The Massachusetts Division of Unemployment Assistance (DUA) has released the 2010 employer contribution rates for unemployment taxes. Employers may check their rate using QUEST. Rates were determined using Schedule E, the same schedule as was used in 2009. Even though the rate schedule remained the same, individual employer rates generally changed based on activity in their account during the measurement period of October 1, 2008 to September 30, 2009. Since the rates were released late in the quarter, some employers may have significant overpayments or underpayments of tax because the rate differential must be applied to all subject wages for the entire first quarter.
Employers who received their rate decrease before the last payroll of the quarter will receive a credit in the last payroll of the quarter for the difference between the tax collected and the tax now due using the new rate. Employers who received their rate decrease after the last payroll of the quarter will receive a refund check for the difference between the tax collected and the tax now due using the new rate.
Employers who received their rate increase before the last payroll of the quarter will need to pay the additional tax equal to the difference between the tax collected and the tax now due using the new rate in the last payroll of the quarter. Employers who received their rate increase after the last payroll of the quarter will need to pay the additional tax equal to the difference between the tax collected and the tax now due using the new rate in an additional end-of-quarter payroll.
The adjustment in the last payroll or additional payroll should be the only adjustment required to correct the tax liability for 2010. Contact Vision Payroll if you have further questions on the 2010 employer contribution rates for unemployment taxes.
The Massachusetts Division of Unemployment Assistance (DUA) has released the UHI contribution rates for 2010. 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.
According to the DUA, for 2010 rates will be as follows:
The health insurance contribution rate is a flat rate of 0.24% for calendar year 2010 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 2010 UHI contribution rates.
Under recently enacted legislation, contribution rates for Massachusetts employers will remain at Schedule E for 2010. Based on the low level of reserves in the fund, previous law would have required an automatic shift to Schedule G. Contact Vision Payroll if you have any questions on the new law.
The Massachusetts Division of Unemployment Assistance (DUA) previously extended the due date for quarterly filings using the new QUEST (Quality Unemployment System Transformation) program two weeks. Since February 15, 2010 was Washington’s Birthday, a federal and state holiday, the deadline was further extended until today, February 16, 2010. Employers who file and pay by today’s extended due date will not be assessed interest or penalties. Filings and payments after today’s extended due date will result in interest and penalties assessed starting on the original due date of February 1, 2010, not the extended due date. Contact Vision Payroll if you have any questions on complying with the DUA’s QUEST program.
The Massachusetts Department of Revenue (DOR) recently released a working draft of TIR 09-23, Effect of the Military Spouses Residency Relief Act or Public-Law 111-97 (the MSRRA). Under the MSSRA, spouses of military personnel who are present in or absent from a domicile due to compliance with military orders will not have their tax residence impacted by such presence or absence. According to the TIR 09-23:
For taxable year 2009, a servicemember’s spouse who had Massachusetts personal income tax withheld and who qualifies for exemption from Massachusetts tax under the MSRRA must file a Massachusetts non-resident income tax return, Form 1NR/PY, to claim a refund. For this purpose, the Form 1 NR/PY return must be paper filed; no efile returns are allowed. The qualifying spouse must write “MSRRA,” across the top of the Form 1NR/PY and attach copies of the following:
- Military Spouse ID card.
- Department of Defense Form 2058, State of Legal Residence Certificate – “legal residence for purposes of withholding state income taxes from military pay;”
- LES, Leave and Earnings Statement of servicemember; and
- Servicemember’s current military orders assigning such servicemember to a post of duty in Massachusetts (or an adjoining state).
The qualifying servicemember’s spouse must pay tax to the state of domicile for 2009, to the extent required by the state of domicile.
For taxable years beginning with 2010, a non-resident servicemember’s qualifying spouse whose wages are exempt from Massachusetts personal income tax under the MSRRA may claim an exemption from Massachusetts withholding tax. A military spouse who qualifies for Massachusetts wage exemption under the MSRRA must complete a Form M-4-MS, Annual Withholding Tax Exemption Certificate for Military Spouse, and provide required documentation.
