Vision Payroll

Secretary Roger M. Ervin of the Wisconsin Department of Revenue announced a special withholding arrangement for employers of Wisconsin residents working in Minnesota in response to the termination by Minnesota of the Minnesota-Wisconsin reciprocity agreement effective January 1, 2010. Under the arrangement, Wisconsin withholding will not be required in the following situations:

• The employee is a legal resident of Wisconsin (i.e., domiciled in Wisconsin) when the wages are earned in Minnesota, and
• The same wages earned by the Wisconsin resident and subject to the withholding of Minnesota income tax would also be subject to the withholding of Wisconsin income tax.

Employees may need to pay Wisconsin estimated tax if the elimination of Wisconsin withholding would cause them to owe $200 or more in Wisconsin income tax.

Contact Vision Payroll if you have further questions on the special withholding arrangement.

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. The revised rates are 22.04¢ per mile for 500 or fewer miles traveled, 16.80¢ per mile for greater than 500 miles traveled and up to 1,500 miles traveled, and 16.15¢ per mile for greater than 1,500 miles traveled. The terminal charge is $40.28. These rates apply to the period from January 1, 2010 to June 30, 2010.

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

The Massachusetts Department of Revenue (DOR) recently released a working draft of TIR 09-23, Effect of the Military Spouses Residency Relief Act or Public-Law 111-97 (the MSRRA). Under the MSSRA, spouses of military personnel who are present in or absent from a domicile due to compliance with military orders will not have their tax residence impacted by such presence or absence. According to the TIR 09-23:

For taxable year 2009, a servicemember’s spouse who had Massachusetts personal income tax withheld and who qualifies for exemption from Massachusetts tax under the MSRRA must file a Massachusetts non-resident income tax return, Form 1NR/PY, to claim a refund. For this purpose, the Form 1 NR/PY return must be paper filed; no efile returns are allowed. The qualifying spouse must write “MSRRA,” across the top of the Form 1NR/PY and attach copies of the following:

1. Military Spouse ID card.
2. Department of Defense Form 2058, State of Legal Residence Certificate – “legal residence for purposes of withholding state income taxes from military pay;”
3. LES, Leave and Earnings Statement of servicemember; and
4. Servicemember’s current military orders assigning such servicemember to a post of duty in Massachusetts (or an adjoining state).

The qualifying servicemember’s spouse must pay tax to the state of domicile for 2009, to the extent required by the state of domicile.

For taxable years beginning with 2010, a non-resident servicemember’s qualifying spouse whose wages are exempt from Massachusetts personal income tax under the MSRRA may claim an exemption from Massachusetts withholding tax. A military spouse who qualifies for Massachusetts wage exemption under the MSRRA must complete a Form M-4-MS, Annual Withholding Tax Exemption Certificate for Military Spouse, and provide required documentation.

The Form M-4-MS must be validated on an annual basis. The military spouse must show continued eligibility for the exemption. Scenarios that will cause the spouse to no longer be eligible include:

1. Servicemember leaves the service;
2. Divorce;
3. Voluntary physical separation due to duty changes – the servicemember’s orders move him or her to a location outside Massachusetts where the spouse is allowed to join him or her but chooses not to; or
4. Spouse commits an action that clearly establishes Massachusetts as his or her state of domicile.

Contact Vision Payroll if you have any questions on the Military Spouses Residency Relief Act.

This week’s question comes from Madeleine, an office manager. One of our employees lost her 2009 Form W-2 and now needs it to file her tax return. How do I get a duplicate Form W-2? There are two ways to get a duplicate Form W-2. The first is to print a copy from your year-end ViewChoice CD and the second is to request a printed copy for pickup at Vision Payroll. There is a nominal fee for this service. Contact Vision Payroll if you would like to arrange for a printed copy of a Form W-2 for pickup.

According to the US Department of Labor, in the week ending February 6, the advance figure for seasonally adjusted initial claims was 440,000, a decrease of 43,000 from the previous week’s revised figure of 483,000. The 4-week moving average was 468,500, a decrease of 1,000 from the previous week’s revised average of 469,500.

The advance seasonally adjusted insured unemployment rate was 3.5% for the week ending January 30, unchanged from the prior week’s unrevised rate of 3.5%.

The advance number for seasonally adjusted insured unemployment during the week ending January 30 was 4,538,000, a decrease of 79,000 from the preceding week’s revised level of 4,617,000. The 4-week moving average was 4,603,500, a decrease of 17,750 from the preceding week’s revised average of 4,621,250.

The fiscal year-to-date average for seasonally adjusted insured unemployment for all programs is 5.322 million.

