News and Notes

Several States Face FUTA Credit Reduction for 2011

Fri, 09 Dec 2011 11:51:12 -0500

Due to recent economic conditions, North Carolina, as well as many states, had to borrow money from the federal government in order to meet Unemployment Insurance benefits obligations. The state has not been able to repay the loan and as a result, there will be a reduction in the credit North Carolina employers receive toward their Federal Unemployment Tax Act (FUTA) taxes for calendar year 2011. The increased revenue associated with this reduced credit will be used by the federal government to repay the loan. North Carolina’s outstanding loan balance as of November 10, 2011 is $2,502,244,831.91.

Under the Federal Unemployment Tax Act (FUTA), employers typically pay an annual FUTA tax rate of only 0.6% because the 6.0% tax rate is offset by a federal credit of 5.4%. (The tax was 6.2% for a net tax of 0.8% previously, but the 0.2% surtax passed by Congress in 1976 finally expired June 30, 2011). However, by law, after a state has had an outstanding loan balance for two consecutive years they will face a reduction in the 5.4% credit if the loan is not paid by November 10 in the same year.

What does this mean?

North Carolina employers (along with 19 other states and the Virgin Islands) will face a credit reduction of at least 0.3%. Employers will be paying an additional $21.00 per employee retroactive back to January 1, 2011. This amount will be added to the FUTA tax calculation on the year-end federal Form 940. The tax will be included in the final tax deposit for 2011 due in January.

States losing full FUTA credit for 2011

Below is a list of states that will be subject to a FUTA credit reduction for 2011 including the amount of the reduction:

State	Credit Reduction Amount
Arkansas	0.3%
California	0.3%
Connecticut	0.3%
Florida	0.3%
Georgia	0.3%
Illinois	0.3%
Indiana	0.6%
Kentucky	0.3%
Michigan	0.9%
Minnesota	0.3%
Missouri	0.3%
Nevada	0.3%
New Jersey	0.3%
New York	0.3%
North Carolina	0.3%
Ohio	0.3%
Pennsylvania	0.3%
Rhode Island	0.3%
Virgin Islands	0.3%
Virginia	0.3%
Wisconsin	0.3%

-Source: American Payroll Association

Payroll Solutions Releases 2012 Calendar

Fri, 04 Nov 2011 10:59:43 -0400

2012 Payroll Calendars are now available.

Please take special note of Federal Banking Holidays. Please contact your payroll analyst if you have any questions concerning the calendar.

Click_here to open and print a pdf version of the calendar.

2011 Payroll Solutions Holiday Schedule

Fri, 04 Nov 2011 10:29:58 -0400

Payroll Solutions will be closed the following days during this holiday season:

November 24, 2011
November 25, 2011
December 26, 2011
January 2, 2012

Please review the schedule below to ensure the timely processing of your direct deposited payroll funds.

Paydate		Info. Reported to PRS by noon
November 23rd		November 21st
November 25th		November 22nd
November 28th		November 23rd
November 29th		November 23rd
December 27th		December 22nd
December 28th		December 23rd
January 3rd		December 29th
January 4th		December 30th

Please contact your payroll analyst if you have any questions concerning the schedule.

2012 Social Security Wage Base Announced

Fri, 04 Nov 2011 10:40:10 -0400

The Social Security Administration has announced that the 2012 social security wage base will increase for 2012. The new base will be $110,100, up from $106,800 where it has been for the past three years. As in prior years, there is no limit to the wages subject to Medicare.

The combined FICA tax rate will be 7.65% for 2012 (6.2% for social security and 1.45% for Medicare. The maximum social tax tax employees and employers will each pay in 2012 is $6,826.20. Please note that the 2011 FICA tax rate was 4.2% for employees and 6.2% for employers under the Tax Relieve Act of 2010, and that the rate is scheduled to be 6.2% for both employees and employers for 2012. However, bills currently being considered in Congress may change this.

We will keep you updated.

