Vision Payroll

The Internal Revenue Service (IRS) has announced that it will no longer mail the Form 941 tax package to business taxpayers. Taxpayers who need paper copies of the forms can download them at IRS.gov or VisionPayroll.com.

Growth in Electronic Filing Spurred Move

The IRS says that it took these steps due to the continued growth in electronic filing as well as to help reduce costs. Additionally, most business forms are available through tax professionals and tax software.

Mailing of Many Other Forms Also Discontinued

The IRS also announced that mailing of the following forms and publication has also been discontinued:

Product	Title
Form 940	Employer’s Annual Federal Unemployment (FUTA) Tax Return
Form 943	Employer’s Annual Federal Return for Agricultural Employees
Form 944	Employer’s Annual Federal Tax Return
Form 945	Annual Return of Withheld Federal Income Tax
Form 720	Quarterly Federal Excise Tax Return
Form 730	Monthly Tax Return for Wagers
Form 2290	Heavy Highway Vehicle Use Tax Return
Form 5500	Annual Return/Report of Employee Benefit Plan
Form 8027	Employer’s Annual Information Return of Tip Income and Allocated Tips
Form 8160-T	Tax Product Availability for Exempt Organization Filers
Form 11-C	Occupational Tax and Registration Return for Wagering
Form CT-1	Employer’s Annual Railroad Retirement Tax Return
Publication 51	(Circular A) Agricultural Employer’s Tax Guide
Publication 80	(Circular SS) Federal Tax Guide for Employers in the U.S. Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands
Publication 179	(Circular PR) Guía Contributiva Federal para Patronos Puertorriqueños
Package 1120-H	U.S. Income Tax Return for Homeowners Associations

Vision Payroll Submits These Forms Electronically

Vision Payroll submits Form 941, Form 944, and Form 940 electronically to the IRS for its clients and does not need paper copies of the forms.

Substantial enforcement developments from government agencies focusing on worker classification compliance are putting employers on notice. Learn about the issues affecting businesses nationwide and the key steps to take immediately.

Five Questions About Worker Misclassifications

1. What is the impact of the Employee Misclassification Prevention Act (EMPA)?
2. What plans does the Internal Revenue Service (IRS) have to audit certain industries?
3. What are the fines for misclassification of workers or recordkeeping violations?
4. What type of classification testing can be used to ensure proper employee classification?
5. What are five tips that can be used to help classify workers properly?

Learn How to Avoid Worker Misclassifications

To learn the answers to these questions and much more, be sure to listen to Worker Misclassifications and How to Avoid Them in this month’s HRCast, a recording provided by our team of HR Pros and available exclusively on MyHRSupportCenter.

MyHRSupportCenter Provides Alerts, Best Practices, and HR Tools Every Day

Visit MyHRSupportCenter regularly, not only for our HRCasts, but also to get late-breaking compliance alerts, best practices to implement, and HR tools to use every day. If you haven’t yet signed up and would like a free trial of MyHRSupportCenter, contact Vision Payroll today.

In Notice 2011-12, Withholding on Wages of Nonresident Alien Employees Performing Services Within the United States the Internal Revenue Service (IRS) announced that Notice 2009-91 will not apply to wages paid after December 31, 2010.

Notice 2009-91 Modified Withholding Procedures for 2010

In Notice 2009-91, Withholding on Wages of Nonresident Alien Employees Performing Services Within the United States, the IRS modified the procedures for calculating the amount of federal income tax to be withheld from wages paid to nonresident aliens starting on January 1, 2010. Since nonresident aliens were not eligible for the Making Work Pay Tax Credit, the withholding procedures were modified to reflect this difference.

Making Work Pay Credit Unavailable in 2011

Since the “Making Work Pay Credit does not apply to taxable years beginning after December 31, 2010…the withholding tables for wages paid on or after January 1, 2011 will not reflect the Making Work Pay Credit, and Notice 2009-91 will not apply in determining the withholding on nonresident aliens.”

