The HIRE Act: Part II

Payroll and HR administrators need to take note and remember “part II” of the HIRE Act.  As you recall, last spring Congress passed the HIRE Act to encourage businesses to bring on more employees. The Act went into effect March 18, 2010. It basically had two parts.  

“Part I” allowed business to take an exemption from paying their share of the Social Security tax (6.2%) on all new hires. The Act stipulated that any individual hired between Feb 3, 2010 & Jan 1, 2011 that had not worked for 60 days prior to being hired was eligible. New employees had to sign an affidavit stating they had not worked in 60 days. Businesses could take the exemption on paying their share of the social security tax for the entire year of 2010. This part of the Act expired Jan. 1, 2011. All businesses were eligible, even seasonal businesses, and it resulted in hundreds of millions of dollars in payroll tax savings. The IRS did implement rules to avoid abuse of the law such as stipulating that a business could not let some one go and then turn around and hire a new person to replace them. Nor could a business get the tax break for hiring family members.    

Businesses took the credit by paying in less payroll taxes. The tax exemption was then indicated on form 941 in order to accurately balance payroll tax liabilities due with payroll tax payments made. Note if you missed taking advantage of this tax exemption, you cannot do so retroactively.

Now that a year has passed, “Part II” is now kicking in. It allows businesses, for each qualified employee retained for at least 52 consecutive weeks, to be eligible for a general business tax credit, referred to as the new hire retention credit. The credit allowed equals 6.2 percent of wages paid to the qualified employee over the 52 week period, up to a maximum credit of $1,000.

Note that unlike the first part of the Act, this credit is not taken when filing payroll taxes. It is a business tax credit. Payroll and HR departments should work closely with the accounting dept. to make sure that the individuals filing company income taxes utilize the correct credit due.

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Congress Continues to Work on Bills That Will Affect All Employers

Congress is hard at work proposing bills that will affect many employers and how employees are paid. Here is some of the legislation in the works:

– The Payroll Fraud Prevention Act would amend the Fair Labor Standards Act (FLSA) to penalize all employers who misclassify individuals as independent contractors  instead of employees. Employers would have to accurately classify workers as employees or non employees and would have to give them written notification of such. Failure to accurately classify the worker will result in fines up to $1,100 per occurrence. Repeat violators would be fined up to $5,000. Congress has been working on legislation to curb the abuse of misclassification for a number of years now. It appears that eventually something will be passed as they continue to work on increasing tax revenues.

– There is now a bill in Congress to increase the wage for tipped employees. Under the bill, the FLSA would be amended to raise the wage for tipped workers to $3.75 per hour 3 months after the bill becomes law and then $5.00 per hour one year later. A year after that, the wage for tipped employees would be set at 70% of federal minimum wage or no less than $5.50.

– The Senate has introduced a bill that would allow Congress flexibility in how they spend the excess $31 billion dollars in already approved unemployment funding. The Bill would allow states to continue paying regular or extended benefits,  help prevent increases in SUTA rates or use the funds for re-employment services. Another bill  is looking at options to allow for the continuation of the FUTA credit each state is granted as well as interest penalty relief for states that have borrowed funds to prop up their unemployment trust funds. It appears they are going to spend the allocated funds whether they have to or not.

All these bills are still in the preliminary stages but represent another attempt to pass legislation of a similar nature that was previously attempted. Try often enough and eventually something may get through. The Advi$or will keep you posted as to if and when they become law.

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Recent Tornados Can Allow for Tax Filing Relief

Last week NE Tennessee was hit by some powerful storms that caused extensive damage to both personal and business property.  The President has declared four Tennessee counties to be federal disaster areas: Bradley, Hamilton, Washington and Greene.  Two of those counties are in our region.  Our thoughts and prayers are with those who lost family and friends or their homes or businesses in the storm and we have made contributions to the Red Cross to support local relief efforts.

One of the consequences of the President’s declaration is that the IRS is providing tax relief for the filing deadlines for most types of tax returns, including payroll returns, and the payment due dates for most tax payments.  Businesses in these areas need to know that there may some tax filing relief that may help them. 

