W-2 should be typed or machine-printed in black ink, using 12-point Courier font. Dollar signs and commas must be omitted, but decimal points and cents, even if zero, must be included. Forms W-2 must be prepared on a calendar year basis using pay dates, not work dates. Wages for work performed in 2009 and paid in 2010 are included and wages for work performed in 2010 and paid in 2011 are excluded.

Boxes a-f Contain Employee and Employer Identifying Information

Report the employee’s social security number (SSN) in box a. Employees who have applied for, but not received, an SSN should be reported with all zeroes and corrected on a Form W-2c. Enter in box b the employer’s employer identification number, not the owner’s SSN. Box c must contain the employer’s address as shown on Forms 941, 943, 944, CT-1 or Schedule H of Form 1040. Box d is an optional box for employer use to identify individual forms. Box e should report the employee’s name exactly as shown on the social security card. Suffixes such as Sr. or Jr. should only be included if on the social security card. Do not include professional and academic titles and degrees such as CPA or Ph.D. as part of the employee’s names. Names should not be changed on Form W-2 unless the employee has received a revised card from the Social Security Administration. The Address in box f should be the address where the employee receives mail. It is recommended that comma and periods not be used in delivery addresses. Foreign country names are not to be abbreviated.

Box 1, Wages, Tips, Other Compensation Is the Next Topic

The next topic in this continuing series will be Box 1, wages, tips, other compensation. Contact Vision Payroll with any questions on 2010 Form W-2.

June 14, 2010

IRS Explains How to Correct Overwithholding Errors

Filed under: News — Tags: , , , — Vision @ 1:50 pm

In a response to Representative Jeff Miller (R-FL), the Internal Revenue Service (IRS), in Information Letter 2010-0010, outlines the process to use after the close of the payroll tax year to correct errors that result in overwithholding of federal payroll taxes. The ability to correct such errors depends on when the errors are discovered and the type of tax that was overwithheld.

An employer may correct an error of overwithholding of Federal Insurance Contributions Act (FICA) tax within the statute of limitations for such taxes by using Form 941-X, Adjusted Employer’s QUARTERLY Federal Tax Return or Claim for Refund, to claim a refund or make an interest-free adjustment.

An employer can correct an overpayment of income tax withholding using either the interest-free adjustment process or the claim for refund process. “An interest-free adjustment for an overcollection of income tax withholding can only be made if the employer discovers the error and repays or reimburses the employee within the same calendar year as the payment of the wages.” Notwithstanding this rule, an overpayment due to an administrative error may be corrected after the calendar year. The claim for refund process is available only “if the employer did not actually withhold the amount from the employee.”

Further details are available in the instructions for Form 941-X.

Contact Vision Payroll immediately if you need to file Form 941-X in order to maximize available amendment options.

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