Employees who have provided a Form W-4, Employee’s Withholding Allowance Certificate claiming exemption from federal income tax withholding must file a new 2010 Form W-4 by February 16, 2010 in order to continue their exemption from federal income tax withholding. Employers must start withholding on February 16, 2010 if employees have not provided a 2010 Form W-4 claiming exemption. Even employees who are no longer claiming exemption should file a 2010 Form W-4 so that employers may calculate the proper amount of withholding. If an employee has not provided a 2010 Form W-4 by February 16, 2010, the employer should withhold based on a previously filed Form W-4 not claiming exemption, if available or using single, zero allowances, if not. Spanish-speaking employees may complete Formulario W-4(SP), Certificado de Exención de la Retención del Empleado. Upon request, Vision Payroll can provide employers with pre-printed 2010 Forms W-4 for all active employees. Vision Payroll will not automatically change any employee’s claimed withholding allowances. Employers should update the allowances claimed by logging in to their company file or providing Vision Payroll with the updated information.

The Massachusetts Department of Revenue has released an emergency regulation 830 CMR 62B.2.3: Motion Picture Production Company Withholding. This regulation “establishes and explains the requirements of motion picture production companies to withhold Massachusetts personal income tax on payments to independent contractors and loan-outs for services rendered in Massachusetts.” The regulation provides information in the following areas:

1. Statement of Purpose; Outline of Topics
2. Definitions
3. Registration and Reporting Obligations of a Production Company; Qualification for the Credit
4. Withholding and Reporting Requirements as Prerequisites for Credit Qualification; Loan-Out Filing Requirements
5. Personal Income Credit against Taxes; Reporting Requirements
6. Coordination with Other Withholding Requirements
7. Effective Date

Since the regulation was issued as an emergency regulation, it is effective immediately and requires withholding on covered payments made after February 17, 2010. A transition rule allows certain waivers issued before February 18, 2010 to remain in effect for the duration of the production for which the waiver was issued. Contact Vision Payroll if you have any questions on 830 CMR 62B.2.3.

The Internal Revenue Service (IRS) has released an updated version of Publication 15-A, Employer’s Supplemental Tax Guide (Supplement to Publication 15 (Circular E), Employer’s Tax Guide) for use in 2010. Publication 15-A contains information on the following areas:

1. Who Are Employees?
2. Employee or Independent Contractor?
3. Employees of Exempt Organizations
4. Religious Exemptions and Special Rules for Ministers
5. Wages and Other Compensation
6. Sick Pay Reporting
7. Special Rules for Paying Taxes
8. Pensions and Annuities
9. Alternative Methods for Figuring Withholding
10. Tables for Withholding on Distributions of Indian Gaming Profits to Tribal Members

In addition, Publication 15-A provides information on What’s New, Reminders, and Useful Items. Contact Vision Payroll if you have any questions on Publication 15-A.

According to the California Employment Development Department (EDD), employers in the counties of Calaveras and Imperial directly affected by the damage resulting from the severe winter storms may request up to a 60-day extension of time from EDD to file their State payroll reports and/or deposit State payroll taxes without penalty or interest. This extension may be granted under Section 1111.5 of the California Unemployment Insurance Code (CUIC). Written request for extension must be received within 60 days from the original delinquent date of the payment or return to file/pay. Contact Vision Payroll if you’ve been affected and need to file the extension request.

The unemployment rate fell from 10.0% to 9.7% in January, and nonfarm payroll employment was essentially unchanged (-20,000), the US Bureau of Labor Statistics reported recently. Employment fell in construction and in transportation and warehousing, while temporary help services and retail trade added jobs.

In January, the number of unemployed persons decreased to 14.8 million, and the unemployment rate fell by 0.3 percentage points to 9.7%.

In January, unemployment rates for most major worker groups–adult men (10.0%), teenagers (26.4%), blacks (16.5%), and Hispanics (12.6%)–showed little change. The jobless rate for adult women fell to 7.9%, and the rate for whites declined to 8.7% The jobless rate for Asians was 8.4%, not seasonally adjusted.

This release includes new household survey tables with information about employment and unemployment of veterans, persons with a disability, and the foreign born. In January, the unemployment rate of veterans from Gulf War era II (September 2001 to the present) was 12.6%, compared with 10.4% for nonveterans. Persons with a disability had a higher jobless rate than persons with no disability–15.2% versus 10.4%. In addition, the labor force participation rate of persons with a disability was 21.8%, compared with 70.1% for those without a disability. The unemployment rate for the foreign born was 11.8%, and the rate for the native born was 10.3%.

In January, the number of persons unemployed due to job loss decreased by 378,000 to 9.3 million. Nearly all of this decline occurred among permanent job losers.

The number of long-term unemployed (those jobless for 27 weeks and over) continued to trend up in January, reaching 6.3 million. Since the start of the recession in December 2007, the number of long-term unemployed has risen by 5.0 million.

In January, the civilian labor force participation rate was little changed at 64.7%. The employment-population ratio rose from 58.2% to 58.4%.

The number of persons who worked part time for economic reasons (sometimes referred to as involuntary part-time workers) fell from 9.2 to 8.3 million in January. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

About 2.5 million persons were marginally attached to the labor force in January, an increase of 409,000 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 1.1 million discouraged workers in January, up from 734,000 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 1.5 million people 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.