Vision Payroll

The new health reform law gives a tax credit to certain small employers that provide health care coverage to their employees, effective with tax years beginning in 2010. Over several weeks, Vision Payroll will be providing further information on the Small Business Health Care Tax Credit. Today’s topic is Impact of the Small Business Health Care Tax Credit on Employment Tax Payments.

Employers may not reduce the amount of employment tax payments paid and use the Small Business Health Care Tax Credit to offset the taxes not paid. Federal employment taxes include both those imposed on the employer and those imposed on the employee. They include federal unemployment tax, the employer portion of Old-Age Survivors and Disability Insurance (OASDI) tax, also known as social security and Medicare, federal income tax withheld, social security tax withheld, and Medicare tax withheld. The Small Business Health Care Tax Credit may only offset income tax.

The next topic to be covered in this series is Transition Relief for Employers That Do Not Pay a Uniform Percentage. Contact Vision Payroll if you have further questions on Impact of the Small Business Health Care Tax Credit on Employment Tax Payments.

The new health reform law gives a tax credit to certain small employers that provide health care coverage to their employees, effective with tax years beginning in 2010. Over several weeks, Vision Payroll will be providing further information on the Small Business Health Care Tax Credit. Today’s topic is Impact of the Small Business Health Care Tax Credit on Deductions for Health Insurance Premiums.

The amount of premiums that can be deducted on the employer’s federal income tax return must be reduced by the amount of the Small Business Health Care Tax Credit.

The next topic to be covered in this series is Impact of the Small Business Health Care Tax Credit on Employment Tax Payments. Contact Vision Payroll if you have further questions on Impact of the Small Business Health Care Tax Credit on Deductions for Health Insurance Premiums.

Total nonfarm payroll employment declined by 125,000 in June, and the unemployment rate edged down to 9.5 %, the US Bureau of Labor Statistics reported recently. The decline in payroll employment reflected a decrease (-225,000) in the number of temporary employees working on Census 2010. Private-sector payroll employment edged up by 83,000.

Both the number of unemployed persons, at 14.6 million, and the unemployment rate, at 9.5%, edged down in June.

Among the major worker groups, the unemployment rate for adult women (7.8%) declined, while the rates for adult men (9.9%), teenagers (25.7%), whites (8.6%), blacks (15.4%), and Hispanics (12.4%) showed little or no change. The jobless rate for Asians was 7.7%, not seasonally adjusted.

In June, the number of long-term unemployed (those jobless for 27 weeks and over) was unchanged at 6.8 million. These individuals made up 45.5% of unemployed persons.

The civilian labor force participation rate fell by 0.3 percentage point in June to 64.7%. The employment-population ratio, at 58.5%, edged down over the month.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers), at 8.6 million, was little changed over the month but was down by 525,000 over the past 2 months. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

In June, about 2.6 million persons were marginally attached to the labor force, an increase of 415,000 from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Among the marginally attached, there were 1.2 million discouraged workers in June, up by 414,000 from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.4 million persons marginally attached to the labor force had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.

This week’s question comes from Aaron, a business owner. We have several employees who work in Massachusetts, but live in neighboring states. Do I need to withhold state tax on wages paid to non-residents? Answer: Massachusetts requires employers to withhold state tax from wages paid to non-residents for services performed in Massachusetts. Most states have similar requirements that employers withhold tax on non-residents, but some states do not require withholding until a certain time or dollar limits are reached. Additionally, some states have setup reciprocal agreements with other states that allow the employees to be taxed in their home states. Massachusetts (and many other states) has special rules for unique occupations such as athletes, entertainers, and flight crewmembers. Contact Vision Payroll for further information on your unique situation.

According to the US Department of Labor, In the week ending June 26, the advance figure for seasonally adjusted initial claims was 472,000, an increase of 13,000 from the previous week’s revised figure of 459,000. The 4-week moving average was 466,500, an increase of 3,250 from the previous week’s revised average of 463,250.

The advance seasonally adjusted insured unemployment rate was 3.6% for the week ending June 19, unchanged from the prior week’s revised rate of 3.6%.

The advance number for seasonally adjusted insured unemployment during the week ending June 19 was 4,616,000, an increase of 43,000 from the preceding week’s revised level of 4,573,000. The 4-week moving average was 4,567,500, a decrease of 25,250 from the preceding week’s revised average of 4,592,750.

The fiscal year-to-date average of seasonally adjusted weekly insured unemployment, which corresponds to the appropriated AWIU trigger, was 5.077 million.

On June 6, 2010, overheated computer equipment activated a sprinkler system that flooded four floors in the Georgia Department of Revenue (DOR) headquarters. As a result, the online system was disabled and ground floor customer service was shut down. According to Commissioner Bart L. Graham:

We’ve started the backup generator that was installed last year in anticipation of an unanticipated event such as this. The reason we started it today was due to the need to remediate water from the building first. We intend to keep the public fully updated as we gradually restore operations. Our expectation is that normal service to our customers will be restored gradually. DOR headquarters staff is available to receive and process applications for liquor licenses, process tax payments from walk-in customers, and expedite all inquiries in a timely manner. We appreciate the public’s patience and understanding as we attempt to restore normal computer functionality over the next few days.

