E-Verify Implemented in Tennessee

Many private Tennessee employers and all governmental entities are now required by law to demonstrate that they are hiring and maintaining a legal workforce according to a new Tennessee Lawful Employment Act law signed by Governor Bill Haslam. Tennessee entities must verify employee eligibility either by utlizing the E-Verify program or by requesting all newly hired employees to provide one of the following identity and employment authorization documents:

> A valid Tennessee driver’s license or photo identification
> A valid driver’s license or photo identification from another state where the license requirements are at least as strict as those in Tennessee
> A birth certificate issued by a U.S. state, jurisdiction or territory
> A U.S. government issued certified birth certificate
> A valid, unexpired U.S. passport
> A U.S. certificate of birth abroad
> A certificate of citizenship
> A certificate of naturalization
> A U.S. citizen identification card
> A lawful permanent resident card

Other proof of employee’s immigration status and authorization to work in the United States

The implementation dates for the new law are structured to occur in phases:
> January 1, 2012 – All state and local government entities and private employers with 500 or more employees must enroll and participate in E-Verify or request and maintain an identity / employment authorization document from a newly hired employee.
> July 1, 2012 – All private employers with 200 to 499 employees must enroll and participate in E-Verify or request and maintain an identity / employment authorization document from a newly hired employee.
> July 1, 2013 – All private employers with 6 to 199 employees must register and utilize E-Verify or request and maintain an identity / employment authorization document from a newly hired employee

Private employers with 5 or less employees are exempt from these new provisions. However, private employers with six or more employees to whom this law applies to must also collect one of the employment authorization documents types listed above for “non-employees” as well. The law defines “non-employee” as “any individual other than an employee, paid directly by the employer in exchange for the individual’s labor or services.”

Human Resource departments need to note that the law also specifies that employers must maintain records of results generated by the E-Verify program for three years after the date of the employee’s hire or for one year after the employee’s employment is terminated, whichever is later. Employers must also maintain records of any employment authorization documents for one (1) year after the employee or non-employee ceases to provide labor or services for the employer, whichever is later.

In the event of any alleged violations of the law, the Tennessee Department of Labor and Services is authorized to request documentation establishing the employer’s compliance with the law, and the employer is required to supply the documentation within thirty days. If the Department determines the employer has violated the new law, a final order for violation of the law shall be issued and may include fines and/or business license suspension.

Additional employment laws currently enacted in Tennessee include:

-HB 111 prohibits contractors from contracting with state agencies within one year of the discovery that the contractor employs illegal immigrants. Contractors must also attest that they do not employ illegal workers.

-HB 729 creates the criminal offenses of flagrantly employing, knowingly employing or knowingly encouraging or inducing an illegal alien to enter the state for the purpose of employing such illegal alien. Fines can amount to $50,000. Farmers are exempt from the new rule and are not required to have business licenses. Suspensions would be lifted once the company proves it no longer has any illegal immigrants as employees. Subsequent offenses occurring within three years would mandate license suspensions for one year. Employers who check identification and are misled by an illegal immigrant will not be considered to be in violation.

-SB 903 prohibits the use in the state of a federal individual taxpayer identification number as a form of identification to prove immigration status. It also provides that for purposes of an application or offer of employment, no person in this state shall accept an individual taxpayer identification number as a form of identification and any person, including any contractor, in this state who is presented with an individual taxpayer identification number by a potential employee or subcontractor as a form of identification or to prove immigration status shall reject such number and shall request the lawful resident verification information.

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Payroll Tax Cut Extended …for 2 Months

Looks like the Idiots in DC have extended the social security payroll tax cut for a period of two months! Thus employee’s social security tax rate will remain at 4.2% until Feb. 29, 2012. The employer’s share will remain at 6.2%.

The $33 billion package also provides extended federal unemployment benefits for two months, avoids a cut in payments to doctors who treat Medicare patients and compels the Obama administration to act within 60 days on a permit for the Canadian proposed Keystone XL pipeline expansion.

One difference in the final agreement is the elimination of a Senate-crafted plan that would have changed the way payroll taxes would have been deducted for higher-paid workers, a move that would have meant significantly changing payroll systems. The Senate proposed that any one earning over $110,100 (2012 max wage cap) would only be eligible for the payroll tax cut equaling 1/6 of the annual payroll tax cut (basically limiting the tax cut to the first $18,350 of earnings) … a payroll processing nightmare.  Payroll departments are breathing a sigh of relief, at least for now.

The bill’s $33 billion cost is expected to be covered by an increase in fees charged to mortgage lenders by government housing agencies Fannie Mae and Freddie Mac. The fee increase, expected to raise about $35.7 billion in revenue over 10 years, likely would be passed on to new-home buyers, raising their monthly mortgage payments by as much as $15 on mortgages of $210,000.

Experts note that, as you read this, the IRS is allocating valuable resources to design a new 941 and 944 form that takes into account a two month payroll tax break, one that  does not even occur for the entire first quarter. Payroll software engineers are also scrambling.  The same prognosticators are also predicting that the efforts will be a waste a time (but what choice do they have) as eventually the Idiots in DC will extend the credit for the entire year.

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Payroll Tax Cut to Expire…for now.

