Vision Payroll

This week’s question comes from Rick, a corporate controller. We received a notification from our state unemployment agency that we may want to make a voluntary payment toward SUTA. Should we make a voluntary additional payment?

Answer: For employers that are in states that use a system that includes contributions made by employers in calculating the unemployment rate, it may be beneficial to make such a contribution. Many such states, but not all, allow employers to make voluntary contributions. Employers should estimate their taxable state unemployment wages for 2009 and multiply that by the difference between the higher rate and the lower rate. That sum should be compared to the required payment. The greater the sum is over the required payment, the more beneficial it is to make the voluntary payment.

For example, assume that taxable SUTA wages (not gross SUTA wages) will be $1,000,000 and that the employer’s rate will decrease by 0.15% if the voluntary payment is made. The estimated savings for 2009 would be $1,500 ($1,000,000 X 0.15%). Any payment greater than $1,500 would not be beneficial for 2009 since the cost would exceed the estimated benefit. Payments significantly less than $1,500 should almost always be made due to the anticipated savings for 2009. As the payment amount approaches $1,500 it becomes less valuable to make the payment because the required outlay must generally be made early in the year.

Voluntary payments are not allowed for FUTA purposes.

Contact Vision Payroll if you have any questions on voluntary additional SUTA payments.

According to the US Department of Labor, in the week ending January 10, the advance figure for seasonally adjusted initial claims was 524,000, an increase of 54,000 from the previous week’s revised figure of 470,000. The 4-week moving average was 518,500, a decrease of 8,000 from the previous week’s revised average of 526,500.

The Internal Revenue Service (IRS) is warning taxpayers to be on the lookout for phony e-mails that appear to be from IRS employees. The e-mails attempt to get personal information such as social security numbers, account numbers, and passwords that may be used in identity theft or to gain access to financial accounts.

The IRS never sends unsolicited e-mails nor does it request personal or financial information in e-mails. The IRS has set up a special e-mail address to forward such e-mails using instructions provided by the IRS. The IRS recommends you delete such messages after you have forwarded them.

Although no system is foolproof in preventing identity theft, Vision Payroll recommends vigilance in dealing with personal information, combined with a service such as LifeLock® to help detect certain types of identity theft.

The United States Citizenship and Immigration Services (USCIS) has submitted an interim final rule to change Form I-9, Employment Eligibility Verification. The rule will become effective February 2, 2009.

There are three categories of documents that employers may use for employment verification: List A that establishes identity and employment authorization, List B that establishes identity, and List C that establishes employment authorization. The rule eliminates the ability of employers to accept expired documents, although the USCIS has invited comments on and will consider allowing employers to accept List B documents “that have expired within the last ninety days (or other limited time period).”

The interim final rule also adds passports of the Federated States of Micronesia (FSM) and the Republic of the Marshall Islands (RMI) to acceptable List A documents. Citizens of both the FSM and the RMI may, but are not required to, obtain Form I-766, Employment Authorization Document.

Further, the interim final rule eliminates Forms I-688, I-688A, and I-688B from acceptable List A documents since these documents are no longer issued and all issued forms are now expired.

There are numerous other miscellaneous changes, including changes to correct references to terminology that has changed. The June 5, 2007 version of Form I-9 becomes invalid February 2, 2009.

This is one in a continuing series on the 2008 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than February 2, 2009. Forms mailed on the due date are considered furnished if properly addressed. Employers unable to meet that deadline may file a request for extension of time to furnish the forms. Today we review Box 4, social security tax withheld.

Box 4 shows the total amount of employee social security tax withheld, including the amount withheld on tips. It does not include any employer contribution toward social security on the employee’s behalf. Since the 2008 rate was 6.2% and the taxable wage base was $102,000, the amount in this box should not exceed $6,324. If the employer paid the employee’s share of such taxes rather than withholding them, the tax must be grossed up and included in boxes 1, 3, and 5.

The next topic in this continuing series will be Box 5, Medicare wages and tips. Contact Vision Payroll with any questions on the 2008 Form W-2.

Nonfarm payroll employment declined sharply in December, and the unemployment rate rose from 6.8% to 7.2%, the Bureau of Labor Statistics of the US Department of Labor reported recently. Payroll employment fell by 524,000 over the month and by 1.9 million over the last 4 months of 2008. In December, job losses were large and widespread across most major industry sectors.

