Vision Payroll

In IR-2010-092, the Internal Revenue Service (IRS) recently announced proposed regulations (REG 153340-09) that eliminate the ability for taxpayers to deposit taxes using paper coupons. Additionally, businesses with a quarterly Federal tax liability of more than $2,500 would be required to pay taxes electronically.

Paper Coupons Eliminated Starting in 2011

Since the Treasury Department will no longer maintain the paper coupon system after December 31, 2010, the proposed regulations eliminate rules related to that system. Taxpayers who have a tax liability of less than $2,500 in a quarter would be able to pay the amount with the return. All other taxpayers will be required to pay electronically.

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As an authorized batch filer using the EFTPS system, Vision Payroll can transmit electronic tax payments in batches for multiple taxpayers. This is the most efficient method to transmit payments to the IRS. Electronic payments have a significantly lower error rate than paper coupons and therefore reduce correspondence from the IRS that attempts to resolve those errors.

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This week’s question comes from Sylvia, a payroll manager. I thought I heard that the social security wage base would remain the same in 2011 as it was in 2010, but I can’t find anything official. Has the 2011 social security wage base been announced? Answer: Although the official announcement has not been made that for 2011 there will be no increase in the social security wage base, The 2010 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds has been released. In it, the Board of Trustees estimates that the 2011 social security wage base will remain unchanged at $106,800. The report includes the information about financial operations, legislative changes, and actuarial assumptions.

Second Straight Year with No Increase in Social Security Wage Base

If the prediction holds true, 2011 would be the third straight year that the wage base would be $106,800 and the maximum social security withholding would be $6,621.60. At this time, an increase in the wage base and maximum withholding is projected for 2012.

Social Security Wage Base Projected to Increase Over 40% by 2019

The Board of Trustees projects annual increases through 2019. Currently, the Board of Trustees estimates that the social security wage base will increase to $153,600 for the year 2019.

Vision Payroll Expects Official Announcement in October

When the Social Security Administration (SSA) makes the official announcement, most likely in October, Vision Payroll will provide updated amounts for 2011. Visit our Important Facts and Figures page for more details.

According to the US Department of Labor, in the week ending August 14, the advance figure for seasonally adjusted initial claims was 500,000, an increase of 12,000 from the previous week’s revised figure of 488,000. The 4-week moving average was 482,500, an increase of 8,000 from the previous week’s revised average of 474,500.

The advance seasonally adjusted insured unemployment rate was 3.5% for the week ending August 7, unchanged from the prior week’s unrevised rate of 3.5%.

The advance number for seasonally adjusted insured unemployment during the week ending August 7 was 4,478,000, a decrease of 13,000 from the preceding week’s revised level of 4,491,000. The 4-week moving average was 4,526,750, a decrease of 1,500 from the preceding week’s revised average of 4,528,250.

The fiscal year-to-date average of seasonally adjusted weekly insured unemployment, which corresponds to the appropriated AWIU trigger, was 5.010 million.

The issue of an employee’s privacy rights and an employer’s workplace monitoring of electronic communications have gained the attention of the US Supreme Court and recently led to a key decision that favors employers.

In City of Ontario, et al. v. Quon, et al., 560 US ___ (2010), an employee (Quon) and others sued their employer (City of Ontario) arguing that the City of Ontario “violated their Fourth Amendment rights and the federal Stored Communications Act (SCA) by obtaining and reviewing the transcript of Quon’s pager messages.” The US Supreme Court ruled that since “the search of Quon’s text messages was reasonable, [the City of Ontario] did not violate [Quon’s and his co-workers’] Fourth Amendment rights, and the Ninth Circuit erred by concluding otherwise.”

Employers may wonder about their rights and responsibilities when monitoring an employee’s electronic communications. What types of searches are allowable? Is notice to employees required in the employee handbook or elsewhere? How do changes in technology affect these rights and responsibilities? What is the impact of state law on employee texting and workplace privacy?

To learn more about, be sure to listen to Employee Texting and Workplace Privacy in this month’s HRCast, a recording provided by our team of HR Pros and available exclusively on MyHRSupportCenter.

Visit MyHRSupportCenter regularly, not only for our HRCasts, but also to get late-breaking compliance alerts, best practices to implement, and HR tools to use every day. If you haven’t yet signed up and would like a free trial of MyHRSupportCenter, contact Vision Payroll today.

Under the Hiring Incentives to Restore Employment Act (HIRE Act), employers who hire certain unemployed workers are exempt from certain employment taxes. In order to qualify under the HIRE Act, the wages must be paid by a qualified employer “with respect to employment” in the period beginning March 19, 2010 and ending December 31, 2010. The Internal Revenue Service (IRS) has provided employers further information on the HIRE Act.