Specifically payroll related, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after April 25 and on or before May 10, 2011, as long as the deposits were made by May 10, 2011. Specifically, the postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after April 25 and on or before May 10 provided the taxpayer made these deposits by May 10.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hot-line at 1-866-562-5227 to request this tax relief.

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief.  For example, a business in Sullivan County that uses a CPA firm in Greene County to perform all of their accounting functions would be eligible for this relief.

The IRS will also grant relief to affected taxpayers until June 30 to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after April 25 and on or before June 30. They will also grant relief to affected taxpayers regarding other time-sensitive actions related to making contributions to qualified retirement plans, filing claims, etc. 

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may research this topic, download forms and publications from the official IRS Web site, irs.gov, or order forms by calling 1-800-TAX-FORM (1-800-829-3676). The IRS toll-free number for general tax questions is 1-800-829-1040.

Posted in News

ObamaCare 1099 Law Repealed

Payroll departments take note!…. Under tremendous pressure from all sides, President Obama on Thursday (4/14) signed into law a bill repealing Obamacare’s 1099 tax reporting requirement, the first provision of the Obamacare to be repealed. The Senate finally passed the law on April 5. The Republican controlled House cleared it in March. Obama signed the bill, which was previously defeated several times, even though he had issue with the way it’s paid for: a “clawback” provision that goes after people who get more in health care subsidies than entitled to under the health care reform law. The president stated (…and we are not making this up…) “Today, I was pleased to take another step to relieve unnecessary burdens on small businesses by signing H.R. 4 into law” 

Ever since the passage of Obama’s health care law and the realization of the 1099 requirement, there has been a big push to get this law repealed. The law which would have gone into effect in 2012, would have required all businesses to file 1099′s for every business and individual they made payments to in excess of $600. For example, if you spent over $600 purchasing gas for the company car at a local gas station, you would have been required to issue that gas station a 1099.  The purpose of the law was to help collect tax on on supposedly unreported income. Lawmakers estimated the requirement would have resulted in $17 billion in additional annual taxes collected. However, the IRS estimated it would have to hire at least 15,000 additional agents to enforce the rule and that enforcement would cost approximately $30 billion annually.

On a related Obamacare topic, in the month of March, 128 new business entities were allowed an exemption from the new health care plan. This means that since its inception, 1,168 businesses, insurers, unions and other organizations have received at least one-year exemptions from the health care reform provision. Proponents of the plan state that these exemptions are necessary while the health care industry adjusts to the new model. Opponents point out that if the new health care plan is so good, then why all the exemptions?

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Time & Pay Announces Supplemental Benefits Offering!

Working with Allstate Benefits in a professional partnership, Time & Pay is pleased to announce the offering of voluntary supplemental benefits as part of their package of payroll and employer services.

“Many employers are not aware of the benefits of supplemental benefits”, said Graeme Urash of Allstate Benefits.  ”They are one of the best ways for employers to offer their employees affordable health related benefits.” It is up to the employer if they want to cover the cost  or let employees cover these low cost benefits. In many cases, the benefit premium can be designated as pre-tax thus lowering the payroll tax liability for both the employer and the employee.

The Time & Pay plan includes Group Term Life, Group Cancer, Group Accident, and Group Critical Illness.  One of the best features of the Time & Pay plan is the “group” designation. Thus our small and medium size customers will receive the same underwriting considerations that larger companies receive. More importantly, the group designation specifies these plans will be “guaranteed issue”,  meaning that these policies will be issued without employees having to answer health related questions.

Allstate Benefits, formerly  Allstate Workplace Division, has been helping Benefits Managers all across the nation successfully accomplish their business objectives since 1956. They are proud to offer high quality voluntary supplemental insurance that can be easily measured during a time of need – an accident, a disabling injury, an illness or death. Allstate Workplace Division provides the right voluntary insurance products that can be customized with various levels of coverage. Allstate believes everyone should be able to access quality insurance from a company they trust. 

