Vision Payroll

In IMRS10-0001357, the Internal Revenue Service (IRS) confirmed that erroneous CP 276B and CP 207 notices were sent to several taxpayers.

IMRS Addresses Significant Issues Regarding IRS Policies, Practices and Issues

The Issue Management Resolution System (IMRS) was designed to capture, develop, and respond to stakeholder issues and to identify nationwide trends in the reporting, filing, and paying requirements that may indicate a need to change IRS processes or procedures.

HIRE Credit Misapplication Led To Erroneous Notices

A problem was identified in the way the 2010 first quarter HIRE credit (line 12e) was applied when computing the Failure to Deposit (FTD) penalty on 2010 second quarter Forms 941. As a result, erroneous CP276B notices were issued.

IRS Response To Incorrect Penalty Notices

The IRS response to this issue is:

Incorrect CP276B and CP207 notices were generated for Form 941 for the tax period ending [June] 30, 2010. There was a programming problem and the HIRE credit arising from the first quarter and claimed on second quarter Forms 941 was not used in the systemic FTD penalty calculation. As a result, the computer charged incorrect penalties in some cases and generated incorrect CP 276B systemic waiver notices in others. A recovery was run to reverse the incorrectly assessed FTD penalties. No corrective action is necessary for the incorrect CP 276B notices since no penalty was charged. This situation will not be considered for future determinations of whether First Time Abatement relief will be granted.

Contact Vision Payroll for Further Information

Contact Vision Payroll for further information regarding the incorrectly issued penalty notices.

In Announcement 2011-14, the Internal Revenue Service (IRS) “has concluded that breast pumps and supplies that assist lactation are medical care under § 213(d) of the Internal Revenue Code because, like obstetric care, they are for the purpose of affecting a structure or function of the body of the lactating woman.” Therefore, assuming all other requirements are met, these expenses qualify as deductible medical expenses.

Reimbursement Allowed Under Flexible Spending Arrangements

Since these amounts qualify as deductible medical expenses, reimbursements of “these expenses under flexible spending arrangements [FSAs], Archer medical savings accounts, health reimbursement arrangements, or health savings accounts are not income to the taxpayer.”

Publication 502 to Be Revised

The IRS will revise Publication 502, Medical and Dental Expenses, to include this information

Contact Vision Payroll for Further Information

Contact Vision Payroll if you have any questions on Announcement 2011-14.

The Internal Revenue Service (IRS) recently released a draft Form 941, Employer’s QUARTERLY Federal Tax Return. The revised Form 941 will be used for reporting information for the first quarter of 2011 and later quarters. It cannot be used to report information for 2010.

Social Security Rate Is Changed on Draft Form

Since the employee social security tax rate for 2011 is 4.2%, the rate used to calculate tax on both taxable social security wages and taxable social security tips has been changed from 12.4% to 10.4%.

New Line 5e Has Been Added

The draft form includes a new line 5e to report §3121(q) notice and demand—tax due on unreported tips. Under §3121(q), when notice and demand is made for such taxes, the remuneration is deemed to be paid on the date of the notice.

Lines 6a-6d Made Inactive

Lines 6a, 6b, 6c, and 6d have been made inactive on the draft Form 941. These lines were used to report on qualified employees and exempt wages under the HIRE Act.

Contact Vision Payroll for Further Information

Contact Vision Payroll for further information on the changes in the draft Form 941.

This week’s question comes from Trevor, a company president. Some of our employees use our company aircraft for personal purposes. We need to value this and include it income for those employees. What are the updated Standard Industry Fare Level Rates? Answer: The United States Department of Transportation (DOT) recently released updated Standard Industry Fare Level (SIFL) rates, which are used to value employee personal use of company aircraft.

Revised Rates Are Effective January 1, 2011 To June 30, 2011

The revised SIFL rates are 22.37¢ per mile for 500 or fewer miles traveled, 17.06¢ per mile for greater than 500 miles traveled and up to 1,500 miles traveled, and 16.40¢ per mile for greater than 1,500 miles traveled. The terminal charge is $40.90. These rates apply to the period from January 1, 2011 to June 30, 2011.

Contact Vision Payroll for Updated SIFL Rates

Contact Vision Payroll if you have any questions on SIFL changes.

According to the US Department of Labor, in the week ending February 19, the advance figure for seasonally adjusted initial claims was 391,000, a decrease of 22,000 from the previous week’s revised figure of 413,000. The 4-week moving average was 402,000, a decrease of 16,500 from the previous week’s revised average of 418,500.

Advance Seasonally Adjusted Insured Unemployment Rate Decreases

The advance seasonally adjusted insured unemployment rate was 3.0% for the week ending February 12, a decrease of 0.1 percentage points from the prior week’s unrevised rate of 3.1%.

Advance Seasonally Adjusted Insured Unemployment Decreases

The advance number for seasonally adjusted insured unemployment during the week ending February12 was 3,790,000, a decrease of 145,000 from the preceding week’s revised level of 3,935,000. The 4-week moving average was 3,892,750, a decrease of 54,750 from the preceding week’s revised average of 3,947,500.

In IR-2011-017, the Internal Revenue Service (IRS) announced that interest rates for the second quarter of 2011 would increase from the first quarter. The rates are as follows:

• Four (4) percent for overpayments [three (3) percent in the case of a corporation];
• Four (4) percent for underpayments;
• Six (6) percent for large corporate underpayments; and
• One and one-half (1.5) percent for the portion of a corporate overpayment exceeding $10,000.

Revenue Ruling 2011-5 Contains Official Rate Announcement

The IRS will publish the rates in Revenue Ruling 2011-5. Contact Vision Payroll if you have any questions on the second quarter rates.