Under the HIRE Act, employees who are hired to replace other employees are generally not eligible to be qualified employees. One exception to this rule is for employees hired to replace other employees who were terminated due to gross misconduct. If they otherwise meet the qualification standards, such employees are qualified employees under the HIRE Act.

Employers should review employees who were hired to replace employees who were terminated due to gross misconduct to see if they otherwise qualify and are therefore eligible under the HIRE Act.

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 exempt from certain employment taxes. In order to qualify under the HIRE Act, the wages must be paid by a qualified employer “with respect to employment” in the period beginning March 19, 2010 and ending December 31, 2010. The Internal Revenue Service (IRS) has provided employers further information on the HIRE Act.

Under the HIRE Act, employees who are hired to replace other employees are generally not eligible to be qualified employees. One exception to this rule is for employees hired to replace other employees who terminated employment voluntarily. If they otherwise meet the qualification standards, such employees are qualified employees under the HIRE Act.

Employers should review employees who were hired to replace employees who terminated voluntarily to see if they otherwise qualify and are therefore eligible under the HIRE Act.

Contact Vision Payroll if you have further questions on the HIRE Act.

Due to the damage caused by the severe storms, flooding and tornadoes in Iowa on June 1, 2010, President Barack Obama declared the following counties a federal disaster area: Black Hawk, Cherokee, Clayton, Decatur, Delaware, Dubuque, Fayette, Franklin, Hamilton, Howard, Humboldt, Ida, Jackson, Jasper, Jones, Kossuth, Lee, Lucas, Lyon, Mahaska, Marion, O’Brien, Osceola, Polk, Ringgold, Sioux, Story, Taylor, Union, Warren, Webster and Wright. Therefore, the Internal Revenue Service (IRS) announced recently that it will waive failure to deposit penalties for employment and excise taxes due after May 31, 2010 and before June 17, 2010 as long as the deposits were made by June 16, 2010. In addition, affected taxpayers had until August 2, 2010 to file most tax returns. Contact Vision Payroll if you were affected by the severe storms, flooding and tornadoes and need further information on the relief provided by the IRS.

Under the Hiring Incentives to Restore Employment Act (HIRE Act), employers who hire certain unemployed workers are exempt from certain employment taxes. In order to qualify under the HIRE Act, the wages must be paid by a qualified employer “with respect to employment” in the period beginning March 19, 2010 and ending December 31, 2010. The Internal Revenue Service (IRS) has provided employers further information on the HIRE Act.

Under the HIRE Act, employers are required “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.” According to the IRS, work performed as self-employed individual does not count toward the forty hours or less that an employee must have worked in the sixty day period in order to be a qualified individual.

Employers should review employees who may have been disqualified under the mistaken belief that work performed as a self-employed individual counted toward the forty hours test.

Contact Vision Payroll if you have further questions on the HIRE Act.

This week’s question comes from Bonnie, a business owner. We tested our multi-state employees for unemployment purposes based on Localization of Services, Base of Operations, and Place of Direction or Control. For some employees we were able to determine the appropriate state, but for some we weren’t. Now we need to test based on Place of Residence. What is Place of Residence? Answer: The general rule for employees who work in more than one state is that employees should be covered by only one state to prevent employers from paying tax in two or more states for the same employee. To determine which state, employers should look at four factors, in the following order:

1. Localization of Services
2. Base of Operations
3. Place of Direction or Control
4. Place of Residence

The employee is covered by the state under which that employee first qualifies using these factors. For example, if an employee is determined to be covered by a state under the Localization of Services test, the results of the remaining tests are irrelevant. Only if a determination cannot be made under the Localization of Services test does the employer consider the Base of Operations.

For the Place of Residence test, determine if the employee performs any service in the state in which the employee resides. If the employee performs some services in the state where the employee resides, that state is the state where the employee will be covered.

Contact Vision Payroll if you have further questions.

According to the US Department of Labor, in the week ending August 7, the advance figure for seasonally adjusted initial claims was 484,000, an increase of 2,000 from the previous week’s revised figure of 482,000. The 4-week moving average was 473,500, an increase of 14,250 from the previous week’s revised average of 459,250.

The advance seasonally adjusted insured unemployment rate was 3.5% for the week ending July 31, a decrease of 0.1 percentage points from the prior week’s unrevised rate of 3.6%.

The advance number for seasonally adjusted insured unemployment during the week ending July 31 was 4,452,000, a decrease of 118,000 from the preceding week’s revised level of 4,570,000. The 4-week moving average was 4,518,500, a decrease of 64,500 from the preceding week’s revised average of 4,583,000.

The fiscal year-to-date average of seasonally adjusted weekly insured unemployment, which corresponds to the appropriated AWIU trigger, was 5.018 million.