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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.

September 30, 2011

Question of the Week: What Are the IRS and DOL Doing About Workers Who Receive 1099s?

IRS Commissioner Douglas H. Shulman
IRS Commissioner Douglas H. Shulman
This week’s question comes from Steve, a small business owner.

Steve asks:

I’ve read about the Voluntary Classification Settlement Program (VCSP) and its application process with the Internal Revenue Service (IRS). What are the IRS and Department of Labor (DOL) doing about workers who receive 1099s?

Answer: The IRS and DOL are entering into agreements that include the IRS and DOL as well as several states to share information and coordinate enforcement of current laws and regulations.

Memoranda Signed at Washington Ceremony

Secretary of Labor Hilda L. Solis recently hosted a ceremony at DOL headquarters in Washington to sign a memorandum of understanding with the IRS that will improve departmental efforts to end the business practice of misclassifying employees in order to avoid providing employment protections. In addition, labor commissioners and other agency leaders representing seven states signed memoranda of understanding with the department’s Wage and Hour Division (WHD) and, in some cases, its Employee Benefits Security Administration, Occupational Safety and Health Administration, Office of Federal Contract Compliance Programs and Office of the Solicitor. The signatory states are Connecticut, Maryland, Massachusetts, Minnesota, Missouri, Utah and Washington. Secretary Solis also announced agreements for the WHD to enter into memoranda of understanding with the state labor agencies of Hawaii, Illinois and Montana, as well as with New York’s attorney general.

DOL and IRS Will Share Information with Participating States

The memoranda of understanding will enable the DOL to share information and coordinate law enforcement with the IRS and participating states in order to level the playing field for law-abiding employers and ensure that employees receive the protections to which they are entitled under federal and state law.

Secretary Solis: We’re Standing United to End the Practice of Misclassifying Employees

“We’re here today to sign a series of agreements that together send a coordinated message: We’re standing united to end the practice of misclassifying employees,” said Secretary Solis. “We are taking important steps toward making sure that the American dream is still available for all employees and responsible employers alike.”

Commissioner Shulman: We Will Work Together More Efficiently to Address Worker Misclassification Issues

“This agreement takes the partnership between the IRS and DOL to a new level,” said IRS Commissioner Doug Shulman. “In this new phase of our relationship, we will work together more efficiently to address worker misclassification issues, and better serve the needs of small businesses and employees.”

Misclassification Can Create Economic Pressure for Law-Abiding Business Owners

Business models that attempt to change, obscure or eliminate the employment relationship are not inherently illegal, unless they are used to evade compliance with federal labor laws — for example, if an employee is misclassified as an independent contractor and subsequently denied rights and benefits to which he or she is entitled under the law. In addition, misclassification can create economic pressure for law-abiding business owners.

Memoranda Arose as Part of the Misclassification Initiative

These memoranda of understanding arose as part of the department’s Misclassification Initiative, which was launched under the auspices of Vice President Biden’s Middle Class Task Force with the goal of preventing, detecting and remedying employee misclassification.

Contact Vision Payroll Today

Contact Vision Payroll if you have further questions on the memoranda of understanding.

September 19, 2011

NY Taxpayers Receive Extension of Time to File Returns and Pay Taxes

Filed under: News — Tags: , , , , — Vision @ 10:35 pm
NY Taxpayers Receive Extension of Time to File Returns and Pay Taxes
NY Taxpayers Receive Extension of Time to File Returns and Pay Taxes
Due to the damage caused by Tropical Storm Lee in New York beginning on September 7, 2011, President Barack Obama declared the following counties a federal disaster area: Broome, Chenango, Delaware, Otsego and Tioga. Individuals who reside or have a business in these counties may qualify for tax relief.

Declaration Leads to Extension of Payroll Tax and Other Deadlines

Therefore, the Internal Revenue Service (IRS) announced recently that it will waive failure to deposit penalties for employment and excise taxes due after September 6, 2011 and before September 23, 2011 as long as the deposits are made by September 22, 2011. In addition, affected taxpayers have until October 31, 2011 to file most tax returns.

