Vision Payroll

This week’s question comes from Ron, an HR director. We’ve been hearing that GINA is going to create problems for many employers. We have fifty-five employees. Will GINA cause problems for us? Answer: the Genetic Information Nondiscrimination Act of 2008 (GINA) is effective November 21, 2009 and creates a new set of rules for two types of entities: health insurance companies and private, state, and local government employers with 15 or more employees, employment agencies, labor unions, and joint labor-management training programs. Health insurers are generally prohibited from using genetic information to determine eligibility, to determine premium levels, or in determining a pre-existing condition. For employers, GINA generally prohibits discrimination in the employment process because of genetic information. Although the rules are very complex, some limited protections are available when an employer may inadvertently learn information about an employee. For example, a question about a relative’s health may result in the employer learning about family medical history. This might be protected under some of the provisions of GINA. Conversely, state law may provide protection that is more beneficial to the employee and must be followed. Due to complex nature of the many new rules, Vision Payroll strongly recommends covered employers and employers that offer health insurance contact competent labor law attorneys for guidance in this area. If you need a referral to an attorney, contact Vision Payroll so that GINA doesn’t cause problems for you.

This week’s question comes from Kevin, a sole proprietor. I am forming an LLC and will be converting from a sole proprietorship to a single member LLC, but still taxed as a sole proprietor. Do I need a separate EIN for my single member LLC? Answer: As explained earlier, in TD 9356, the IRS announced that single member LLCs would be treated as corporations for employment tax purposes, but that the single member would still be treated as self-employed and not an employee of the LLC. Therefore, sole proprietors forming an LLC should apply for and obtain a new Employer Identification Number (EIN) using Form SS-4, Application for Employer Identification Number. Contact Vision Payroll if you have any further questions on single member LLCs.

This week’s question comes from Elizabeth, a small business owner. I need to give copies of my quarterly tax returns to my CPA so I can finish my income tax return. I can’t find my copies anywhere. How can I get copies of my quarterlies? Answer: Vision Payroll offers a CPA Reporting Service that will deliver electronic or paper copies of your quarterlies to your CPA. Your CPA will appreciate always having your file up-to-date and you’ll appreciate the timesavings for both of you at year-end. And there’s no charge for this valuable service. Send us the name and address of your CPA and we’ll get you the paperwork to enroll. Contact Vision Payroll today to get started.

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 Rick, a business owner in Manhattan. This week’s tax liability expense was larger than normal, mostly due to the New York MTA Payroll Tax. Why do I have a big withdrawal for MTA Payroll Tax this week? As previously reported, the Metropolitan Commuter Transportation Mobility Tax or MTA Payroll Tax covers wages paid within the Metropolitan Commuter Transportation District (MCTD) after February 28, 2009. The tax filing for the third quarter must include the tax on all wages paid after February 28, 2009 and before October 1, 2009. In the last payroll of this quarter, all uncollected taxes for that period were collected for payment with the third quarter return. After the third quarter, filing and payments will be due on a quarterly basis. Contact Vision Payroll if you have any questions on your MTA Payroll Tax liability.

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.

This week’s question comes from Kim, a business owner. We have an employee who never shows up for work the Friday before a holiday. Can we require employees to work the day before or after a holiday? Answer: Employers may condition holiday pay on attendance, i.e., employers may require employees to work on the scheduled workday before and after the holiday to receive holiday pay. Some employers have exception policies that allow employees to schedule vacation around a holiday, to take a personal day with advanced notice, or to take a sick day with a note from a doctor. Other employers strictly enforce the policy and do not allow exceptions. Contact Vision Payroll if you have any further questions on holiday pay.

This week’s question comes from Ryan, a small-business owner. We’re going to be closed next Monday for Labor Day. We have some full-time employees and some part-time employees. Do I have to pay employees for holidays? Answer: There is no requirement in the Fair Labor Standards Act (FLSA) for employers to pay employees for holidays not worked or to pay them a higher rate if they do work. Most employers do pay holiday pay to their full-time employees. Among part-time employees, some employers pay a full day’s pay, some pay according to the employee’s work schedule or other allocation method, and some do not pay part-time employees for holidays. Most public sector and union employees have holiday pay negotiated into their contracts.

State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have further questions about holiday pay.

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 week’s question comes from Brian. We need more help in our business. We’re not sure if the person who’ll provide us services should be considered an employee. How do I know if someone is an employee or independent contractor? Answer: In Summertime Tax Tip 2009-20, the Internal Revenue Service (IRS) listed ten items a business should consider when deciding whether an individual is an employee or independent contractor. They are:

1. Three characteristics are used by the IRS to determine the relationship between businesses and workers: Behavioral Control, Financial Control, and the Type of Relationship.
2. Behavioral Control covers facts that show whether the business has a right to direct or control how the work is done through instructions, training or other means.
3. Financial Control covers facts that show whether the business has a right to direct or control the financial and business aspects of the worker’s job.
4. The Type of Relationship factor relates to how the workers and the business owner perceive their relationship.
5. If you have the right to control or direct not only what is to be done, but also how it is to be done, then your workers are most likely employees.
6. If you can direct or control only the result of the work done — and not the means and methods of accomplishing the result — then your workers are probably independent contractors.
7. Employers who misclassify workers as independent contractors can end up with substantial tax bills. Additionally, they can face penalties for failing to pay employment taxes and for failing to file required tax forms.
8. Workers can avoid higher tax bills and lost benefits if they know their proper status.
9. Both employers and workers can ask the IRS to make a determination on whether a specific individual is an independent contractor or an employee by filing a Form SS-8 – Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding – with the IRS.
10. You can learn more about the critical determination of a worker’s status as an Independent Contractor or Employee at IRS.gov by selecting the Small Business link. Additional resources include IRS Publication 15-A, Employer’s Supplemental Tax Guide, Publication 1779, Independent Contractor or Employee, and Publication 1976, Do You Qualify for Relief under Section 530? These publications and Form SS-8 are available on the IRS Web site or by calling the IRS at 800-829-3676 (800-TAX-FORM).

Contact Vision Payroll if you need further information.