The Iowa Department of Human Services has amended Chapter 97, “Collection Services Center,” Iowa Administrative Code to require submission of child support payments by means of electronic funds transfer (EFT) no later than June 30, 2015, unless an exemption applies.

Phased-in Implementation Schedule for EFT

The schedule for implementation is based on the number of employees and is as follows:

• Employers with 1000 or more employees must be compliant by December 31, 2011,
• Employers with 500 or more employees must be compliant by December 31, 2012,
• Employers with 200 or more employees must be compliant by December 31, 2013,
• Employers with 100 or more employees with an agent for payroll processing must be compliant by December 31, 2013.

Contact Vision Payroll for Further Information

Contact Vision Payroll if you have further questions, including areas such as waiver requests and the alternative use of a secure website.

Governor Deval Patrick recently signed legislation that will provide immediate relief to Massachusetts’ businesses by freezing employer contributions to the Unemployment Insurance (UI) Trust Fund at current levels. This new law prevents a scheduled rate hike from taking effect, helping to save businesses $402 million this year. Although the legislation freezes the rate schedule for 2011, individual employer’s rates may increase or decrease from 2010. The rate change is determined by the change in the employer’s Experience Rating.

Legislation Said to Position State for Continued Economic Recovery

“Without this legislation employers would have seen an average increase of $228 per employee,” said Governor Patrick. “We want to encourage a positive climate for employers and by signing this bill we are helping to position the state for continued economic recovery.”

Employer Contributions Tied to Trust Fund Levels

Employer contributions into the UI Trust Fund are tied to the amount of reserves in the trust fund. By law, a scheduled increase was triggered on January 1, 2011, which would have caused an increase in the average contribution per employee of $228 for 2011. In order to reduce costs for Massachusetts businesses, Governor Patrick and the Legislature agreed to freeze the contribution at a lower rate schedule (Schedule E). This measure will not impact benefit levels or eligibility for persons currently collecting unemployment benefits.

Notice of Employer’s Unemployment Insurance Contribution Rate for 2011 to Be Released

Now that the legislation has been passed, the Massachusetts Division of Unemployment Assistance (DUA) is expected to release through QUEST the Notice of Employer’s Unemployment Insurance Contribution Rate for 2011. This notice contains information on each employer’s contribution rates, including the following:

• Unemployment Insurance (UI) Rate,
• Universal Health Insurance (UHI) Rate,
• Workforce Training Fund (WTF) Rate, and
• Experience Rating

Contact Vision Payroll for Further Information

Contact Vision Payroll for further information on the unemployment tax rate schedule in Massachusetts for 2011.

The Massachusetts Division of Unemployment Assistance (DUA) has released the UHI contribution rates for 2011. According to MGL c. 151A, §14G(f):

There shall be a rate review board composed of the commissioner of medical assistance or his designee, the deputy director of employment and training or his designee and the commissioner of insurance or his designee. The rate review board shall determine if the unemployment health insurance contribution rate and the unemployment health insurance contribution wage base established in this section shall be adequate to provide for the estimated costs for the subsequent year of unemployment health insurance programs established pursuant to subsection (j) provided by said division of employment and training. If in the opinion of said board the unemployment health insurance contribution wage base or the unemployment health insurance contribution rate as established above would be inadequate to properly fund the unemployment health insurance program, said rate of health insurance inflation or the unemployment health insurance contribution rate shall be appropriately adjusted in order to properly fund said unemployment health insurance program.

On or before November 30 of each year, the deputy director of employment and training shall certify to said board the estimated costs for the subsequent year of health insurance programs provided by the division of employment and training for individuals and their families who are eligible for the health insurance program established by subsection (j) for individuals receiving unemployment insurance compensation. Such estimated costs shall be exclusive of amounts to be covered by premiums, co-payments, deductibles and co-insurance to be paid by covered individuals and any anticipated appropriations. The rate review board shall further adjust such estimated costs to reflect prudent levels of reserves sufficient to carry out the responsibilities of the division of employment and training for said unemployment health insurance program. If in the opinion of said board the rate of health insurance inflation on the unemployment health insurance contribution wage base as established or calculated above would be inadequate to properly fund said unemployment health insurance program, said rate of health insurance inflation or the unemployment health insurance contribution rate shall be appropriately adjusted in order to properly fund said health insurance programs.

2011 Rates to Increase for Most Employers

According to the DUA, for 2011 rates will be as follows:

The health insurance contribution rate is a flat rate of 0.36% for calendar year 2011 for all subject employers—except for those meeting the exempt or reduced rate criteria. (Employers operating within two calendar years following the “newly subject” status pay at rates of 0.04% and 0.08%, respectively.)

Contact Vision Payroll if you have any questions on the 2011 UHI contribution rates.

According to statistics released by the US Bureau of Labor Statistics (BLS), in January 2011, the percentage of people with disabilities in the labor force was 20.1. By comparison, the percentage of persons with no disability in the labor force was 69.5.

Table A-6 Provides Further Details on Employment Levels by Disability Status

Table A-6 shows further details on employment status of the civilian population by sex, age, and disability status, not seasonally adjusted.

Definition of a Person with a Disability

In compiling the data, the BLS defines a person with a disability as a person having at least one of the following conditions: is deaf or has serious difficulty hearing; is blind or has serious difficulty seeing even when wearing glasses; has serious difficulty concentrating, remembering, or making decisions because of a physical, mental, or emotional condition; has serious difficulty walking or climbing stairs; has difficulty dressing or bathing; or has difficulty doing errands alone such as visiting a doctor’s office or shopping because of a physical, mental, or emotional condition.

Updated Population Controls Introduced

The BLS introduces updated population controls annually with the release of the January data.

Visit VisionPayroll.com Monthly for Updated Disability Employment Statistics

Each month, Vision Payroll will provide updates disability employment statistics as they become available.