Source: American Payroll Association, Compliance Update - 10/19/2011

EFTPS Phishing Scam Targets Taxpayers

Mon, 11 Oct 2010 11:57:06 -0400

A new phishing scam is on the rise and is targeting well-meaning people just trying to get right with the IRS. According to McAfee, the scam targets businesses using the Electronic Federal Tax Payment System (EFTPS) to pay their taxes. This system has been in place since 1996 and was established by the U.S. Department of the Treasury to allow people to easily pay their taxes online.

The recent fraudulent format uses an email message that claims to be a rejected tax payment and directs users to a fake website for additional information. This scam follows the standard format of emailing potential victims, claiming something needs to be updated.

The scam message:
Subject:
Your EFTPS Tax Payment ID has been rejected.

Body:
Report ID: ***. Your Federal Tax Payment ID: *** has been rejected. Return Reason Code R## – The identification number used in the Company Identification Field is not valid. Please, check the information and refer to Code R## to get details about your company payment in transaction contacts section: http://www.eftps*******7.com/contacts

These types of scams can only work with your cooperation. They will try the dirtiest tricks to get you to click some random, unsolicited link in order to get your information and/or your money. If you have any suspicions whatsoever about whether an email is a scam or not, it probably is.

Most importantly, remember this bit of information: The IRS does not initiate contact with a taxpayer via email. Not a “call me”, not a “you’re overdue” and especially not a “you owe us some more money.”

Most of the important institutions in your life, like the IRS and your bank, will rarely contact you about anything important via email. Don’t blindly trust the information your email interface shows you. View the headers (“show details” or “view original” in Gmail) and look at the actual email addresses and Reply-To address.

If you’re suspicious of a link in your email, IM’s, Twitter, Facebook, or anywhere, one simple check you can do is hover over it and look at your browser’s status bar to verify where it goes. The best thing you can do is just leave it alone and find another way to contact the alleged source.

For more information on how to report these bogus emails to the Internal Revenue Service, please click here.

Source: www.blackweb20.com - 10/07/2010

2010 W-2 Forms Posted to Web Employee Portals

Fri, 04 Nov 2011 10:53:14 -0400

The 2010 Form W-2 Wage and Tax Statements have now been posted to all Web Employee portals. If your employees are unable to view their W-2 Form please contact us immediately.

Web Employee is an employee self-service package where your employees can change their address, change tax exemption information, view year-to-date information, view periodic check stubs and view W-2 information. All of this information can be printed by each employee as well.

Payroll Solutions Releases 2011 Calendar

Wed, 11 Nov 2009 14:39:45 -0500

2011 Payroll Calendars are now available.

2010 Payroll Solutions Holiday Schedule

Tue, 20 Oct 2009 14:28:04 -0400

Payroll Solutions will be closed the following days during this holiday season:

November 25, 2010
November 26, 2010
December 24, 2010
December 31, 2010

Please review the schedule below to ensure the timely processing of your direct deposited payroll funds.

Paydate		Info. Reported to PRS by noon
November 24th		November 22nd
November 26th		November 23rd
November 29th		November 24th
November 30th		November 24th
December 24th		December 22nd
December 31st		December 29th

Please contact your payroll analyst if you have any questions concerning the schedule.

Employee withholding taxes likely to increase in 2011

Fri, 24 Sep 2010 10:37:47 -0400

There are many reasons why employees are likely to see more taxes withheld from their paychecks in 2011.

Higher tax brackets. Unless Congress acts, the provision in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA, PL 107-16) that provided for lower income tax rates will no longer be in effect beginning in 2011. Income tax brackets would change as follows:

(1) The 10% bracket would disappear (the lowest tax bracket would be 15%).

(2) The size of the 15% tax bracket for joint filers and qualified surviving spouses would be 167% (rather than 200%) of the 15% tax bracket.

(3) The top four tax brackets would rise from 25%, 28%, 33%, and 35% to 28%, 31%, 36%, and 39.6%.

Making Work Pay credit. The American Recovery and Reinvestment Act of 2009 (ARRA) included a provision that provides a refundable income tax credit (the Making Work Pay credit) to individuals below a certain income tax level on their 2009 and 2010 personal income tax returns. Employees receive the credit incrementally through a reduction in the amount withheld from their paychecks. The credit expires after the 2010 tax year. Withholding tables will need to be adjusted in 2011 to take into account the fact that employees will no longer be able to claim this credit.

