Vision Payroll

The Internal Revenue Service (IRS) has released Notice 2009-27, Premium assistance for COBRA benefits. Pursuant to the American Recovery and Reinvestment Act of 2009 or ARRA, certain involuntarily terminated employees are eligible for employer-provided subsidies to help pay for their Consolidated Omnibus Budget Reconciliation Act (COBRA) continuation coverage. Employers may then claim a payroll tax credit on their Form 941 to be reimbursed for the assistance provided.

In recently issued guidance, the IRS reviewed the impact of amendments to state law. COBRA premium subsidies would apply to coverage elected during a special election period under amended state laws. This is true even if the state law allows coverage to begin later than the first coverage period beginning after February 16, 2009. If the election to begin COBRA coverage as of a later date is made, the nine-month period for premium subsidy would still begin effective with the first period of coverage after February 16, 2009. In addition, depending on state law, a delay in beginning coverage could affect the preexisting condition exclusion. Contact Vision Payroll if you have any questions on the COBRA premium reduction credit.

Saturday, July 4, 2009 will be Independence Day, a federal holiday. Due to bank processing deadlines, the offices of Vision Payroll will be required to transmit ACH files by 2 pm EDT on Friday, July 3, 2009. Payroll received after this time will be processed on the next business day. For all other dates and times, standard processing deadlines will apply.

The next federal holiday will be Monday, September 7, 2009, Labor Day. Contact Vision Payroll as soon as possible to make changes to or for questions on your processing schedule.

The Internal Revenue Service (IRS) has released Notice 2009-27, Premium assistance for COBRA benefits. Pursuant to the American Recovery and Reinvestment Act of 2009 or ARRA, certain involuntarily terminated employees are eligible for employer-provided subsidies to help pay for their Consolidated Omnibus Budget Reconciliation Act (COBRA) continuation coverage. Employers may then claim a payroll tax credit on their Form 941 to be reimbursed for the assistance provided.

In recently issued guidance, the IRS discussed individuals eligible for the extended federal (or FEHBP) COBRA election period. Such individuals must be offered coverage “effective with the first period of coverage beginning” after February 16, 2009. The employer or health plan may allow coverage to begin as of a later date. If the election to begin COBRA coverage as of a later date is made, the nine-month period for premium subsidy would still begin effective with the first period of coverage after February 16, 2009. Additionally, any period between the first period of coverage beginning after February 16, 2009 and the effective date of coverage “is not disregarded for purposes of the rules limiting preexisting condition exclusions.” Periods between the involuntary termination and the first period of coverage beginning after February 16, 2009 are disregarded for the preexisting condition exclusions. Contact Vision Payroll if you have any questions on the COBRA premium reduction credit.

The Internal Revenue Service (IRS) has released Notice 2009-27, Premium assistance for COBRA benefits. Pursuant to the American Recovery and Reinvestment Act of 2009 or ARRA, certain involuntarily terminated employees are eligible for employer-provided subsidies to help pay for their Consolidated Omnibus Budget Reconciliation Act (COBRA) continuation coverage. Employers may then claim a payroll tax credit on their Form 941 to be reimbursed for the assistance provided.

In recently issued guidance, the IRS confirmed that assistance-eligible individuals (AEIs) do not lose their eligibility for premium subsidy simply because they are eligible for TRICARE health coverage. TRICARE is the health care program serving active duty service members, National Guard and Reserve members, retirees, their families, survivors and certain former spouses worldwide. Contact Vision Payroll if you have any questions on the COBRA premium reduction credit.

This week’s question comes from Debbie, a sole proprietor. I read that children under age 18 are not subject to federal employment taxes. My children are now in college and work part-time year-round. I know they are now subject to FICA taxes. Do FUTA taxes apply to children of sole proprietor who are age 18 or older? Answer: Sole proprietors who hire their own children under age 21 are not required to pay Federal Unemployment Tax Act (FUTA) tax on those children’s wages. Once the children reach age 21, the exemption no longer applies. Contact Vision Payroll if you have any questions on payroll taxes on children.