Withholding Rules for Nonresident Aliens for 2011

According to the IRS:

For wages paid on or after January 1, 2011, employers must determine the amount of income tax to withhold from wages paid to nonresident alien employees for services performed within the United States, using the procedure explained in Notice 2005-76, 2005-2 C.B. 947, together with the tables in the revisions of Publication 15 (Circular E), Employer’s Tax Guide, and Notice 1036 that are in effect when the wages are paid. This procedure is explained in Publication 15 and Notice 1036.

Contact Vision Payroll for Further Information

Contact Vision Payroll if you have any questions on Notice 2011-12.

In IMRS10-0001357, the Internal Revenue Service (IRS) confirmed that erroneous CP 276B and CP 207 notices were sent to several taxpayers.

IMRS Addresses Significant Issues Regarding IRS Policies, Practices and Issues

The Issue Management Resolution System (IMRS) was designed to capture, develop, and respond to stakeholder issues and to identify nationwide trends in the reporting, filing, and paying requirements that may indicate a need to change IRS processes or procedures.

HIRE Credit Misapplication Led To Erroneous Notices

A problem was identified in the way the 2010 first quarter HIRE credit (line 12e) was applied when computing the Failure to Deposit (FTD) penalty on 2010 second quarter Forms 941. As a result, erroneous CP276B notices were issued.

IRS Response To Incorrect Penalty Notices

The IRS response to this issue is:

Incorrect CP276B and CP207 notices were generated for Form 941 for the tax period ending [June] 30, 2010. There was a programming problem and the HIRE credit arising from the first quarter and claimed on second quarter Forms 941 was not used in the systemic FTD penalty calculation. As a result, the computer charged incorrect penalties in some cases and generated incorrect CP 276B systemic waiver notices in others. A recovery was run to reverse the incorrectly assessed FTD penalties. No corrective action is necessary for the incorrect CP 276B notices since no penalty was charged. This situation will not be considered for future determinations of whether First Time Abatement relief will be granted.

Contact Vision Payroll for Further Information

Contact Vision Payroll for further information regarding the incorrectly issued penalty notices.

In Announcement 2011-14, the Internal Revenue Service (IRS) “has concluded that breast pumps and supplies that assist lactation are medical care under § 213(d) of the Internal Revenue Code because, like obstetric care, they are for the purpose of affecting a structure or function of the body of the lactating woman.” Therefore, assuming all other requirements are met, these expenses qualify as deductible medical expenses.

Reimbursement Allowed Under Flexible Spending Arrangements

Since these amounts qualify as deductible medical expenses, reimbursements of “these expenses under flexible spending arrangements [FSAs], Archer medical savings accounts, health reimbursement arrangements, or health savings accounts are not income to the taxpayer.”

Publication 502 to Be Revised

The IRS will revise Publication 502, Medical and Dental Expenses, to include this information

Contact Vision Payroll for Further Information

Contact Vision Payroll if you have any questions on Announcement 2011-14.

The Internal Revenue Service (IRS) recently released a draft Form 941, Employer’s QUARTERLY Federal Tax Return. The revised Form 941 will be used for reporting information for the first quarter of 2011 and later quarters. It cannot be used to report information for 2010.

Social Security Rate Is Changed on Draft Form

Since the employee social security tax rate for 2011 is 4.2%, the rate used to calculate tax on both taxable social security wages and taxable social security tips has been changed from 12.4% to 10.4%.

New Line 5e Has Been Added

The draft form includes a new line 5e to report §3121(q) notice and demand—tax due on unreported tips. Under §3121(q), when notice and demand is made for such taxes, the remuneration is deemed to be paid on the date of the notice.

Lines 6a-6d Made Inactive

Lines 6a, 6b, 6c, and 6d have been made inactive on the draft Form 941. These lines were used to report on qualified employees and exempt wages under the HIRE Act.

Contact Vision Payroll for Further Information

Contact Vision Payroll for further information on the changes in the draft Form 941.

In IR-2011-017, the Internal Revenue Service (IRS) announced that interest rates for the second quarter of 2011 would increase from the first quarter. The rates are as follows:

• Four (4) percent for overpayments [three (3) percent in the case of a corporation];
• Four (4) percent for underpayments;
• Six (6) percent for large corporate underpayments; and
• One and one-half (1.5) percent for the portion of a corporate overpayment exceeding $10,000.