In December, the number of unemployed persons increased by 632,000 to 11.1 million and the unemployment rate rose to 7.2%. Since the start of the recession in December 2007, the number of unemployed persons has grown by 3.6 million, and the unemployment rate has risen by 2.3 percentage points.

The unemployment rates for adult men (7.2%), adult women (5.9%), and whites (6.6%) increased in December. The jobless rates for teenagers (20.8%), blacks (11.9%), and Hispanics (9.2%) were little changed over the month. The unemployment rate for Asians was 5.1% in December, not seasonally adjusted.

Among the unemployed, the number of job losers and persons who completed temporary jobs rose by 315,000 to 6.5 million in December. Over the past 12 months, the size of this group has increased by 2.7 million.

The number of long-term unemployed (those jobless for 27 weeks or more) rose to 2.6 million in December and was up by 1.3 million in 2008.

Roger B. Madsen, Director of the Idaho Department of Labor announced recently that the 2009 unemployment wage will increase from $32,200 to $33,200. In addition, tax rates (including the workforce rate) will range from 0.447% to 5.4% and the standard rate will be 1.566%. The special Administration Reserve Fund Tax is not in effect for 2009. Contact Vision Payroll if you have any question on Idaho unemployment rates and wage base.

This week’s question comes from Rob, a business owner. I paid all my federal and state unemployment taxes and didn’t lay anyone off. Why is my unemployment rate going up? Answer: Generally, your state unemployment rate is determined by the ratio of your account balance to your covered employment wages for the measurement period.

For example, if the measurement period runs from October 1 to September 30, your account balance as of September 30 is the numerator and the taxable payroll during the year from October 1 to September 30 is the denominator. The resulting fraction is the reserve percentage or ratio. Some states use longer base periods or use an average over a period of years for the denominator.

The account balance generally increases by contributions the employer has paid into SUTA and decreases by benefit claims paid against the employer’s account and solvency assessments, if necessary. The solvency assessment is used to pay benefit claims that are not charged to an employer.

Taxable wages are generally wages paid to covered employees up to the SUTA limit. They should equal the wages on which SUTA taxes were calculated.

Many states use multiple schedules to determine the employer’s unemployment rate. The reserve percentage or ratio is located on the appropriate schedule and an unemployment tax rate it assigned. The higher the reserve percentage or ratio within the parameters of the schedule, the lower the unemployment rate for the upcoming year. Many states have moved to a schedule with higher overall rates for 2009 since their overall statewide reserve percentage or ratio is lower. Therefore, even employers with lower reserve percentages or ratios can have higher tax rates because of the higher rate schedule.

We recommend you forward Vision Payroll the notice with your 2009 rate as soon as you receive it. Contact Vision Payroll if you have any questions on the determination of your unemployment rate.

According to the US Department of Labor, in the week ending January 3, the advance figure for seasonally adjusted initial claims was 467,000, a decrease of 24,000 from the previous week’s revised figure of 491,000. The 4-week moving average was 525,750, a decrease of 27,000 from the previous week’s revised average of 552,750.

This New Year’s you may have resolved to lose more weight, spend more time with family, or be nicer to your payroll service. Hopefully, you haven’t broken all those resolutions yet. It’s not too late to make some work-related resolutions you can stick to. High on that list should be getting up-to-date on the top 2009 employment law topics.

One important change is the ADA (Americans with Disabilities Act) Amendments Act of 2008 or ADAAA. Effective January 1, 2009, this law change redefines who is considered disabled.

Later this month, the new federal Family and Medical Leave Act (FMLA) regulations take effect. These regulations provide clarity on several long-standing, challenging regulations and implement new FMLA leave available to military family members.

In line with the 2009 changes, be sure you’ve implemented the changes required by the National Defense Authorization Act of 2008 or NDAA. Highlights include changes to Leave Duration, Multiple Leaves, Qualifying Exigencies, and Qualified Employees.

To learn more, sign into MyHRSupportCenter and read this month’s featured article. If you’re not yet signed up or would like a free trial of MyHRSupportCenter, contact Vision Payroll today.