The House yesterday rejected the Senate’s proposed 2 month extension of the 2% reduction in the employee’s share of their social security taxes. According to press reports, the House passed a bill which, while not perfect, would at least prevent the looming tax hike for all working Americans, extend additional unemployment benefits and prevent cuts to Medicare providers with another “Doc Fix” for a full year.  Besides these three key policies, the House also included some policies helpful to job creation in trying to get the Obama administration to approve the Keystone oil pipeline (from Canada) project as well as an important change to fix Medicare’s finances, thus strengthening it for seniors today and tomorrow.  This change is crucial toward tackling the nation’s largest and most pressing fiscal issue — our entitlement crisis.

The Senate however decided to pass only a two-month extension of these three policies and then left for vacation.  

The Senate bill also chose to limit the amount of income that qualifies for payroll tax relief “so that upper-income earners don’t get more than their ‘fair share’ of the tax relief during this brief two-month period.” The Senate bill paid for it all by increasing fees on mortgages financed by Fannie Mae and Freddie Mac. 

From a payroll processing objective, the Advisor wishes that the idiots in DC would realize how difficult their inaction makes payroll processing. It leaves so much undone and so many people hanging. Working Americans will have no idea whether or not they’ll suffer a tax hike when the extension expires. Payroll processors will take on additional costs and have to jump through more hurdles in having to change their payroll systems to keep up with Washington’s policy “du jour” — and frankly, it will be an even more difficult for small businesses who do payroll by hand. Time & Pay is ready no matter how the idiots  in DC (who have probably never had a do payroll in their lives) behave.

The Advi$or will keep you posted, but it looks like we will all see a reduction in our net pay come Jan 1, 2012.

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NLRB Approves Union Voting Change

The National Labor Relations Board on Wednesday adopted a rule that will speed union-organizing elections in private-sector workplaces, ushering in some of the biggest procedural changes in decades and scoring a win for unions that say scheduling a vote often takes too long.

The board’s two Democrats approved the rule through electronic voting, while the lone Republican symbolically rejected it by choosing not to vote. The rule takes effect April 30.

The approval drew immediate backlash from employers, who said it leaves them inadequate time to respond to unionization campaigns and limits their rights to legally challenge elections before employee voting occurs.

The U.S. Chamber of Commerce has filed a lawsuit Tuesday night to challenge what it called the “ambush election rule.” The suit, filed in the U.S. District Court for the District of Columbia, claims the rule deprives employers of a fair opportunity to explain to employees the costs of unionizing. The Coalition for a Democratic Workplace is also a plaintiff in the suit.

Labor officials welcomed but downplayed the new rule’s potential impact and said more needs to be done to protect workers’ rights. AFL-CIO President Richard Trumka called the rule a “modest but important step” to help ensure workers get a fair chance to vote on forming a union.

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IRS Announces 2012 Mileage Rates

The IRS announced that the 2012 business mileage rate remains 55.5 cents for business miles driven, the same as the adjusted midyear rate in 2011.

Starting Jan. 1, 2012, the rate for medical or moving purposes will be 23 cents and the rate for miles driven in service of charitable organizations will be 14 cents per mile.

The standard mileage rate for business is based on an annual study by independent contractor Runzheimer International of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

EIC Requirements.

The IRS has released its notice that asks employers whether they have notified employees about the Earned Income Credit. The notice gives questions and answers related to notifying employees about the credit and how employees can claim it. This credit is for low income individuals who meet certain income level qualifications (depending on the number of dependents they have)  who may qualify for additional funds from the federal government. These funds are distributed by the IRS upon review of the indivdual’s tax return.

The notice of the EIC is usually printed on the back the the employee’s W-2.

Qualified employees used to be able to add the credit to their regular paycheck. However, employees can no longer claim the advance earned income credit, and Form W-5 is no longer in use.

States that have specific notification requirements related to the federal earned income credit include: California, Delaware, Illinois, Louisiana, Maryland, New Jersey, Texas, and Virginia.

Social Security Rates and Taxes:

As you know, currently in place is a 2% reduction of the employee’s share of the social security tax rate… a reduction from 6.2% to 4.2%. This reduction expires Dec 31, 2011.  The President and Congress are jockeying back and forth working on extending the credit through next year. There are even considerations of extending the 2% credit to the employer also.  Politic pundits predict that it will be extended but with the mess that is Washington, who knows! The Advi$or will keep you posted.

Remember that the taxable wage base for Social Security taxes was increased from $106,800 to $110,100 for 2012, a 3% increase This will add an addition a $138 in social security taxes to those high wage earners (provided the rate remains at 4.2%).

FUTA Rates

Congress is also considering a bill that would extend emergency unemployment benefits another year and allow employers in FUTA credit reduction states (those states being hit by a reduction in the FUTA credit due to funds borrowed from the Federal Government to cover shortfalls in state unemployment benefit funds) to avoid paying the extra FUTA tax required under current law.

Needless to say, payroll professionals are hoping the idiots in Washington, who have probably never done a payroll in their life,  make some decisions soon!

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“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

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

“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

“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

“As a new company to Johnson City, we were glad to find a local quality payroll service provider. We had used a national provider in Florida and were well aware of the advantages of outsourcing. Time & Pay offers all that the big national firms provide and more, including local, prompt and courteous customer service!”
-K H – JD Squared, Johnson City, 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

“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 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

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

“As a former customer of one of those big national firms, not only does Time & Pay perform better in the payroll processing area with better products and services, but you are also way ahead of them in the customer service area. It is a pleasure working with your staff knowing that any help we need is readily available.”
-C – Comprehensive Community Services, Johnson City, TN


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