The DOR also stated that, “Tax payments for online e-file/e-pay can be mailed to the [DOR] or delivered to any DOR Regional Office. Taxpayers who make a diligent effort to pay timely will not be assessed a penalty.”

Contact Vision Payroll if you need further information.

In IR-2010-078, the Internal Revenue Service (IRS) released guidance based on current law that explains how the government can help BP oil spill-impacted taxpayers.

“This is a very difficult time for many people affected by the oil spill in the Gulf of Mexico. As residents of the region cope with the evolving situation, I want to assure them that the IRS will be doing everything it can to provide tax help to those who need it,” IRS Commissioner Doug Shulman said. “We encourage anyone who has an issue with the IRS to contact us and explain their hardship, and we will work with them to find a solution. We’ll do everything we can under current law to help taxpayers.”

In the guidance, the IRS explains that generally payments received from BP for lost income should be treated “in the same way that the wages or business income these payments are replacing would have been.” There are new sections on the IRS website including Gulf Oil Spill Information Center and Gulf Oil Spill: Question and Answers. The IRS will also hold Gulf Coast Assistance Day on July 17. IRS employees will be available to meet with taxpayers and their representatives in Mobile, Alabama, Panama City, Florida, Pensacola, Florida, New Orleans, Louisiana, Houma, Louisiana, Baton Rouge, Louisiana, and Gulfport, Mississippi.

Further information will be available in the coming days and weeks so be sure to visit Vision Payroll for updated information.

The US Department of Labor (DOL) Employee Benefits Security Adminstration (EBSA) has ruled in a determination letter that the mooning of a co-worker is not gross misconduct that would disqualify an individual from receiving COBRA premium assistance under the American Recovery and Reinvestment Act of 2009 (ARRA). The ruling came to light when the employer in the case, Stormont-Vail Health Care, Inc. (Stormont-Vail), requested a temporary restraining order (TRO) staying the final determination letter. In Stormont-Vail Health Care, Inc. v. US Department of Labor EBSA, DCKS, 10cv4052-RDR, 5/27/2010, the court denied the motion for the TRO.

According to the court, Jennifer Reavis (Reavis) was employed by Stormont-Vail as a nurse. Stormont-Vail received a report that “Reavis told [a male nurse] to answer some patient call lights, that he assertively told her ‘no, I’m busy,’ and that in response Reavis bent over with her scrub pants pulled down, exposing her rear end.” In response, “Reavis has claimed that she was responding to a provocative finger gesture and that she only partially exposed her backside to the male nurse.” Stormont-Vail fired Reavis and disallowed her claim for COBRA premium assistance under ARRA. Reavis filed an appeal with the Department of Labor, which ruled that Reavis did qualify for the premium assistance.

Due to the clear lack of standards to determine gross misconduct for COBRA and ARRA purposes, Vision Payroll strongly recommends that employers consult with a competent labor law attorney for assistance in deciding if ARRA premium assistance should be denied because of gross misconduct.

In Notice 2010-48, the Internal Revenue Service (IRS) provided administrative “relief to sponsors of defined contribution pre-approved plans (i.e., master and prototype (‘M&P’) and volume submitter (‘VS’) plans).” Notice 2010-48 extended the following from April 30, 2010 to July 30, 2010:

• Deadline for restating affected pre-approved defined contribution plans,
• Deadline for submitting determination letters to the Service, and
• The § 401(b) remedial amendment period with respect to these plans.

The notice lists how a plan is considered in an affected area and lists the eight affected areas, all of which received previous relief from the IRS. The areas are the following:

1. Connecticut
2. Tennessee
3. Alabama
4. Mississippi
5. New Jersey
6. Massachusetts
7. Rhode Island
8. West Virginia

Contact Vision Payroll for further information on Notice 2010-48.

Twelve separate lawsuits from California, Florida, Kansas, Texas, and Washington, all of which allege that Bank of America (either Bank of America, NA or Bank of America Corp.) “routinely fails to pay its employees for off-the-clock overtime work in violation of the Fair Labor Standards Act [FLSA] and/or state law”, have been moved to the District of Kansas for coordinated or consolidated pretrial proceedings by the United States Judicial Panel on Multidistrict Litigation (the Panel). One of the cases “seeks to certify a class of all Bank of America non-exempt employees in the United States” for a class action suit against Bank of America.

The Panel considered not moving some of the cases. Some cases were moved even though the allegations were related to specific jobs, because the allegations were similar to those in other cases, “including allegations that Bank of America systematically prohibits overtime eligible employees from accurately recording their time and, as a result, does not pay its employees for all hours worked, including overtime pay.” Others considered similar “allege that that the timekeeping system used by Bank of America allows managers to modify or decrease the time recorded, and time worked is regularly deleted to avoid paying overtime.” Some cases moved included unrelated allegations, “such as discrimination (the Zhou action), retaliation, defamation and violation of the Family and Medical Leave Act (the Carrero action).” The Panel felt that any differences were not significant enough to outweigh the benefits of moving the cases for coordinated or consolidated pretrial proceedings.

The Panel recommended that, with the consent of the District of Kansas, the coordinated or consolidated pretrial proceedings be assigned to the Honorable John W. Lungstrum, who “has the experience, energy and time to handle this litigation efficiently.”