Revenue Ruling 2011-5 Contains Official Rate Announcement

The IRS will publish the rates in Revenue Ruling 2011-5. Contact Vision Payroll if you have any questions on the second quarter rates.

This week’s question comes from Myrtle, a retired bookkeeper. I thought the income tax cuts were extended, but now the federal income tax withholding on my pension has increased. Why did my withholding Increase on my pension? Answer: The Internal Revenue Service (IRS) gave a detailed answer to this question in Special Edition Tax Tip 2011-01. The answer follows:

Why Employees and Retirees May See Changes in 2011 Payments and Withholding

The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, enacted on December 17, 2010, included several changes impacting workers’ take-home pay and retirees’ net pension checks for 2011. The Tax Relief Act extended for two years the income tax rates that were scheduled to expire at the end of 2010; that extension prevented a large increase in federal income tax withholding.

However, the new law did not extend the Making Work Pay (MWP) credit that had been available for tax years 2009 and 2010. While most workers qualified for the maximum MWP credit, pension recipients did not qualify for any MWP credit unless they also had wages or other earned income.

In December 2010, the IRS published new federal income tax withholding information to reflect the impact of the Tax Relief Act. The fact that the MWP credit expired, by itself, would have resulted in increased withholding for most taxpayers. However, under the Tax Relief Act, withholding for social security tax for all wage earners was reduced from 6.2% to 4.2% (withholding for Medicare, at 1.45%, did not change). For most employees, the net effect of these two changes will result in less total tax being withheld from their checks. The social security tax reduction does not affect pension payments.

Due to the late enactment of these tax law changes, the IRS asked employers and plan administrators to adjust their systems as soon as possible but not later than January 31, 2011. This means employees and pension recipients may not have seen the full impact of these changes until their first paycheck in February, 2011.

Once employers implement the changes, there will be a net increase in take-home pay for most employees (excluding the impact of any other withholding amounts, such as withholding for health insurance, state income taxes, etc.).

Once pension plan administrators implement the 2011 changes, the retirement check payments for some pensioners may be lower depending upon the method that their plan administrators used to calculate withholding in 2010. Because the MWP credit did not apply to pensioners, the IRS published a table for 2009 and 2010 giving plan administrators the option of increasing withholding for their pension recipients. Not all plan administrators made the optional adjustment and instead allowed pensioners to make the adjustment when they filed their tax returns. Since the 2011 withholding tables do not reflect the expired credit, pension recipients in this situation are likely to see the withholding for their 2011 pension payments increase by approximately $7 to $50 per payment, depending on filing status, the amount of the payment, and how often the payment is made.

IRS encourages both employees and pensioners to review their withholding every year using the withholding calculator on IRS.gov and, if necessary, fill out a new W-4 or W-4P form and give it to their employer or pension plan administrator.

Contact Vision Payroll for Further Information

Contact Vision Payroll if you have any further questions on the changes in federal withholding.

This week’s question comes from Christina, an HR director. We use Publication 1494 to determine the amount of wages exempt from levy. Publication 1494 is usually available in December for the following year. When will the 2011 Publication 1494 be released? Answer: Publication 1494, Tables for Figuring Amount Exempt from Levy on Wages, Salary, and Other Income (Forms 668-W(ACS), 668-W(c)(DO) and 668-W(ICS)), is used to calculate the amount of wages and other income exempt from levies for delinquent taxes and was recently released by the Internal Revenue Service (IRS).

Use New Publication 1494 for Levies Issued in 2011

In addition to levies issued in 2011, employers use the revised amounts to calculate the exempt amount if the employee should provide a revised statement showing a change in filing status or exemptions. The amounts have increased slightly over the amounts used for levies issued in 2010.

Vision Payroll Can Assist in Publication 1494 Calculations

Contact Vision Payroll for assistance in automating the calculation of the exemption and levy amounts on employees’ paychecks.

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 2011. 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

Additional Information provided in Publication 15-A

In addition, Publication 15-A provides information on What’s New, Reminders, and Useful Items.

Contact Vision Payroll Today

Contact Vision Payroll if you have any questions on Publication 15-A.