Advance earned income credit. This credit allowed certain low-income employees to receive an advance payment of the earned income credit in their paychecks. Their withholding was lowered to take into account the payment. The advance earned income credit has been repealed beginning with the 2011 tax year.

Supplemental wage rates. Unless Congress acts to extend this EGTRRA provision, the supplemental wage rate on compensation paid to employees in addition to their regular wages (e.g., bonuses, commissions, severance pay) will increase from 25% to 28% on supplemental wages totaling $1 million or less in the calendar year. For supplemental wage payments totalling more than $1 million in a calendar year, the rate will increase from 35% to 39.6%.

Backup withholding. Backup withholding is required on certain nonwage payments made to payees for whom an information return was filed which had either a missing or an incorrect taxpayer identification number. The backup withholding rate is currently 28%. It will increase to 31% in 2011 unless Congress acts to extend this EGTRRA provision.

Source: RIA Newstand - 9/24/2010

Hiring Incentives to Restore Employment Act (HIRE)

Thu, 01 Apr 2010 10:33:09 -0400

On March 18, 2010, President Obama signed the new Hiring Incentives to Restore Employment Act (HIRE) into law. This federal legislation creates brand-new tax breaks for hiring and retaining unemployed workers.

Employers will get a “Payroll Tax Holiday” for new hires and a potential tax credit bonus.

Normally, an employer is required to pay its share of Social Security taxes on wages earned by employees. For 2010, the portion of the tax is 6.2 percent on the first $106,800 of wages.

Under the HIRE Act, an employer is effectively excused from paying its share of the 6.2 percent tax on wages received by "qualified employees." This exemption applies to wages paid after the date of enactment through the end of 2010. The maximum value for each qualified employee is $6,621.

For example, if a qualified employee is hired in March and receives $50,000 in wages in 2010, the employer saves $3,100 (6.2 percent of $50,000) in Social Security tax.

The new law defines a "qualified employee" as someone who meets all of these criteria:

Begins work after February 3, 2010 and before January 1, 2011.
Has not been employed for more than 40 hours during the previous 60 days (ending on the start date).
Was not hired to replace another employee unless the former employee separated from employment voluntarily or for cause.
Is not related to the employer and does not own more than 50 percent of the business, either directly or indirectly.

A qualified employee may be either a full-time employee or a part-time employee. There is no minimum requirement for the hours worked. The payroll tax forgiveness does not apply to the 1.45 percent Medicare portion of payroll tax. Household employers (for example, hiring nannies) cannot claim the new tax benefit.

The exemption officially begins with wages paid in the second calendar quarter of 2010. Employers entitled to tax relief for the first quarter will be credited against their general Social Security liability for the second quarter.

In addition to the payroll tax forgiveness, an employer can claim a tax credit if it retains a qualified worker for a minimum of 52 consecutive weeks. The credit is equal to the lesser of: $1,000 or 6.2 percent of the employee's wages paid during the 52-week period. If the employee quits or is fired before the end of the one-year period, no credit is allowed.

Please click the following links for more information directly from the IRS:

New Incentives for Hiring - New tax benefits aid employers who hire and retain unemployed workers.

Questions? We Have Answers - Our Q&As will help you understand the details of the HIRE tax breaks.

The HIRE Act - The language of the Act itself contains additional information for you.

Please click the link below to open a draft of the new HIRE Employee Affidavit. This form will be permanently added to our forms page as soon as the final draft is released.

Form W-11

2009 W-2 Forms Posted to Web Employee Portals

Tue, 08 Dec 2009 09:41:36 -0500

The 2009 Form W-2 Wage and Tax Statements have now been posted to all Web Employee portals. If your employees are unable to view their W-2 Form please contact us immediately.

Social Security Wage Base to Remain the Same in 2010

Tue, 20 Oct 2009 14:27:56 -0400

The taxable wage base for Social Security taxes will not increase in 2010, marking the first time since COLA increases were implemented in 1975 that this has occurred.

Additionally, Social Security benefits levels will also remain the same for 2010.

With a $106,800 Social Security wage base, the maximum Social Security tax per employee is $6,621.60. The employer matches the employee's Social Security taxes.