Vision Payroll

Under the Hiring Incentives to Restore Employment Act (HIRE Act), employers who hire certain unemployed workers are allowed not to pay certain employment taxes. Employees are not eligible under the HIRE Act if the employee is “employed by the qualified employer to replace another employee of such employer unless such other employee separated from employment voluntarily or for cause.” Therefore, employers may not simply terminate employees and replace them with otherwise qualified individuals and qualify for the exemption. Contact Vision Payroll if you have further questions on the HIRE Act.

Under the Hiring Incentives to Restore Employment Act (HIRE Act), employers who hire certain unemployed workers are allowed not to pay certain employment taxes. Under the HIRE Act, certain related individuals as described in §51(i)(1) of the Internal Revenue Code of 1986, as amended (IRC), do not qualify as eligible workers. Therefore, most family members will not qualify under the HIRE Act based on the IRC §51(i)(1). Contact Vision Payroll if you have further questions on the HIRE Act.

This week’s question comes from Donna, an HR Director. I read how we can get a payroll tax credit for hiring unemployed workers. How do we know if an employee qualifies us for the new payroll tax credit for hiring unemployed workers? Answer: The Internal Revenue Service (IRS) has released IR-2010-033, Two New Tax Benefits Aid Employers Who Hire and Retain Unemployed Workers. In it, the IRS explains that under the HIRE Act, employers will be required to “get a statement from each eligible new hire certifying that he or she was unemployed during the 60 days before beginning work or, alternatively, worked fewer than a total of 40 hours for someone else during the 60-day period.” The IRS will provide a form that employers may use to obtain the certification from employees. Contact Vision Payroll if you have any questions on the new credits.

According to the US Department of Labor, in the week ending March 13, the advance figure for seasonally adjusted initial claims was 457,000, a decrease of 5,000 from the previous week’s unrevised figure of 462,000. The 4-week moving average was 471,250, a decrease of 4,250 from the previous week’s unrevised average of 475,500.

The advance seasonally adjusted insured unemployment rate was 3.5% for the week ending March 6, unchanged from the prior week’s unrevised rate of 3.5%.

The advance number for seasonally adjusted insured unemployment during the week ending March 6 was 4,579,000, an increase of 12,000 from the preceding week’s revised level of 4,567,000. The 4-week moving average was 4,575,250, a decrease of 8,000 from the preceding week’s revised average of 4,583,250.

The fiscal year-to-date average of seasonally adjusted weekly insured unemployment, which corresponds to the appropriated AWIU trigger, was 5.166 million.

HR 2847, An Act making appropriations for the Departments of Commerce and Justice, and Science, and Related Agencies for the fiscal year ending September 30, 2010, and for other purposes, was passed by Congress and sent to President Barack Obama who indicated he will sign it March 18, 2010. The law, also called the Hiring Incentives to Restore Employment Act or HIRE Act, allows employers who hire employees after February 3, 2010 (and before January 1, 2011) who were unemployed for sixty days in the period from February 3, 2010 to December 31, 2010 to not pay the employer portion of the social security tax (6.2% of taxable earnings). Employers must still collect and pay the employee portion of the social security tax. Additionally, the employer and employee portion of the Medicare tax must still be collected and paid for all employees. The Internal Revenue Service (IRS) is not planning to change the Form 941 for the first quarter 2010 (the three months ended March 31, 2010). Credits for taxes paid in this quarter will be available on the Form 941 filed for the second quarter 2010. The credit amount would be treated as an additional payment for the second quarter 2010. Employers who employ such qualifying individuals for a fifty-two week period would also be eligible for a $1,000 credit against income taxes. Contact Vision Payroll if you have any questions on the new law.

The Oregon Department of Revenue has completed its analysis of the changes required by the passage of Measure 66. For employees with wages less than $125,000, the Oregon Withholding Tax Tables dated January 1, 2007 remain in effect. For employees with wages of $125,000 or more, payroll withholding calculators have been created to modify the withholding calculation. Alternatively, employers may request the employees modify their withholding by filing a revised Form W-4 after completing the Oregon personal allowances worksheet (W-4). New tables will be available for the 2011 tax year. Vision Payroll has modified its withholding calculations for Oregon employees and no further action is required. Contact Vision Payroll if you have further questions.

South Dakota Governor Mike Rounds recently signed SB 186, which increases the taxable wage base from $10,000 in 2010, to $11,000 in 2011, $12,000 in 2012, $13,000 in 2013, $14,000 in 2014, and $15,000 in 2015. The surcharge was reduced from 1.5% to 1.0% in 2010 and to 0.75% in 2011. The maximum rate for 2010 was increased, however, from 8.5% to 9.5%. Contact Vision Payroll if you have any questions on the South Dakota unemployment tax law changes.

Governor Linda Lingle signed into law HB 2169 that lowers the taxable wage base for 2010 from $38,800 to $34,900 or 90% of the average annual wage for 2010 and 2011. The new law also sets the rate schedule to Schedule D for 2010 and Schedule F for 2011. Vision Payroll has updated its tax table calculation for Hawai’i employers and will adjust tax liabilities on the next live payroll for all Hawai’i employers. Contact Vision Payroll if you have any questions on the Hawai’i wage base and rate changes or visit our Unemployment Taxable Wage Base page.

Since Daylight Saving Time begins in most parts of the country at 2 am, Sunday, March 14, 2010, many workers on a third shift will only work seven hours. At 2 am on that day, clocks are turned ahead to 3 am. The Fair Labor Standards Act does not require employers to pay employees for the hour not worked. Contact Vision Payroll if you have any further questions on the switch to Daylight Saving Time.

This week’s question comes from James, a company controller. We have employees who are eligible for the COBRA subsidy credit. We receive a credit on Form 941 for the subsidy we provide employees. What do we need to provide Vision Payroll to get the COBRA subsidy credit? Answer: The COBRA subsidy credit has been extended to include employees terminated through March 31, 2010. The credit is generally 65% of the total premium, but Notice 2009-27 provided further details on the calculation of the premium reduction. Simply provide Vision Payroll the amount of the employer subsidy eligible for the credit and Vision Payroll will reduce the federal tax deposit due on Form 941.