In the recently released, Working Draft Directive 09-XX, State Filing Requirements for Forms in the 1099 Series, the Massachusetts Department of Revenue (DOR) proposes changes to the definition of “machine-readable form” and to the filing requirements for forms in the 1099 series. Employers who file fifty or more of any form in the 1099 series in a calendar year will now be required to file them in machine-readable form. Previously, only filers of 250 or more forms were required to file in machine-readable form. For 2009 and later, the definition of machine-readable form will no longer include diskette, magnetic tape, or cartridge 18-track magnetic media. Filing must be done through WebFile for Business or electronic data transfer. Contact Vision Payroll if you have any questions on the proposed changes.
In the recently released, Working Draft Directive 09-XX, Requirements for Employers Filing Year-end Withholding Information, the Massachusetts Department of Revenue (DOR) proposes changes to the definition of “machine-readable form”. Employers who file fifty or more Forms W-2 in a calendar year are required to file them in machine-readable form. For 2009 and later, the definition of machine-readable form will no longer include diskette, magnetic tape, or cartridge 18-track magnetic media. Filing must be done through WebFile for Business or electronic data transfer. Contact Vision Payroll if you have any questions on the proposed changes.
This week’s question comes from Jason, an HR director. We reimburse employees using the per diem rates established by the General Services Administration. What are the 2010 maximum per diem rates? Answer: The GSA updated the maximum per diem rates for travel after September 30, 2009 and before October 1, 2010. For destinations or counties not specifically listed, the lodging per diem is $70 and the meals and incidental expenses per diem is $46. The rates for 2009 were $70 and $39, respectively. Certain destinations or counties are listed with higher per diem rates for part or all the fiscal year. Contact Vision Payroll if you have any questions on maximum per diem rates.
This weeks question comes from Barry, a business owner. We have always provided several employees with company cars. Now we plan to reimburse them for business use of their personal cars. How much can we reimburse employees for automobile expenses? Answer: As announced by the Internal Revenue Service (IRS) in IR-2008-131, the mileage rate for 2009 is 55 cents per mile. Therefore, if employees account for their business miles to their employers, the employers may reimburse at a rate up to 55 cents per mile without any requirement for the employees to include the reimbursement in taxable income. Contact Vision Payroll if you have any further questions.
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 24.84¢ per mile for 500 or fewer miles traveled, 18.94¢ per mile for greater than 500 miles traveled and up to 1,500 miles traveled, and 18.21¢ per mile for greater than 1,500 miles traveled. The terminal charge is $45.41. These rates apply to the period from January 1, 2009 to June 30, 2009.
Contact Vision Payroll if you have any questions on SIFL changes.
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.
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.
Maureen T. O’Donnell, Director of the State of Illinois Department of Employment Security announced recently that the 2009 unemployment wage base has increased from $12,000 to $12,300. O’Donnell, appointed by Governor Rod R. Blagojevich in August, had served as Acting Director since March 2007. In addition, the minimum rate, the maximum rate, and the fund building rate all decreased from 0.8% to 0.6%, from 7.2% to 6.8%, and from 0.6% to 0.4%, respectively. Contact Vision Payroll if you have any question on Illinois unemployment tax rates and taxable wage base.
The Internal Revenue Service (IRS) recently released 2009 Form W-5, Earned Income Credit Advance Payment Certificate. There are four criteria for claiming advance earned income credit (EIC) payments.
- Taxpayer (and spouse if filing jointly) must have a valid social security number.
- Taxpayer (or spouse if filing jointly) must have at least one qualifying child and be able to claim the credit using that child.
- Taxpayer’s expected earned income and adjusted gross income must be less than $35,463 ($38,583 if filing jointly).
- Taxpayer must expect to claim the EIC for 2009.
Eligible taxpayers must file a new Form W-5 for 2009. The 2008 Form W-5 expired December 31, 2008. Contact Vision Payroll if you have any question on Form W-5.
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