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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.

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

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%.

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

The Massachusetts Department of Revenue (DOR) has released Technical Information Release (TIR) 11-5, Employer-Provided Health Care Benefits Update. This TIR updates TIR 07-16, Personal Income Tax Treatment of Employer-Provided Health Insurance Coverage for an Employee’s Child, to reflect a Massachusetts statutory change to the personal income tax enacted in response to the federal Patient Protection and Affordable Care Act. The general effect of the Massachusetts change is to conform to the federal income exclusion rules for health care benefits that are in effect for each year, notwithstanding the general Massachusetts tie-in to federal income and exclusion rules as of January 1, 2005. The Massachusetts change is effective for tax years beginning on or after January 1, 2010.

Massachusetts Law Generally Conforms To 2005 IRC

In general, Massachusetts individual taxpayers must follow the Internal Revenue Code (IRC) in effect as of January 1, 2005. As a result of a recent law change in Massachusetts, taxpayers now follow the federal law for IRC §105 and §106 for exclusions from gross income for employer-provided health care benefits. This change is retroactive to January 1, 2010.

Amended Form W-2 May Be Required

Employers who imputed income for amounts that are now excluded from income may need to file Form W-2C, Corrected Wage and Tax Statement. Such a filing would be required if any 2010 or 2011 Forms W-2 have been provided to employees with such imputed income included. If a 2011 Form W-2 has not already been provided to affected employees, employers can simply adjust the 2011 Form W-2 when prepared. Employees who have already filed a 2010 Form 1, Massachusetts Resident Income Tax would need to file an amended return to reflect the Form W-2C. Employees who have yet to file can simply incorporate the Form W-2C figures into their return when they file.

Contact Vision Payroll for Assistance with Form W-2C

Contact Vision Payroll today if you have affected employees and need to file Form W-2C.

Illinois Governor Pat Quinn recently signed HB 1030 into law. The new law adds an unemployment tax surcharge, increases the taxable wage base, and reduces maximum benefits, among other provisions.

Surcharge Is for First Quarter of 2011

For the first quarter of 2011, employers are now required to pay a surcharge of 0.50% of taxable wages. Up to $90,000,000 of this surcharge is to be earmarked for interest payments for interest required to be paid under Title XII of the Social Security Act or for transfers to the state’s account in the unemployment trust fund.

Taxable Wage Base Will Increase in 2012

The taxable wage base will increase from $12,960 in 2011 to $13,560 in 2012.

Further Surcharge May Apply in 2012

If necessary to further interest payments, a surcharge will also apply to the first quarter of 2012 and the 2013 wage base will remain at $13,560. Otherwise, the 2013 wage base is scheduled to revert to the 2011 level of $12,960.

Maximum Benefits Reduced Starting in 2012

The new law also reduces the maximum total amount of benefits for an eligible individual, for specified benefit years starting in 2012, to 25 (instead of 26) times his or her weekly benefit amount plus dependents’ allowances, or to the total wages for insured work paid to such individual during the individual’s base period, whichever amount is smaller.

Contact Vision Payroll for Further Information

Contact Vision Payroll for further information on the changes to Illinois unemployment taxes.

As of January 1, 2011, the Nebraska Department of Revenue (DOR) required the use of an electronic funds transfer (EFT) all payments of taxes or fees for tax programs, such as income or sales and use tax, if the taxpayer had made tax or fee payments above $20,000 for that same tax program in a prior tax year.

Further Reduction Effective July 1, 2011

As of July 1, 2011, the threshold is reduced from $20,000 to $16,000. Further reductions are scheduled every six months until the threshold is $5,000 effective January 1, 2015.

Failure to Use EFT Will Result in a Non-Compliance Penalty

A $100 penalty for non-compliance will be imposed if required payments are not made by EFT. The penalty does not apply to individual income tax payments.

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Contact Vision Payroll for further questions on the changes to the Nebraska EFT threshold.

This week’s question comes from Charlie, a manufacturing plant manager. We have a third shift that works from 11 pm to 7 am the following day. Some of the workers will work this Saturday night into Sunday. Do we need to pay for eight hours of work because of the switch to Daylight Saving Time? Answer: Since Daylight Saving Time begins in most parts of the country at 2 am, Sunday, March 13, 2011 many workers on a third shift will only work seven hours. At 2 am on that day, clocks are turned ahead to 3 am.

FLSA Does Not Require Pay for Hour When Clocks Are Turned Ahead

The Fair Labor Standards Act (FLSA) does not require employers to pay employees for the hour not worked. When Daylight Saving Time ends on November 6, 2011, employers will need to pay an extra hour since clocks are turned back.

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Contact Vision Payroll if you have any further questions on the switch to Daylight Saving Time.

The Massachusetts Executive Office of Labor and Workforce Development (EOLWD) has released the 2011 contribution rates. Employers apply the rates to taxable payroll to determine the amount of tax due.

Many 2011 Employer Rates Remain Unchanged

Although the new construction employer rate and the solvency assessment rate have both increased, the  new non-construction employer rate, the minimum rate, the maximum positive rate, and the maximum rate all remain unchanged. The following table provides rates for 2011 and 2010.