The Form M-4-MS must be validated on an annual basis. The military spouse must show continued eligibility for the exemption. Scenarios that will cause the spouse to no longer be eligible include:
- Servicemember leaves the service;
- Divorce;
- Voluntary physical separation due to duty changes – the servicemember’s orders move him or her to a location outside Massachusetts where the spouse is allowed to join him or her but chooses not to; or
- Spouse commits an action that clearly establishes Massachusetts as his or her state of domicile.
Contact Vision Payroll if you have any questions on the Military Spouses Residency Relief Act.
The Massachusetts Department of Revenue has released an emergency regulation 830 CMR 62B.2.3: Motion Picture Production Company Withholding. This regulation “establishes and explains the requirements of motion picture production companies to withhold Massachusetts personal income tax on payments to independent contractors and loan-outs for services rendered in Massachusetts.” The regulation provides information in the following areas:
- Statement of Purpose; Outline of Topics
- Definitions
- Registration and Reporting Obligations of a Production Company; Qualification for the Credit
- Withholding and Reporting Requirements as Prerequisites for Credit Qualification; Loan-Out Filing Requirements
- Personal Income Credit against Taxes; Reporting Requirements
- Coordination with Other Withholding Requirements
- Effective Date
Since the regulation was issued as an emergency regulation, it is effective immediately and requires withholding on covered payments made after February 17, 2010. A transition rule allows certain waivers issued before February 18, 2010 to remain in effect for the duration of the production for which the waiver was issued. Contact Vision Payroll if you have any questions on 830 CMR 62B.2.3.
This week’s question comes from Janine, an office manager. We are a Massachusetts employer with some employees who have chosen not to participate in the company health insurance plan. What are the penalties for not having health insurance in 2010? Answer: The Massachusetts Department of Revenue (the Department) has released a working draft Technical Information Release 09-XX, Individual Mandate Penalties for Tax Year 2010. In this working draft, the proposed penalties are as follows:
- Individuals with incomes up to 150% of the Federal Poverty Level are not subject to any penalty for non-compliance, as those at this income level are not required to pay an enrollee premium for Commonwealth Care health insurance.
- Penalties for individuals with incomes from 150% to 300% of the Federal Poverty Level will be half of the lowest priced Commonwealth Care enrollee premium that could be charged to an individual at the corresponding income level, based on the Connector’s Commonwealth Care enrollee premiums as of January 1, 2010.
- Penalties for individuals with incomes greater than 300% of the Federal Poverty Level will be:
Ages 18-26: half of the lowest priced Commonwealth Choice Young Adult Plan premium; and
Ages 27 and above: half of the lowest priced Commonwealth Choice Bronze premium, based on the Connector’s prices for these plans as of January 1, 2010.
- The Department anticipates issuing an updated penalty schedule for tax year 2011.
- Penalties for married couples who do not comply with the individual mandate rules (with or without children) will equal the sum of individual penalties for each spouse.
Contact Vision Payroll if you have any questions on the working draft of Information Release 09-XX, Individual Mandate Penalties for Tax Year 2010.
This week’s question comes from Thomas, a controller. I received a notification from the Massachusetts Division of Unemployment Assistance concerning their new QUEST program. What do I need to do to get ready for QUEST? Answer: QUEST (Quality Unemployment System Transformation) is the new online unemployment insurance system scheduled to be available on December 7, 2009. Soon all registered employers will be receiving a letter with their user ID and temporary password. Someone must logon, reset the password, list an Account Administrator, verify the employer account information, make updates, and provide missing information. Clients of Vision Payroll will also need to authorize Vision Payroll as their agent and select the roles that Vision Payroll will perform. When you receive this notification, contact Vision Payroll for assistance in registering with the QUEST system.
This week’s question comes from Michelle, a small business owner. I have not had to pay Massachusetts HICA tax all quarter. Now I have to pay it with the last payroll of the quarter. Why do we have to pay Massachusetts HICA tax this payroll? Answer: The Massachusetts Unemployment Health Insurance Quarterly Contribution (HICA) is required when the average employee count is six or greater for a quarter. Employers must pay contributions on the first $14,000 of each employee’s covered wages during the calendar year. The amount of the contribution is derived by multiplying these wages by an assigned rate. The health insurance contribution rate is 0.12% for most subject employers. 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 further questions.
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.
Vision Payroll