Vision Payroll

The US Department of Labor (DOL) recently announced a $248,878 National Emergency Grant to provide training and re-employment services for about 60 workers affected by layoffs at Thompson/Center Arms in Rochester, NH, which began in January and will continue through the end of the year.

DOL Secretary Solis Comments on Grant

“This grant will help these dislocated workers by equipping them with the skills necessary to obtain good, stable jobs in New Hampshire’s high-growth industries,” said Secretary of Labor Hilda L. Solis.

Southern New Hampshire Services, Inc. Will Operate Grant

Awarded to the New Hampshire Department of Resources and Economic Development, the grant will be operated by Southern New Hampshire Services, Inc. to prepare the workers for other manufacturing positions available in the area, as well as for positions in non-manufacturing companies in the southern New Hampshire labor market.

Thompson/Center Arms Is Part of Smith & Wesson Holdings

Thompson/Center Arms is a firearms manufacturer that produces pistols, rifles and accessories. The company became a part of Smith & Wesson Holdings in 2007.

National Emergency Grants Are Part of Discretionary Fund

National Emergency Grants are part of the secretary of labor’s discretionary fund and are awarded based on a state’s ability to meet specific guidelines.

This week’s question comes from Brent, an HR Director. I read about employees being reimbursed through a dependent care flexible spending arrangement (FSA) for summer camp costs and need more information. What are the tests for reimbursement of expenses by a dependent care FSA? Answer: Plans may have different forms that must be completed to receive reimbursement, but the expenses themselves must be qualifying expenses to be eligible for reimbursement.

Test for Qualifying Expenses

To be eligible for reimbursement under a dependent care FSA, an employee must meet all of the following tests:

• Qualifying Person: The care must be for one or more qualifying persons.
• Earned Income: The employee (and spouse, if filing jointly) generally must have earned income during the year.
• Work-Related Expense: The employee must pay child and dependent care expenses so that the employee (and spouse, if filing jointly) can work or look for work.
• Care Provider: The employee must make payments to someone the employee (and spouse, if filing jointly) cannot claim as a dependent. If paid to a child of the employee, the child must also be age 19 or older by the end of the year. Payments cannot be made to:
  • The employee’s spouse, or
  • The parent of the employee’s qualifying person if the qualifying person is the employee’s child and under age 13.
• Filing Status: The employee’s filing status must be single, head of household, qualifying widow or widower with dependent child, or married filing jointly. Married employees must generally file a joint return.
• Provider Identification: The employee must identify the care provider on the employee’s income tax return.

Contact Vision Payroll Today

Contact Vision Payroll for further information on the tests for reimbursement of expenses by a dependent care FSA.

According to the US Department of Labor, in the week ending July 16, the advance figure for seasonally adjusted initial claims was 418,000, an increase of 10,000 from the previous week’s revised figure of 408,000. The 4-week moving average was 421,250, a decrease of 2,750 from the previous week’s revised average of 424,000.

Advance Seasonally Adjusted Insured Unemployment Rate Decreases

The advance seasonally adjusted insured unemployment rate was 2.9% for the week ending July 9, a 0.1 percentage point decrease from the prior week’s unrevised rate of 3.0%.

Advance Seasonally Adjusted Insured Unemployment Decreases

The advance number for seasonally adjusted insured unemployment during the week ending July 9 was 3,698,000, a decrease of 50,000 from the preceding week’s revised level of 3,748,000. The 4-week moving average was 3,720,500, a decrease of 4,000 from the preceding week’s revised average of 3,724,500.

As previously announced, New York has assessed most employers an Interest Assessment Surcharge (IAS). The New York Department of Labor has posted the following twelve FAQs about the IAS.

1. Why is the IAS being assessed?
Due to the high rate of unemployment, New York, as well as many other states, had to borrow money from the federal government in order to meet unemployment insurance (UI) benefits obligations. Normally, there should be sufficient revenues generated from quarterly UI employer tax collections to repay the federal loan in time to avoid interest charges. As a result of the recession there have been insufficient revenues from unemployment insurance (UI) taxes to satisfy the loans and to avoid the interest assessment. In 2009 and 2010, the federal government provided interest-free loans to states with insolvent Trust funds. Thus far, Congress has not extended the interest-free loan provisions for 2011. Therefore, New York owes approximately $95 million in interest for this year, which must be paid by September 30, 2011. In order to pay the interest due for 2011 on these federal loans, New York State is required by state law to assess a temporary charge on employers called the Interest Assessment Surcharge, or IAS.