According to the US Department of Labor, in the week ending June 20, the advance figure for seasonally adjusted initial claims was 627,000, an increase of 15,000 from the previous week’s revised figure of 612,000. The 4-week moving average was 617,250, an increase of 500 from the previous week’s revised average of 616,750.

The advance seasonally adjusted insured unemployment rate was 5.0% for the week ending June 13, unchanged from the prior week’s unrevised rate of 5.0%.

The advance number for seasonally adjusted insured unemployment during the week ending June 13 was 6,738,000, an increase of 29,000 from the preceding week’s revised level of 6,709,000. The 4-week moving average was 6,759,750, a decrease of 3,250 from the preceding week’s revised average of 6,763,000.

The fiscal year-to-date average for seasonally adjusted insured unemployment for all programs is 5.333 million.

Pursuant to the American Recovery and Reinvestment Act of 2009 or ARRA, certain involuntarily terminated employees are eligible for employer-provided subsidies to help pay for their Consolidated Omnibus Budget Reconciliation Act (COBRA) continuation coverage. Employers may then claim a payroll tax credit on their Form 941, Employer’s QUARTERLY Federal Tax Return, to be reimbursed for the assistance provided.

As the end of the second quarter nears, employers who are expecting to apply for a refund on their Form 941 should ensure that all amounts eligible for the credit have been reported to Vision Payroll so that we may reflect those amounts on the Form 941. Amounts reported after the Form 941 has been filed will need to be corrected through the use of Form 941-X, Adjusted Employer’s QUARTERLY Federal Tax Return or Claim for Refund. Employers should also ensure that all required documentation is maintained.

Contact Vision Payroll if you have any question on the premium reduction credit.

In the recently released Chief Counsel Advice (CCA) 200923029, the Internal Revenue Service ruled that discounts provided to an employer’s employees who purchase or lease property from a company that formerly owned the employer are taxable as fringe benefits based on the amount of the discount. Such discounts are also taxable for FICA purposes. FICA is also known as OASDI or social security and Medicare.

Qualified employee discounts are excludible from income under §132 of the Internal Revenue Code of 1986 (IRC). Since “the discounted property was not offered for sale to customers by the same employer for which the employees receiving the discount performed the services”, the discounts were not “qualified employee discounts” under IRC §132. These amounts are to be reported on Form W-2, even for former employees. They should not be reported on Form 1099.

Since the discount was offered as a percentage off the retail price, the discount may be valued for fringe benefits purposes at the amount of the discount.

Contact Vision Payroll if you have any questions on taxation of fringe benefits.

The Internal Revenue Service (IRS) has released Notice 2009-27, Premium assistance for COBRA benefits. Pursuant to the American Recovery and Reinvestment Act of 2009 or ARRA, certain involuntarily terminated employees are eligible for employer-provided subsidies to help pay for their Consolidated Omnibus Budget Reconciliation Act (COBRA) continuation coverage. Employers may then claim a payroll tax credit on their Form 941 to be reimbursed for the assistance provided.

In recently issued guidance, the IRS confirmed that members of military Reserve units and National Guard are considered involuntarily terminated if they are called to active duty. This is true whether the employer treats it as a termination of employment or a leave of absence. Contact Vision Payroll if you have any questions on the COBRA premium reduction credit.

Due to flooding and ice jams in Alaska on April 28, 2009, President Barack Obama declared the following regional educational attendance areas a federal disaster area: Alaska Gateway, Kuspuk, Yukon Flats and Yukon-Koyukuk. Therefore, the Internal Revenue Service (IRS) announced recently that it will waive failure to deposit penalties for employment and excise taxes due after April 27, 2009 and before May 14, 2009 as long as the deposits were made by May 13, 2009. Also, affected taxpayers will have until June 29, 2009 to file most tax returns. Contact Vision Payroll if you were affected by the flooding and ice jams and need further information on the relief provided by the IRS.