Rate	2011	2010
New non-construction employer rate	2.83%	2.83%
New construction employer rate	8.62%	7.84%
Minimum rate	1.26%	1.26%
Maximum positive rate	6.14%	6.14%
Maximum rate	12.27%	12.27%
Solvency assessment	1.71%	1.22%

Solvency Assessment Is not Paid Directly

The Solvency Assessment is applied by the Division of Unemployment Assistance (DUA) when calculating an employer’s Statement of Account Balance. It is applied to the employer’s taxable wages for the period.

Still Have Questions on 2011 Massachusetts Unemployment Tax Rates

Contact Vision Payroll for further information on 2011 Massachusetts unemployment tax rates.

This week’s question comes from Trevor, a company president. Some of our employees use our company aircraft for personal purposes. We need to value this and include it income for those employees. What are the updated Standard Industry Fare Level Rates? Answer: 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.

Revised Rates Are Effective January 1, 2011 To June 30, 2011

The revised SIFL rates are 22.37¢ per mile for 500 or fewer miles traveled, 17.06¢ per mile for greater than 500 miles traveled and up to 1,500 miles traveled, and 16.40¢ per mile for greater than 1,500 miles traveled. The terminal charge is $40.90. These rates apply to the period from January 1, 2011 to June 30, 2011.

Contact Vision Payroll for Updated SIFL Rates

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

Governor Deval Patrick recently signed legislation that will provide immediate relief to Massachusetts’ businesses by freezing employer contributions to the Unemployment Insurance (UI) Trust Fund at current levels. This new law prevents a scheduled rate hike from taking effect, helping to save businesses $402 million this year. Although the legislation freezes the rate schedule for 2011, individual employer’s rates may increase or decrease from 2010. The rate change is determined by the change in the employer’s Experience Rating.

Legislation Said to Position State for Continued Economic Recovery

“Without this legislation employers would have seen an average increase of $228 per employee,” said Governor Patrick. “We want to encourage a positive climate for employers and by signing this bill we are helping to position the state for continued economic recovery.”

Employer Contributions Tied to Trust Fund Levels

Employer contributions into the UI Trust Fund are tied to the amount of reserves in the trust fund. By law, a scheduled increase was triggered on January 1, 2011, which would have caused an increase in the average contribution per employee of $228 for 2011. In order to reduce costs for Massachusetts businesses, Governor Patrick and the Legislature agreed to freeze the contribution at a lower rate schedule (Schedule E). This measure will not impact benefit levels or eligibility for persons currently collecting unemployment benefits.

Notice of Employer’s Unemployment Insurance Contribution Rate for 2011 to Be Released

Now that the legislation has been passed, the Massachusetts Division of Unemployment Assistance (DUA) is expected to release through QUEST the Notice of Employer’s Unemployment Insurance Contribution Rate for 2011. This notice contains information on each employer’s contribution rates, including the following:

• Unemployment Insurance (UI) Rate,
• Universal Health Insurance (UHI) Rate,
• Workforce Training Fund (WTF) Rate, and
• Experience Rating

Contact Vision Payroll for Further Information

Contact Vision Payroll for further information on the unemployment tax rate schedule in Massachusetts for 2011.

The Massachusetts Division of Unemployment Assistance (DUA) has released the UHI contribution rates for 2011. According to MGL c. 151A, §14G(f):

There shall be a rate review board composed of the commissioner of medical assistance or his designee, the deputy director of employment and training or his designee and the commissioner of insurance or his designee. The rate review board shall determine if the unemployment health insurance contribution rate and the unemployment health insurance contribution wage base established in this section shall be adequate to provide for the estimated costs for the subsequent year of unemployment health insurance programs established pursuant to subsection (j) provided by said division of employment and training. If in the opinion of said board the unemployment health insurance contribution wage base or the unemployment health insurance contribution rate as established above would be inadequate to properly fund the unemployment health insurance program, said rate of health insurance inflation or the unemployment health insurance contribution rate shall be appropriately adjusted in order to properly fund said unemployment health insurance program.

On or before November 30 of each year, the deputy director of employment and training shall certify to said board the estimated costs for the subsequent year of health insurance programs provided by the division of employment and training for individuals and their families who are eligible for the health insurance program established by subsection (j) for individuals receiving unemployment insurance compensation. Such estimated costs shall be exclusive of amounts to be covered by premiums, co-payments, deductibles and co-insurance to be paid by covered individuals and any anticipated appropriations. The rate review board shall further adjust such estimated costs to reflect prudent levels of reserves sufficient to carry out the responsibilities of the division of employment and training for said unemployment health insurance program. If in the opinion of said board the rate of health insurance inflation on the unemployment health insurance contribution wage base as established or calculated above would be inadequate to properly fund said unemployment health insurance program, said rate of health insurance inflation or the unemployment health insurance contribution rate shall be appropriately adjusted in order to properly fund said health insurance programs.

2011 Rates to Increase for Most Employers

According to the DUA, for 2011 rates will be as follows:

The health insurance contribution rate is a flat rate of 0.36% for calendar year 2011 for all subject employers—except for those meeting the exempt or reduced rate criteria. (Employers operating within two calendar years following the “newly subject” status pay at rates of 0.04% and 0.08%, respectively.)

Contact Vision Payroll if you have any questions on the 2011 UHI contribution rates.