“We are very pleased to be working with Allstate, one of the largest providers of supplemental benefits, to offer a great package of benefits to our customers and their employees,”  said Steve Scheu of Time & Pay.  ”We continue to work hard at offering our clients valuable products and services that cost effectively help them better manage their payroll, their employees and their business. We will be able to work with Allstate to streamline the management of these benefits making it easy for our customers to create a better working environment for their employees without the headaches. This relationship with Allstate fits right into our business service model.”

For further information, read our Benefits page.

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“Time & Pay does a great job handling both our corporate and independent store accounts. The flexibility of their on-line capabilities gives us the information we need when we need it. Their response to our diverse needs has been excellent.”
-B G – HobbyTown USA, Omaha, Nebraska

“We have been using Time & Pay for a number of years. Their customer service is outstanding. I would recommend their products and services to anyone looking to get the most out of the payroll process and stay compliant with federal and multi-state payroll regulations.”
-M W – Royal Brass, Knoxville, TN

“After working with one of the national firms, the transition to Time & Pay was easy and beneficial. Their products and services exceeded what we were getting, were more cost effective, and their customer service goes above and beyond. We are very happy we made the change.”
-R V – Mountain Treasure Corral, Kingsport, TN

“Opening up a large retail operation, the last thing I wanted to concern myself with was payroll and all the compliance hassles. Time & Pay takes care of all my payroll needs. With their services, my payroll worries are eliminated. We would recommend your services to any one.”
-D K – DW Express LLC, Bristol, VA

“We had been doing payroll in-house for years and was looking for a cost effective alternative. Your systems and services have been able to provide us with information and reports we were not able to produce with our old system. You have freed our time to concentrate on more important accounting aspects of our business. With the excellent services you provide, we would not consider any other payroll processing system.”
-Kwick-Way Transportation Co, Gray, TN

Time & Pay is a  godsend for a small business like mine. I no longer have to worry about paying my employees or my payroll taxes accurately or on time!  Time & Pay takes care of everything for me!
-B M – Stellar Studios, Johnson City, TN

A while back, the state came to our office to audit our payroll records. When the auditor found out Time & Pay did our payroll, she stopped, packed her briefcase and informed us there was no need for the audit. She was very confident we were compliant.
-K B – GR&P Co. Bristol, TN

“Having Time & Pay as a payroll service has been a wonderful partnership. Their customer service, punctuality and attention to detail have surpassed our expectations and we are glad to have them as a partner in conducting all of our payroll functions. I would highly recommend their services to companies, large and small.”  
-T W – Little Things, LLC, Chattanooga, TN

“From the start, Time & Pay has worked with us in many aspects of payroll and HR as we have grown from a single facility to a multi-state operation. They have allowed us to concentrate on that expansion while they have focused on keeping us compliant with payroll and timekeeping regulations. There customer service is exemplary! They are great to work with.”
-J G – Prime Choice Foods, Denver, CO

“We find your integrated timekeeping and payroll easy to use and more accurate than the time sheets we were using. My time is now freed up to take care of my patients and other aspects of my business. Thanks for making the transition to outsourcing my payroll easy and cost effective.”
-B W – Westmoreland, DDS, Johnson City, TN

7-15-2014

FMLA Benefits Now Include Same Sex Marriage Couples

Under a proposed rule issued June 20th by the Dept. of Labor, the Family and Medical Leave Act (FMLA) will now apply to eligible employees in legal same-sex marriages regardless of what state they live in and that state’s same-sex … Continue reading

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6-30-2014

Minimum Wage to Increase in Some States

Mid 2014 brings minimum wage increases to a number of locations. The hourly minimum wage rate is to increase July 1 in two states and the District of Columbia, with rate changes coming over the next few months in other states. … Continue reading

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6-20-2014

Payroll News

Changes in FLSA expected in November: In response to President Obama’s executive order declaring that the FLSA protections should cover more employees, the Dept of Labor has declared that they expect to announce the FLSA OT wage cap in November … Continue reading

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