Vision Payroll Is Here to Help Affected Taxpayers with Payroll Tax Issues

Contact Vision Payroll if you were affected by Tropical Storm Lee and need further information on the relief provided by the IRS.

September 7, 2011

Tip of the Week: IRS Provides Tax Relief to Victims of Hurricane Irene

The Internal Revenue Service (IRS) is providing tax relief to individual and business taxpayers impacted by Hurricane Irene.

The IRS has announced that certain taxpayers in Connecticut, Massachusetts, New Jersey, New York, North Carolina, Puerto Rico and Vermont will receive tax relief, and other locations are expected to be added in coming days following additional damage assessments by the Federal Emergency Management Agency (FEMA).

The tax relief postpones certain tax filing and payment deadlines to Oct. 31, 2011. It includes corporations and businesses that previously obtained an extension until Sept. 15, 2011, to file their 2010 returns and individuals and businesses that received a similar extension until Oct. 17. It also includes the estimated tax payment for the third quarter of 2011, which would normally be due Sept. 15.

Hurricane Irene, Courtesy of NASA/NOAA GOES Project
Hurricane Irene, Courtesy of NASA/NOAA GOES Project

The tax relief is part of a coordinated federal response to the damage caused by the hurricane and is based on local damage assessments by FEMA. For information on disaster recovery, individuals should visit disasterassistance.gov.

Tax Relief Available So Far

Filing and payment relief is currently available to taxpayers in federal disaster areas declared in Connecticut, Massachusetts, New Jersey, New York, North Carolina, Puerto Rico and Vermont. The IRS expects to announce tax relief for taxpayers in other areas as damage assessments continue. The IRS encourages taxpayers and tax practitioners to monitor Tax Relief in Disaster Situations for updates.

So far, IRS filing and payment relief applies to the following counties and municipalities:

  • Connecticut: Fairfield, Hartford, Litchfield, Middlesex, New Haven, New London, Tolland and Windham;
  • Massachusetts: Berkshire and Franklin.
  • New Jersey: Atlantic, Bergen, Burlington, Camden, Cape May, Cumberland, Essex, Gloucester, Hudson, Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean, Passaic, Salem, Somerset, Sussex, Union and Warren.
  • New York: Albany, Clinton, Delaware, Dutchess, Essex, Greene, Montgomery, Nassau, Orange, Otsego, Rensselaer, Rockland, Saratoga, Schenectady, Schoharie, Sullivan, Suffolk, Ulster, Warren and Westchester.
  • North Carolina: Beaufort, Bertie, Brunswick, Camden, Carteret, Chowan, Craven, Currituck, Dare, Duplin, Edgecombe, Gates, Greene, Halifax, Hertford, Hyde, Johnston, Jones, Lenoir, Martin, Nash, New Hanover, Northampton, Onslow, Pamlico, Pasquotank, Perquimans, Pitt, Tyrrell, Vance, Warren, Washington and Wilson;.
  • Puerto Rico: Arroyo, Aguas Buenas, Caguas, Canovanas, Carolina, Cayey, Cidra, Coamo, Comerio, Humacao, Jayuya, Juncos, Loiza, Luquillo, Orocovis, Patillas, Ponce and San Juan.
  • Vermont: Addison, Bennington, Caledonia, Chittenden, Orange, Rutland, Washington and Windsor.

Vision Payroll is Here to Help Affected Taxpayers with Payroll Tax Issues

Contact Vision Payroll if you were affected by Hurricane Irene and need further information on the relief provided by the IRS.

September 4, 2011

NY Taxpayers Affected by Hurricane Irene Receive Extension of Time to File Returns and Pay Taxes

Filed under: News — Tags: , , , — Vision @ 12:14 pm
Hurricane Irene, Courtesy of NASA/NOAA GOES Project
Hurricane Irene, Courtesy of NASA/NOAA GOES Project
Due to the damage caused by Hurricane Irene in New York beginning on August 26, 2011, President Barack Obama declared the following counties a federal disaster area: Albany, Delaware, Dutchess, Essex, Greene, Nassau, Rensselaer, Schenectady, Schoharie, Ulster and Westchester. Individuals who reside or have a business in these counties may qualify for tax relief.

