Vision Payroll

Thursday, January 1, 2009 will be New Year’s Day, a federal holiday. The offices of Vision Payroll will close New Year’s Eve, December 31 at 2 pm and re-open Friday January 2. Most banks will also be closed in observance of the holiday. Payrolls dated January 1 will be paid December 31 unless a previous change in schedule has been submitted. Payroll changes and hours must be submitted before the processing deadline on December 29. For payrolls dated January 2, payroll changes and hours must be submitted before the processing deadline on December 30. For payrolls dated January 5, payroll changes and hours must be submitted before the processing deadline on December 30. Payrolls submitted after these processing deadlines will be pushed back until the next available processing day. Due to heavy USPS and UPS delivery requirements, we strongly recommend submitting payrolls during this time as early as practicable. UPS does not ship ground deliveries received on December 31 until January 2 so we do not recommend submitting payrolls on that date. No changes are required for payrolls dated January 6. Contact Vision Payroll as soon as possible to make changes to or for questions on your processing schedule.

In conjunction with recent amendments to the Payday Loan Act (Code of Virginia §§6.1-444 et seq.) that take effect January 1, 2009, the Virginia State Corporation Commission has adopted conforming regulations (Case Number BFI-2008-00295) on licensed payday lenders. In addition to requiring development of an internet database for licensed lenders to access and transmit loan information to, the new law made significant changes in interest rates and fees allowed, and placed restrictions on the frequency of such loans. Payday loans can be an expensive form of borrowing for employees; a two-week loan with a 15% fee works out to an Annual Percentage Rate (APR) of 391%. With the increased restrictions and higher fees allowed under the new law, employers may face more requests from employees for payday advances. Vision Payroll highly recommends consulting with your labor law attorney to ensure that any loans are properly documented and that deductions from pay checks comply with federal and state laws.

In TD 9356, the Internal Revenue Service made final the regulations on disregarded entities effective August 16, 2007. In order to allow taxpayers sufficient time to make the changes required by the regulations, the IRS delayed the effective date for the payroll tax changes until January 1, 2009. Under the new regulations, qualified subchapter S subsidiaries (QSubs) (under §1361(b)(3)(B) of the Internal Revenue Code of 1986) and single-owner eligible entities (under §301.7701-1, §301.7701-2, and §301.7701-3 of the Procedure and Administrative Regulations) that are treated as disregarded entities for most federal tax purposes will be treated as corporations for employment tax purposes. Therefore, owners of single-member LLCs who are treated as sole proprietors for income tax purposes must treat their LLCs as separate entities for employment tax and related reporting purposes. The final regulations clarify that an owner of a disregarded entity will continue to be treated as self-employed and not as an employee of the entity. The regulations also clarify that disregarded entities that are owned solely by a §501(c)(3) organization will maintain the organization’s exemption from federal unemployment tax or FUTA. Contact Vision Payroll if you have questions on changes to the payroll tax reporting procedures for single-owner eligible entities and QSubs.