2. What happens if the interest is not paid to the federal government?
Failure to pay the interest due can have severe consequences. New York’s Unemployment Insurance Program could lose its federal certification, which would result in employers in the state losing eligibility for a credit of up to 5.4% against the Federal Unemployment Tax Act (FUTA) tax. This would cause a very large and sudden spike in employer payroll taxes. In addition, the federal government can withhold administrative funds needed to operate New York’s Unemployment Insurance Program.

3. Isn’t the federal government waiving the interest?
The American Recovery and Reinvestment Act (also known as the Recovery Act) provided interest-free loans to New York and other states with insolvent Trust Funds during calendar years 2009 and 2010. Thus far, Congress has not extended the interest-free loan provisions into 2011. Should Congress extend the interest-free loan provision, we will either credit the employer’s account or refund the money paid.

4. What is the section of the law which imposes the IAS?
The section of the State Labor Law is Article 18, Title 6, Section 581-d. This can be found by visiting our website at www.labor.ny.gov. Employers were previously charged an IAS under this law in 2003, 2004, and 2005.

5. Are all employers required to pay the IAS?
All employers who pay unemployment insurance (UI) tax to the State are liable for the IAS. State and local government and not-for-profit employers who self-insure for UI purposes are not liable for the IAS.

6. How was my IAS calculated?
Your IAS was calculated using the taxable wages for the current payroll year (the fourth quarter of 2009 through the third quarter of 2010) and multiplying those wages by the IAS rate of 0.25%. The maximum amount that most employers will be assessed is $21.25 per employee.

7. Will my tax rate increase as a result of IAS?
No. IAS does not affect an employer’s experience rating account.

8. When is my payment of the IAS due? Can I get an extension?
Payment is due August 15, 2011. As the federal government has not granted an extension of the interest payment, extensions on the due date cannot be granted.

9. Why didn’t I receive the notice of the IAS earlier?
Because multiple bills were being considered by Congress to extend the interest waiver position into the current year, it was prudent to wait for Congressional resolution. Unfortunately, to date, Congress has not enacted an extension of this provision.

10. Whom should I make my check payable to and where do I send the payment?
Checks should be made payable to: NYS Unemployment Insurance and sent to: NYS Unemployment Insurance, PO Box 4301, Binghamton, NY 13902-4301.

11. Is this a one-time billing and what happens if I do not pay my IAS?
IAS will be billed annually until the loans to the federal government have been paid. IAS is subject to the same collection processes as contributions due. This would include legal actions to enforce the debt.

12. What if I did not receive an IAS bill or have questions regarding the IAS bill?
If you have any questions, please call the Employer Accounts Adjustment Section of the Unemployment Insurance Division at (888) 899-8810 or go to the agency website at www.labor.ny.gov.

Contact Vision Payroll Today

New York clients who have further questions on the IAS should contact Vision Payroll.

The state of New York has announced the assessment of an Interest Assessment Surcharge (IAS) for 2011. The surcharge will be used to pay approximately $95 million in interest on loans to the federal government by September 30, 2011.

New York Must Pay Interest on More Than $3 Billion in Loans

Since 2009, New York State has borrowed over $3 billion from the federal Unemployment Insurance Trust Fund. New York is going to charge employers the interest on these loans and if Congress later decides to forgive the interest, New York plans to credit the employer’s account or refund the money paid.

IAS is 0.25% for 2011

The IAS rate is 0.25% for 2011. Each employer’s surcharge amount is determined by multiplying the total taxable wages in the most recently completed payroll year (October 1, 2009 through September 30, 2010) by the IAS rate. Based on a taxable wage base of $8,500, the maximum surcharge per employee should be $21.25.

Contact Vision Payroll Today

New York clients who have further questions on the IAS should contact Vision Payroll.

As part of the recently enacted fiscal-year 2012 state budget (article 4), Rhode Island changed the way in which the unemployment taxable wage base is calculated in §28-43-7 of the General Laws in C. 28-43.

2012 Will Be the First Year the New Formula Is Used

Beginning in 2012, the formula will be to calculate an “average annual wage in covered employment” for the calendar year preceding the “computation date” and multiply that figure by 46.5%. The resulting product, rounded up to the nearest $200, will be the unemployment wage base for the year following the computation date.