Declaration Leads to Extension of Payroll Tax and Other Deadlines

Therefore, the Internal Revenue Service (IRS) announced recently that it will waive failure to deposit penalties for employment and excise taxes due after August 25, 2011 and before September 13, 2011 as long as the deposits are made by September 12, 2011. In addition, affected taxpayers have until October 31, 2011 to file most tax returns.

Vision Payroll is Here to Help Affected Taxpayers with Payroll Tax Issues

Contact Vision Payroll if you were affected by Hurricane Irene and need further information on the relief provided by the IRS.

August 2, 2011

New York Issues Guidance on Withholding from Same-Sex Married Employees

NY Governor Andrew Cuomo
NY Governor Andrew Cuomo
Due to the recent enactment in New York of the Marriage Equality Act, The New York State Department of Taxation and Finance has updated information for same-sex married employees and their employers.

Employers Should Not Withhold on Certain Benefits

New York employers of same-sex married employees should institute the following changes:

  • Don’t withhold New York tax on certain benefits provided to a same-sex married employee. You don’t need to withhold tax for New York State, New York City, or Yonkers income tax purposes on the value of certain benefits (e.g., domestic partner health benefit), even though it’s subject to federal withholding. This applies if the employee’s federal taxable wages subject to withholding include the value of the benefits, and the value of these benefits wouldn’t be included in taxable wages if provided to a different-sex married spouse.
  • When reporting the annual wage totals on Form NYS-45, Quarterly Combined Withholding, Wage Reporting, and Unemployment Insurance Return, Part C, column d; report the federal wages minus any amount of benefits discussed above that you don’t withhold on for New York purposes (plus any amount of any taxable 414(h) retirement contributions and any IRC 125 amounts from a New York City flexible benefits program for governmental employees).
  • Continue to use the rules described in the NYS-50, Employer’s Guide to Unemployment Insurance, Wage Reporting, and Withholding Tax for reporting State and local wages on federal Form W-2, Wage and Tax Statement.

Same-Sex Employees Should Consider Filing a New Form IT-2104

Same-sex employees should consider filing a new Form IT-2104, Employee’s Withholding Allowance Certificate, if they will be changing their filing status on their 2011 New York income tax return. They should also provide proof of a legal marriage to their employer so that the employer can stop withholding New York tax on the value of benefits subject to federal withholding that wouldn’t be subject to New York withholding, (e.g., domestic partner health benefit).

Contact Vision Payroll Today

Contact Vision Payroll if you have further questions on the changes in New York to withholding on same-sex married employees.

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.

July 19, 2011

New York Assesses Interest Assessment Surcharge for 2011

Filed under: News — Tags: , , , — Vision @ 12:43 pm
New York Assesses Interest Assessment Surcharge for 2011
New York Assesses Interest Assessment Surcharge for 2011
The state of New York has announced the assessment of an Interest Assessment Surcharge (IAS) for 2011. The surcharge will be used to pay approximately $95 million in interest on loans to the federal government by September 30, 2011.

New York Must Pay Interest on More Than $3 Billion in Loans

Since 2009, New York State has borrowed over $3 billion from the federal Unemployment Insurance Trust Fund. New York is going to charge employers the interest on these loans and if Congress later decides to forgive the interest, New York plans to credit the employer’s account or refund the money paid.

IAS is 0.25% for 2011

The IAS rate is 0.25% for 2011. Each employer’s surcharge amount is determined by multiplying the total taxable wages in the most recently completed payroll year (October 1, 2009 through September 30, 2010) by the IAS rate. Based on a taxable wage base of $8,500, the maximum surcharge per employee should be $21.25.

Contact Vision Payroll Today

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

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