Computation Date Will Be September 30

The computation date will be September 30. For example, to calculate the unemployment wage base for 2012, the computation date will be September 30, 2011 and the look-back year will be 2010.

Negative Balances Can Lead To Surcharge

Employers with a reserve account percentage of negative twenty-four or less will have a taxable wage base of the standard taxable wage plus $1,500.

Contact Vision Payroll Today

Contact Vision Payroll if you have any further questions on the Rhode Island unemployment taxable wage base calculation.

New Jersey Governor Chris Christie recently signed into law A-3819 (S-2730), which reduces the unemployment tax rates that employers would have otherwise had to pay during the 2012 rate year (July 1, 2011 through June 30, 2012). The rates will increase, however, from the rate year 2011 rates.

Rates Will Be Determined Using Schedule D for 2012 Rate Year

During the 2011 rate year (July 1, 2010 through June 30, 2011), rates for employers in New Jersey were determined based on the rates in column C of the tax table. Without the passage of A-3819, employers would have had their rates for 2012 determined by column E of the tax table. Under A-3819, rates in 2012 will be determined by reference to column D of the tax table.

Minimum and Maximum Rates to Increase for 2012 Rate Year

The minimum rate for employers will increase from 0.5% for the 2011 rate year to 0.6% for the 2012 rate year. Had the rates changed to Schedule E, the minimum rate would have increased to 1.2%. The maximum rate for employers will increase from 5.8% for the 2011 rate year to 6.4% for the 2012 rate year. Had the rates changed to Schedule E, the maximum rate would have increased to 7.0%.

New Employer Rate Also Set to Increase for 2012 Rate Year

The rate for new employers will increase from 2.8% for the 2011 rate year to 3.1% for the 2012 rate year. Had the rates changed to Schedule E, the new employer rate would have increased to 3.4%.

Contact Vision Payroll Today

Contact Vision Payroll if you have any further questions on A-3819 and the impact on New Jersey unemployment tax rates.

According to the California Employment Development Department (EDD), employers in the county of Marin directly affected by the severe rainstorms 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).

Marin County in a Declared State of Emergency Due to Severe Rainstorms

Written request for extension must be received within 60 days from the original delinquent date of the payment or return to file/pay.

Vision Payroll Can Assist Marin County Clients with Extension Application

Contact Vision Payroll if you’ve been affected and need to file the extension request.

This week’s question comes from Tony, a restaurant owner. I read that restaurants should obtain a signed tip credit notice from all tipped employees. What is the impact of not providing a tip credit notice? Answer: Employers who do not provide a tip credit notice are not allowed to take the tip credit.

Minimum Wage for Tipped Employees May Be Lower

Current federal law requires most workers be paid a minimum wage of $7.25 per hour when an employee works forty hours or less in a week. For tipped employees, the minimum cash wage is $2.63 per hour as long as the employee receives enough tips to bring the hourly wage up to at least $7.25 per hour. Some states may have higher minimum wage rates that must be followed in that state. See our Minimum Wage Chart for further information.

Under FLSA, Notice Is Required to Take a Tip Credit

Under §3(m) of the Fair Labor Standards Act (FLSA), a tip credit is not allowed, “with respect to any tipped employee unless such employee has been informed by the employer of the provisions of [the tip credit].”

Employers Must Pay Full Minimum Wage

Employers who do not provide a tip notice and therefore are not allowed a tip credit must pay the full hourly minimum wage of $7.25 per hour the state minimum wage if it is higher than $7.25 per hour.

Contact Vision Payroll Today

Contact Vision Payroll today if you have further questions on the tip credit notice.

According to the US Department of Labor, in the week ending July 9, the advance figure for seasonally adjusted initial claims was 405,000, a decrease of 22,000 from the previous week’s revised figure of 427,000. The 4-week moving average was 423,250, a decrease of 3,750 from the previous week’s revised average of 427,000.

Advance Seasonally Adjusted Insured Unemployment Rate Remains Unchanged

The advance seasonally adjusted insured unemployment rate was 3.0% for the week ending July 2, unchanged from the prior week’s revised rate of 3.0%.

Advance Seasonally Adjusted Insured Unemployment Decreases

The advance number for seasonally adjusted insured unemployment during the week ending July 2 was 3,727,000, an increase of 15,000 from the preceding week’s revised level of 3,712,000. The 4-week moving average was 3,719,250, a increase of 6,250 from the preceding week’s revised average of 3,713,000.